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Takeaways for Merchants from Amazon q4 Earnings

4 February 2019

From eCommerce Bytes:

Amazon released earnings on Thursday, and there were some takeaways about third-party merchant sales, changes in seller fees, Amazon delivery, advertising, and upcoming investment in fulfillment center capacity.

Amazon grew 2018 fourth quarter sales 20% to $72.4 billion. Sales for North America in the 4th quarter of 2018 were up 18% year-over-year; sales for International were up 19% FX-neutral; and sales for its AWS cloud web-hosting business was up 46% FX-neutral.

. . . .

“The better-than-expected fourth-quarter results, backed by strong holiday sales, comes as investors fret about decelerating growth following two straight quarters of disappointing revenue. Sales climbed 19.7 percent in the latest quarter, which was faster than the 18.8 percent expected, but still the slowest since the first quarter of 2015.”

. . . .

Amazon said third-party sales grew faster than first-party sales. It also called out the fact in its earnings press release, where it stated that nearly 200,000 small and medium-sized businesses surpassed $100,000 in sales in Amazon’s stores in 2018.

. . . .

Amazon said third-party sellers are an important part of its value proposition – “they’ve had great success on our site, more than half of our units sold are from third-party sellers.” Amazon said it would always be evolving that business, including adding new fees or subtracting existing fees. “We generally work to change the fees to make sure that the incentives are strong on both sides and we continue to have a healthy growth in third party.”

. . . .

The company continues to expand its Amazon logistics and delivery capability and it also matches up with the faster ship speed for Prime members. “We have over 100 million items that customers could get within two days, but there’s now over 3 million that will be delivered within one day or faster in 10,000 cities and town.”

Amazon deliveries are a big part of that. Often it costs the same or less as using its outside shipping partners. Amazon invests selectively because it has more perfect information about where demand is and how it’s moving items – “by not involving third parties all the time, we can find that we can extend our order cut offs.”

Asked about advertising revenue, Amazon said it was focused on evolving tools and services for agencies and advertisers to make it easier for companies to grow – “we’re continually excited about the opportunity there.” It said it was working on making smarter recommendations as well as addressing the needs of brands.

Link to the rest at eCommerce Bytes

PG has recently noticed more deliveries by people wearing Amazon shirts arriving at Casa PG.

It’s early days for Amazon’s delivery service, but the appearance of the Amazon delivery persons carries a distinctly more “temp hire” vibe than the UPS or Fedex folks.

Amazon, Self-Publishing

3 Comments to “Takeaways for Merchants from Amazon q4 Earnings”

  1. “Amazon deliveries are a big part of that. Often it costs the same or less as using its outside shipping partners.”

    Oh man, please, PLEASE stop using USPS, Amazon. Here, they don’t bring packages to your house if your mailbox is more than 1/2 mile from your house, and that’s just about anyone rural or semi rural since they LOVE their cluster mailboxes where I live. UPS and FedEx have no problem bringing the packages to the door.

    • On the flip side is we ordered a bed frame from Amazon, UPS shipping and two day delivery (and they said it was out for delivery.) Two days passed and nothing, the order now admits to being delayed – we might get it in another three days. Nothing. This time we were given an option to cancel or reorder, we cancelled and tried a fresh order. Told three days – but it got there in two by way of USPS …

  2. I’ve had bad luck with Amazon’s delivery service. Around 10-20% of my packages have ended up being labeled “Lost in system” (I’m blanking on the exact wording.) Basically, they still have it, but can’t track it any longer. “Just try waiting a few more days, maybe it will show up.” Some of them do, eventually, show up days or weeks later. But by that time, I’ve already reordered them or gotten a refund. What a hassle.

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