Amazon reported Q2 earnings on August 3rd, 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 on what it means for them. This is our attempt to distill it down.
The key takeaway for brands is that after several years of COVID effects, growth on their retail platform has returned to “trendline” growth of 10-20%. This should be viewed as very positive growth for brands. Additionally, Amazon 3P is dramatically outperforming 1P with an estimated growth of 18% YoY vs 4% for 1P.
- Total ecommerce sales on the Amazon platform grew an estimated 13% from last year, and is up a whopping 62% 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 18% YoY growth. Amazon 3P now accounts for 67% of Amazon GMV based on our assumption, with 1P making up only 33% of GMV.
- Amazon’s ad business grew 20% YOY to $10.7billion and now represents roughly 6.7% 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.