📦 The Order : Weekly Roundup - Amazon AI Rufus, Amazon Q2 & Product Liability
Issue #174
Happy Sunday,
Here’s a quick roundup of last week’s news :
Amazon AI TL;DR
Care about growing organic lift on Amazon? 👉 Here’s a 5min deep dive on how the game changes with Amazon’s AI Rufus.
📜 Slides with sources here.
Kudos to Nick Penev for a great webinar this week.
Chart if the Week
Amazon reported Q2. Official reporting here.
Stratably Founder Russ Dieringer postet a great summary:
(1) Moderated Growth in GMV: Amazon's gross merchandise volume (GMV) grew by 8% year-over-year, driven by slower growth in both 1P and 3P sales. Faster growing categories included Beauty & Personal Care and Home & Kitchen, while slower categories included Books and Video Games.
(2) Market Outperformance: Despite a deceleration, Amazon's GMV growth of 8.7% in the U.S. outpaced the market's 2.6% growth, showcasing its continued market dominance.
(3) Revised Growth Outlook: We have adjusted our 2024 GMV growth forecast to 10% from the previous 12%. This reduction more so reflects broader market weaknesses rather than Amazon-specific issues.
(4) Narrowing 3P Outperformance: The growth gap between Amazon's marketplace (3P) and first-party (1P) sales is narrowing due to tougher comparisons for 3P. We forecast 3P GMV to grow 11.5% Y/Y and 1P to grow 5.4% in 2024, both ahead of the broader retail market.
(5) International Gains: For the first time since 3Q21, Amazon's international GMV outpaced North America, driven by growth in existing markets and increased Prime membership penetration.
(6) Improving Retail Margins: Amazon's profitability is up significantly, with operating margins increasing by 230 basis points compared to 2Q23. This improved financial position enables further reinvestment in growth areas such as low ASP items (re: grocery, low-priced apparel, etc.)
(7) Ad Business Growth: Amazon's ad revenue grew by 20% Y/Y, primarily driven by Sponsored Products, although we see Amazon’s Streaming TV options as a meaningful driver of future growth over the next several years.
(8) Digital Ad Market Outperformance: Amazon exceeded the broader digital ad market by 2.8 percentage points, indicating strong advertiser interest relative to competitors despite it being a mature platform.
(9) Increasing Ad Spend: Advertisers spent 6.8% of GMV on Amazon ads this quarter, up 60 basis points from a year ago, a trend expected to continue as brands strive to remain competitive on the platform.
(10) Stable Prime Program: Prime membership growth has stabilized in the low double-digit range, up 11% Y/Y. Amazon's walking a delicate balance of improving elements of Prime (via more selection, delivered more quickly), but also increasing the price of the program and introducing ads into Prime Video.
Movers & Shakers 🙌
L’Oréal sales hit by China slowdown [Financial Times]
Strategy 🦈
That’s a big one! “Amazon must recall unsafe products sold by independent sellers, a consumer agency says” [NRP]
Amazon Brand Store is getting an upgrade: Deep Dive by Steven Pope [Youtube]
Competition Made Amazon a Better Deal [Marketplace Pulse]
S2E11: Online Retail and the Modern-Day Consumer with Former Amazon Executive Dave Clark - Tennessee on Supply Chain Management [GSCI Podcast]
Meta shares pop on revenue and earnings beat, better-than-expected forecast [CNBC]
EBay’s Quarterly Sales and Profits Exceed Analysts’ Estimates [Bloomberg]
US consumers show signs of flagging, companies and analysts warn [Financial Times]
China ecommerce shifts gear and TSMC heads to Europe [Financial Times]
Job Opportunity 👩🚀
Operations Specialist - Amazon Automation Control Center ]with Autopilot]
Events 🎤
Amazon Accelerate, Sep 17-19 in Seattle
Amazon unBoxed, Oct 14-16 in Austin
Make this week count 🙌
Christian