Amazon reported Q1 earnings on April 27th, 2023 and gave an update on the trends they are seeing. With Amazon in so many different businesses (AWS, Grocery Stores, streaming, etc.) it is difficult for brands to focus in on what it means for them. This is our attempt to distill it down. While many of Amazon’s businesses are slowing down, the key takeaway for brands is that Amazon is seeing strong growth on their retail platform that is being led by Amazon 3P.
- Total ecommerce sales on the Amazon platform grew an estimated 11% from last year, and is up a whopping 77% from Pre-Covid 2019 levels. We believe this shows that ecommerce is getting back to its “trend line” growth of 10-15% even with a slowing economy.
- 3P sales continues to take market share from 1P and shows strong 20% YoY growth. We estimate that 3P sales increased 18% from 2021 (and 78% from 2019) while 1P was flat from last year. Amazon 3P now accounts for 66% of Amazon GMV based on our assumptions.
- Amazon’s ad business grew 20% YOY to $9.5billion and now represents roughly 6.3% of Amazon GMV. Amazon’s ads business continues to grow… and grow much faster than total sales on the platform. Essentially, this means that ads are getting more expensive and it requires a bigger focus to make sure brands are not overspending on unprofitable key words.
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