News & Insights
What Amazon’s Q4 2022 Earnings Report Means for Ecommerce Brands
Amazon reported Q4 earnings on Feb 2nd, 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 a reacceleration of 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 78% 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 continue to take market share from 1P and shows accelerating growth to 20% YoY. Amazon would rather be a marketplace vs a retailer. We estimate that 3P sales increased 20% from 2021 (and 78% from 2019) while 1P shrunk 2% from last year. Simply put, this is another sign that Amazon would rather be a marketplace instead of a retailer. 1P brands should be thinking about their 3P strategy as the tide is clearly moving against them.
- The Amazon advertising business grew 20% YOY to $11.6billion and now represents roughly 6.3% of Amazon’s 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 keywords.
Plan your brand’s future with Amify
Respond to Amazon’s evolving marketplace with the help of a partner who understands the opportunities ahead. The team at Amify can help your brand adjust to the shifting demands of success on Amazon. More than 60 experts in warehousing, logistics, optimization, content and more are waiting to help you focus your efforts where they matter most. Contact us today for a free consultation.