Free Shipping Costs Amazon $30M in Q4

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Amazon.com's free shipping offer for orders over $25 cost the Seattle retailer $30 million in the fourth quarter, but the company still posted only the second quarterly profit in its history.


The promotion likely will cost Amazon $100 million this year, chief financial officer Tom Szkutak told reporters in an earnings call last week. Free shipping also will be extended to customers in Britain.


Net income for the fourth quarter was $2.7 million on revenue of $1.43 billion. The revenue was up 28 percent from a year ago, but the net income was down 48 percent from $5.09 million.


Books, videos and music sold well on Amazon in the United States, Japan and Europe. Amazon's stores in Britain, Germany, Japan and France were up 57 percent to $461 million for the fourth quarter. Non-North American stores now account for 37 percent of Amazon's overall revenue. The goal for the international units is 50 percent of all Amazon sales by 2005.


Another Internet-only retailer and Amazon competitor, buy.com, has had free shipping in place since June with no minimum purchase.


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