๐จ #Amazon beats revenue and margin targets in strong Q3 earnings report. Here's everything you need to know:
๐ง๐๐๐ฅ;
Amazon convinced shareholders with another strong quarter across its Retail, 3P Seller Services, AWS, and Advertising divisions:
๐ Net Sales grew to $158.9bn (+11% / +$15.8bn YoY)
๐ฐ Operating Income grew to $17.4bn (+11% / +$6.2bn YoY)
๐ข Advertising grew to $14.3bn (+19% / +$2.27bn YoY)
๐ค๐ฐ ๐๐๐ถ๐ฑ๐ฎ๐ป๐ฐ๐ฒ
๐บ Net Sales expected to reach $181.5 bn - $188.5 bn (+7% to +11% YoY)
๐บ Operating Income predicted to grow to $16 bn - $20 bn
๐๐ป๐ฎ๐น๐๐๐ถ๐
As shoppers remain price-sensitive, Amazon doubles down on what it does best: Running big sales events and improving fulfilment speed to consumers.
With one caveat:
The tech giant remains focused on protecting its bottom line, prioritising operational efficiencies in its retail division. The recent termination of small vendor accounts is just the tip of the iceberg.
CEO Andy Jassy has made it clear that improving the cost of serving shoppers remains a NorthStar metric for Amazon. Affecting CPG brands selling low ASP items the most, since these products often act as a gateway to getting shoppers through the (virtual) door.
With the rise of Asian-based rivals from Temu, Shein, & Co., Amazon knows that unlocking these economies of scale becomes a competitive advantage:
ยป ๐๐ณ ๐๐ต๐ฒ ๐ผ๐ป๐น๐ถ๐ป๐ฒ ๐ฟ๐ฒ๐๐ฎ๐ถ๐น๐ฒ๐ฟ ๐ฐ๐ฎ๐ป ๐ผ๐ณ๐ณ๐ฒ๐ฟ ๐ฎ ๐น๐ผ๐-๐ฝ๐ฟ๐ถ๐ฐ๐ฒ๐ฑ ๐ฐ๐ฎ๐๐ฎ๐น๐ผ๐ด๐๐ฒ ๐ฎ๐ ๐๐ฐ๐ฎ๐น๐ฒ ๐ฎ๐ป๐ฑ ๐ฝ๐ฎ๐ถ๐ฟ ๐ถ๐ ๐๐ถ๐๐ต ๐๐ฎ๐บ๐ฒ-๐ฑ๐ฎ๐ ๐ผ๐ฟ ๐ป๐ฒ๐
๐-๐ฑ๐ฎ๐ ๐ฑ๐ฒ๐น๐ถ๐๐ฒ๐ฟ๐, ๐๐บ๐ฎ๐๐ผ๐ป ๐ฒ๐ณ๐ณ๐ฒ๐ฐ๐๐ถ๐๐ฒ๐น๐ ๐๐ฒ๐ฐ๐๐ฟ๐ฒ๐ ๐ถ๐๐ ๐ฝ๐น๐ฎ๐ฐ๐ฒ ๐ฎ๐ ๐๐ต๐ฒ #๐ญ ๐ฏ๐๐๐ถ๐ป๐ด ๐ฑ๐ฒ๐๐๐ถ๐ป๐ฎ๐๐ถ๐ผ๐ป ๐ณ๐ผ๐ฟ ๐๐ต๐ผ๐ฝ๐ฝ๐ฒ๐ฟ๐. ยซ
As a result, the declining 1P sales share of 40% vs 60% for 3PS is a feature. Not a bug. It allows Amazon to go after the biggest opportunity (i.e., category-critical selection) and let 3P brands self-serve the rest.
So if you think that Amazon will let go of its profit focus anytime soon, you may want to re-adjust your plans for 2025.
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