In this Amazon Seller's Week in Review, Julie Spear, our Operations Manager, shares her take on recent news highlights and what these could mean for brands selling on the Amazon marketplace.
1. Walmart Takes on Amazon Prime
In one of the bigger stories of the week, we learned about Walmart’s efforts to take on Amazon by offering its customers 2-day, free shipping without the cost of membership. Previously, Walmart had offered shoppers a ShippingPass subscription for $49 a year. This subscription mirrored one aspect of Amazon’s Prime subscription: free 2-day shipping. However, the subscription offered none of the other features included in an Amazon Prime subscription (like free movie and TV streaming, music, etc). With this latest change to service, all Walmart.com customers who spend a minimum of $35 will enjoy free, 2-day shipping. This move further underscores Walmart’s goal of taking on Amazon. What do you think? How great of an impact will this have on Amazon?
2. The Super Bowl, Alexa and Drones
Amazon used valuable advertising air time during Sunday’s Super Bowl to promote Alexa as well as their promise of deliveries via drone. While the FAA in the US has yet to approve drone use for the purpose of package deliveries, Amazon continues to move forward with its design plans, developing drones with the capability of delivering customer orders swiftly to their doorsteps. In one of three 10-second spots during the Super Bowl’s action-packed 4th quarter, Amazon showed how Alexa and drones could combine forces for effortless ordering and (nearly) instant gratification using Prime Air. While the commercial includes a disclaimer that Prime Air is not yet available, we all eagerly await the day when our Doritos can be delivered at a moment’s notice! See the commercial clip:
3. Prime Air Cargo Hub
In somewhat of a follow up to my previous mention of Amazon’s quest to own their own logistics around shipping (i.e. taking on the role of freight forwarder), Amazon made news last week by announcing plans to build a Prime Air Cargo Hub in northern Kentucky. This move would enable Amazon to take greater control of moving products to its customers while also helping their bottom line by limiting fees associated with partnerships with carriers. This project is also a boon to the local economy in the Cincinnati and northern Kentucky area, bringing more than 2,000 jobs to the area once the hub is open.
4. Amazon’s Advertising Revenue Gains
It’s not just the sellers on Amazon who benefit from investing in the Sponsored Products Ads program--Amazon itself is reaping the benefits. According to their latest earnings report, one category in particular, saw significant year over year growth at 60%. The “Other” category, which is believed to be comprised of Amazon’s advertising sales, earned $1.3 billion in revenue in 2016. Regarding Amazon’s perspective on their ads strategy, Business Insider quotes Amazon CFO, Brian Olsavsky, saying, “Our goals there are to be helpful to customers and enhance their shopping and viewing experiences, mostly with targeted recommendations... We think that's a good strategy rather than invasive things that take away from the shopping experience." Advertising industry experts speculate Amazon’s growing online advertising success could one day challenge that of Facebook and Google.
5. Sales in Electronics, Home and Apparel Drive Amazon’s Growth in 2016
Just how much of the e-commerce market does Amazon own? According to an analysis shared last week by Slice Intelligence, the answer to that question is 43%. 43% of 2016’s online retail sales were on Amazon, up from 33% in 2015 and 25% in 2012. Slice identified the electronics, home and apparel categories and as the main drivers of Amazon’s growth in 2016, with the food and health & beauty categories rounding out the top 5. E-commerce continues to grow by leaps and bounds, with Amazon leading the way.
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