Amazon.com 2004 Annual Report Download - page 42

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Net Sales and Gross Profit
Net sales information is as follows:
Year Ended December 31,
2004 2003 2002
(in thousands)
Net Sales:
North America ...................................... $3,847,344 $3,258,413 $2,761,457
International ....................................... 3,073,780 2,005,286 1,171,479
Consolidated ................................... $6,921,124 $5,263,699 $3,932,936
Net Sales Growth Rate:
North America ...................................... 18.1% 18.0% 12.2%
International ....................................... 53.3 71.2 76.9
Consolidated ................................... 31.5 33.8 26.0
Net Sales Mix:
North America ...................................... 55.6% 61.9% 70.2%
International ....................................... 44.4 38.1 29.8
Consolidated ................................... 100.0% 100.0% 100.0%
Revenue growth is due primarily to increased demand driven by increased selection, lower prices, including
from our free shipping offers, and improved features and services available on our websites. Revenue growth is
also affected by changes in exchange rates. See “Effect of Exchange Rates” below for additional information on
the effect on reported revenue of changes in exchange rates. Net sales from “Other” consist of non-retail
activities, such as our Merchant.com program, miscellaneous marketing and promotional activities, and our co-
branded credit card program.
North America revenue growth rate in 2004 was consistent with 2003 at 18%, up from our 2002 growth rate
of 12%. The increase in growth rates from 2002 reflects our efforts to increase product categories and selection
available on our websites, and to continue reducing prices for our customers, including from our free shipping
offers.
International revenue growth rate declined in 2004 and 2003 compared to the prior year periods, which
reflects several factors. These factors include the increasing size of our business, which naturally causes growth
rates to decline over time, offset by our customer experience initiatives including new category introductions;
increased selection; the introduction of our third-party offerings in the UK, Germany, Japan, and France; and our
efforts to reduce prices for our customers, including from our free shipping offers. International segment revenue
growth rates are also affected by changes in exchange rates.
The relative mix of worldwide net sales attributed to our International segment continues to increase, and
we expect that, over time, our International segment will represent 50% or more of our consolidated total.
Additionally, as we continue to offer increased selection, lower prices, and additional product lines in our
Electronics and other general merchandise category, we expect to see the relative mix of sales from this category
increase.
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