Amazon UK sales growth slows as competition step up their game

Amazon has suffered a slowdown in Britain, with revenues rising only 12.6 per cent to £4.5 billion last year, the London Evening Standard can reveal.

Analysts said Britain’s biggest online retailer was feeling the squeeze as traditional players such as John Lewis and Dixons raised their game — particularly with “click and collect” services.

Accounts filed by the US parent company show Amazon’s UK sales were $7.29 billion (£4.46 billion) — a rise of around $800 million on a year earlier. British revenues rose by $1 billion to $6.48 billion in 2012 and by $1.4 billion to $5.35 billion in 2011.

Taking into account changes to the dollar-sterling exchange rate, UK growth is estimated at 14 per cent last year on a like-for-like basis — down from 22 per cent in 2012 and 31 per cent in 2011.

“The competition is a bit stronger for them in electricals,” said independent retail analyst Nick Bubb, pointing to Dixons’ decision to match Amazon on price and John Lewis’s move to offer “click-and-collect” at its Waitrose food stores.

“What has been a drag is the books and entertainment market is pretty mature,” added Bubb, who reckoned falling CD sales and other traditional entertainment products — once at the heart of Amazon’s business — have pushed down on revenues.

Amazon remains Britain’s biggest online retailer, but Bubb said "mathematically, arithmetically, it gets harder to keep growing" at double-digit rates.

The web giant has come under fire for tax avoidance because it processes sales in Luxembourg but there in no sign the row has hit the UK. Amazon had a foreign tax bill last year of just $173 million on $30 billion of international sales.

Amazon declined to comment.