What Brands Need to Know: Amazon's Earnings Report
On Thursday afternoon, Amazon released its latest earnings report. Numbers broke records, projections, and analyst expectations. For example, the quarterly profit of $3.6 billion made headlines, but the report also includes information beyond the numbers important to the future of Amazon and those who sell on it. Continue reading for takeaways from Amazon’s earnings report and what they mean for brands.
Third-Party Sellers are Responsible for Growth
The third-party landscape has become a challenge for brands when developing their Amazon strategy. Whether a brand has to manage duplicate listings, inventory control, brand reputation, or other challenges, third-party resellers can’t be ignored.
Analysts concur growth reported is largely due to third-party sales. This is a huge reminder to brands; Amazon and its private labels aren’t the biggest competition or hurdle to overcome with their strategy. Jeff Bezos prefaced this in his letter to shareholders earlier this month.
Amazon’s Advertising Segment Reports Significant Growth
This time last year, Amazon reported growth in its advertising segment by near-double. However, in this earnings report, the advertising category reported 34-percent growth.
This isn’t as high as what has been seen in past reports, but is significant and reflects Amazon’s continued commitment to surpassing Google and Facebook advertising platforms. If brands want to remain competitive on Amazon, they will need to continue to shift dollars towards their Amazon advertising strategy.
Second Quarter Profits Won’t Compete
Amazon plans to invest a significant amount into cutting Prime delivery time in half. In other words, Prime shoppers will receive orders in just one day. Some products provide same-day or one-day shipping options now, but Amazon wants to refine the status-quo.
Brands will need to adjust their strategy to operate under this new standard once it rolls out. It’s not yet clear how catalogs and products who currently adhere to Prime will be impacted, if at all. But those who don’t will need to step up their efforts to remain competitive.
The core components of Amazon’s earnings report will direct the company’s next moves and future business. Each will play an important role in the way brands plan their Amazon strategy and succeed on the platform.
If you’d like to partner with a team of strategic experts who are on top of Amazon’s next move, schedule a free consultation. It’s important for brands to be ahead of the game in Amazon’s evolving landscape. We look forward to working with your brand to navigate the past, present, and future of Amazon.
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