Lion or hare? Amazon might soon face a lot of hungry competitors around the world

When Amazon released data on its financial performance for 2012 at the end of January 2013, Jeff Bezos, the company’s founder and CEO concluded: “We’re now seeing the transition we’ve been expecting. After 5 years, e-books is a multi-billion dollar category for us and growing fast—up approximately 70% last year.” (Amazon reports record sales growth. The Bookseller, 30 January 2013) That is certainly true. But Amazon might not be any longer in that most privileged role of defining the game almost all alone, as it was mostly the case, at least in the US, since the introduction of the Kindle in 2007.

EbookMarketReportDisregarding Bezos’ strong statement, the recent filings did not contain any specifics on ebook sales. However, for the first time ever, the world market leader in online bookselling revealed some insights into its stupendous international expansion. (Annual Report for fiscal year, ended December 31, 2012, US SEC)

While overall sales of Amazon in North America always exceed revenues from its international business, at least since 2010, international turnover in the segment of media is clearly ahead of domestic North American. (“Media” includes, aside from ebooks, all other digital content, notably music, movies and games, yet not “Electronics and other general merchandise”) Even more remarkably, at least in 2010 and 2011, “international media” showed stronger growth, year on year, than domestic developments. For 2012, international media growth dropped sharply, from 23 percent in 2011, to 9 percent in 2012 (against continuous growth, of 15 percent, for domestic media sales – with no further explanation given).

By far the lion’s share in all of Amazon’s international revenues came from only three markets (Germany, Japan and the United Kingdom), adding up to $23 billion of the international total of $26.3 billion for 2012. All the other markets combined accounted for just another $3.3 billion, or less than 13 percent of international. This refers to the total turnover, not just media. For Germany, an independent estimate is available which has Amazon’s media revenues at $3.5 billion, and its book division is thought to represent some 20 percent of the German book retail market, making it probably the number one channel, head on head with Weltbild/DBH. (“Amazon kontrolliert rund 20% des Buchmarktes”. buchreport, 5 February 2013)

However, recent growth beyond those three core markets, hence on the true global end of the scale, was ever more remarkable, with 69 percent year on year for 2011, and 50 percent for 2012.

Interestingly, all figures reported by Amazon hint at a significant slow-down in its growth for 2012. Growth in overall international media sales dropped from 23 percent, year on year, for 2011, to 9 percent in 2012. The by-country rates fell on average by more than a third, for Germany, Japan and the UK. For the rest of the world, the expansion slowed down from a mesmerizing 69 percent in 2011, to a still strong 50 percent in 2012.

With no details indicated in these corporate filings, yet with no global economic factors providing a plausible explanation for the broad pattern, it must be assumed that competition is the most reasonable cause. With more and more hounds chasing the global leader of the segment, on both local as well as global grounds, with Apple, Google and Kobo, as well as scores of homegrown competitors stepping into the arena, Amazon should probably get ready to meet a bunch of serious challengers in the months and years ahead.

For more details, and a table with all relevant figures, see the February 2013 update of the “Global Ebook Market” report here.

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