Good morning. Tomorrow marks the first week of November and the start of the most wonderful time of the year for consumer brands and retailers!
It’s also earnings season and Amazon reported its third-quarter earnings last week.
AMAZON’S 3RD QUARTER EARNINGS REPORT
Amazon once again did not split out Advertising revenue in its earnings report, but the “Other” category where it’s included just keeps getting larger and larger - 58% over the past year, to be precise.
Amazon’s CFO said that ad revenues continue to grow “very, very quickly” and Amazon recently announced 2,000 advertising focused positions in New York. Research firm Advertiser Perceptions found that Amazon ties with Google for having the highest adoption rate among ad agencies, in a survey of 700 ad buyers.
As I wrote in a RetailWire article last week, Amazon’s increasing revenue from ads will start to put incumbents Facebook and Google under pressure.
Finally, sales for the quarter hit $43.7 billion. Compared to the previous year, sales are up 34%, topping the Wall Street projections of $41.6 billion. International sales have also leaped from the prior year. I think we’re in for an absolutely fiery 4th Quarter on Amazon.
If you’re a brand manager, sales manager or owner of a consumer brand and feel like you’re not making the most of your Amazon channel, contact us for a consultation. It’s still not too late for us to handle a fast and furious update to your Amazon catalog for Q4.
AMAZON LOOKS TO PHARMA CAUSES JITTERS
If you’ve heard the news about drugstore giant CVS being in talks to buy insurer Aetna, you may also know that one factor to spur the deal on is the rumor that Amazon will be entering the pharmaceutical services space. A report published on Thursday of last week cited that Amazon had obtained approval from pharmaceutical boards in some states to become a wholesale distributor.
However, the Wall Street Journal highlights some difficulties in this highly regulated market, including the fact that it’s often insurers and benefits managers who purchase prescription drugs, not the consumer themselves.
In my personal opinion, as a Type 1 Diabetic navigating the hazy and exorbitantly expensive healthcare industry in the US, it couldn’t be a better industry for Amazon to disrupt.
598 MILLION PRODUCTS FOR SALE ON AMAZON.COM
Scrapehero measures how many products are listed for sale on Amazon.com every month or so. As you expect, the numbers just keep creeping up, and October alone saw an 11% increase in the number of SKUs alone.
AMAZON AND ALIBABA - NOT RETAILERS AFTER ALL?
Though there’s much hand-wringing over the supposed loss of retail jobs resulting from the rise of e-commerce, this article in The Economist points out how the largest companies in the retail industry, Amazon and Alibaba, don’t see themselves as retailers at all. Amazon’s most profitable division has nothing to do with retail, and they are building a formidable logistics network in the US and beyond.
Here are a few other great points from the article, as summarized by Louise Gray, a Project Manager at Bobsled Marketing:
- Alibaba says to some extent they are more like a “utility company, providing an infrastructure for digital commerce”. This is a good insight, disclosing the long-term vision of both Alibaba and Amazon
- Amazon’s most profitable arm is its cloud computing business, AWS, which accounts for 74% of its operating income
- Morgan Stanley estimates Amazon to grow at a rate of 20% a year between now and 2025
- More searches now begin on Amazon than Google
AMAZON FINALLY EXPANDS IN BRAZIL
After selling just Kindle and print books since 2012, Amazon swiftly launched and rolled out a marketplace for third-party sellers in the world’s 10th-largest economy. There are now 1,700 sellers on Amazon Brazil, but still no FBA option.
What will this mean for incumbent Latin American commerce giant MercadoLibre? Naturally, their stock price fell over 14% in a week. However, the Latin American market will be much more challenging for Amazon to tackle with their existing business model - internet penetration is much lower and delivery infrastructure is relatively undeveloped.
HOW TO HANDLE HIGH VOLUME SALES WITH AN ELECTRONIC DATA INTEGRATION SYSTEM
Our most recent blog article is about Electronic Data Integration or EDI, and how brands can use it to reduce time and expenses to maintain their inventory, POs, and invoices. An effective EDI implementation saves time and keeps you away from costly mistakes that can arise from inaccurate stock counts and slow turnaround times on filling purchase orders. If you’re a brand that processes large quantities of wholesale orders, read more about EDI and whether it’s a good idea for you in our blog post.
Finally, a new discovery I made recently is the Amazonian blog. Written by current Amazonians, the articles dive into what it’s like working at Amazon, and often focus on recruiting or Amazon’s leadership principles. I’m a big fan of Amazon’s core values like Customer Obsession, Learn and Be Curious, and Invent and Simplify. Check it out here.
This is all the news I have to share with you this week. Stay tuned for my next update!