Amazon’s Latest Quarter: Product/Advertising Sales Slows as AWS Surges
Back again for another quarter from the toll booth of eCommerce: Amazon. A couple of takeaways from last night’s quarterly report:
Product Sales aka Online Store Sales slowed. Quarterly growth was 4%, the lowest increase posted since Q2 2023 based on Q2 2022 results. If you focus specifically on North America, the sales growth rate was lowest since Q1 2022.
2. Third-party Seller Services is accounting for 28-35% of the sales growth over last four quarters. Amazon clearly sees the value of price increases on sellers and continues to pull their growth from that area.
3. Advertising growth slowed. Whilst the overall sales growth slowed, we believe a lot of this slowdown is a result of the higher Third-party seller fee increases.
Bottom Line: Amazon clearly slowed in most recent quarter and continues to provide a comprehensive view of the macro economy (Jassy statements from April). Gone are the statements of a soft landing and the recession word seems to be returning. Specific to Sellers, we believe the pain of lower profitability and higher cost per click is making its’ way into the reduced advertising. We continue to reiterate the need to run Amazon using a hybrid model of 1P Vendor Central and 3P Seller Central to ensure flexibility and profitability.
Enjoy the weekend,
Ryan