Britain's Amazon obsession helps revenues at its UK warehouse business jump 50%

LONDON — Revenue at Amazon’s key UK operating company jumped by more than 50% to £1.46 billion last year, as the e-commerce giant’s popularity with consumers continues and it expanded its warehouse footprint.

Accounts for Amazon UK Services — which runs the retail giant’s warehouses, customer service, and fulfilment of orders in the UK — show that turnover rose by 54% in 2016, passing £1 billion for the first time.

Turnover at the company isn’t a direct reflection of UK sales — the company bills Amazon’s European head office in Luxembourg for services such as the delivery of orders. However, a rise in revenue suggests more business in the UK.

Profits halved at the company last year as it invested in building new UK warehouses and building out its delivery network. Expenses jumped by 60% to £1.43 billion due to new fulfilment centres in places like Leicestershire, Manchester, Doncaster, Daventry, and Tilbury.

UK staff numbers rose from 9,090 in 2015 to 14,118 last year, taking staffing costs to £449 million.

The rapid expansion of Amazon’s UK presence pushed pre-tax profits down from £48.5 million in 2015 to £24.2 million last year. Amazon paid £1.3 million in UK tax. That was up from a £9.7 million tax credit in 2015, due to historic losses.

Amazon’s expansion looks set to continue, with the retailer announcing earlier this year plans to open four new fulfilment centres that will create 1,200 jobs. The US tech giant is also opening development centres in Cambridge and London, and a new London head office.

An Amazon spokesperson told Business Insider: “We’ve invested over £6.4 billion in the UK since 2010 including opening a new head office in London and development centres in Cambridge and London this year, and creating 5,000 permanent jobs across the country in research and development, our head office, customer service and fulfilment centres, to bring our total workforce to 24,000.

“We pay all taxes required in the UK and every country where we operate. Corporation tax is based on profits, not revenues, and our profits have remained low given retail is a highly-competitive, low margin business and our continued heavy investment.”

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