It’s a big day for Amazon watchers as the company reports their Q1 results after Wall St. closes today (April 26, 2012). In Q4, Amazon’s revenue growth rated slowed (appeared to, if you think about GMV, it accelerated), largely driven by the increase in third party sales vs. first party. Also Amazon is investing on so many fronts (Kindle, video, AWS, fulfilment, etc.) wall st. is really worried that we’re hitting this perfect storm – slowing revenue and increasing expenses.
Amazon also for the first time revealed some more information on third party that everyone is working some calculus on and watching – we’ll have more on that later this month after we have time to compute on the results.
In this post, I wanted to introduce our Q1 results tracker and cover some of the news that has come out of Amazon globally.
Q1 Results tracker
For those of you playing along at home, here’s a good way to measure how Amazon does today. As mentioned, probably the biggest item is revenue growth with the expense trends being another metric under the spotlight.
Amazon Q1 News Roundup
Amazon has had a ton of news that has come out and in true Amazon fashion, not a lot of it has made it out there so I wanted to round up the things on our radar that we think are interesting. We’ve put them into a couple of different buckets: new offerings, fulfilment/tax news, non-domestic news.
At Catalyst, Amazon was talking to retailers about a new offering called Amazon Sponsored Products. You can read more here (http://sp.amazon.com). What amazon is doing is piloting giving 3P sellers the ability to buy on-amazon ads on a cpc basis to drive awareness, traffic and transactions to your 3P listings. This is an interesting program because historically the only lever you had as a merchant was the price of your product. Now you have a second lever. It’s a brand new offering and we’re ramping up some tests on it and will report back later on the best ways to leverage this.
Our early thinking is that it is very strong when you have something that is unique you want to get in front of buyers or something that is an up and coming hot product you can use SP to accelerate.
New offering – Amazon Web Services Marketplace
If you track AWS, they released a really neat marketplace that sits on top of their cloud infrastructure.
New offering – AmazonSupply
There’s been a fair amount of press around AmazonSupply as Amazon’s entry into the world of B2B, one thing that’s interesting here is some new features and functionality above and beyond the current B2C platform:
- Lines of credit
- multi purchase per item page
Currenty AmazonSupply looks to be first party only – historically Amazon starts that way and as they ramp up the add 3P sellers. It will be interesting to see if this offering follows that roadmap.
- Amazon settled with NV and will start collecting tax there in 2014 – expect more FCs there.
- A mystery company is building a large warehouse/FC in California. the press has called it Project X – most are betting that it’s Amazon. This is an outcome of their tax concession – California makes a ton of sense for a FC given the population. Can you say same day shipping to SFO?
- Folks in Australia are really excited about the possibility that Amazon will launch there soon. Rumors have it that Amazon has engaged a real estate agent and is looking to buy existing or land for building a FC.
- Brazil/South America – While there hasn’t been a formal announcement, Amazon added to their AWS boilerplate language that they have Data centres in South America now: “AWS services are available to customers from data centre locations in the U.S., Brazil, Europe, Japan and Singapore.” . This has everyone buzzing that perhaps Amazon is set to launch in a more meaningful way in South America. No word on warehouses, but having a datacentre there does plant a flag.
That’s some of the highlights , we’ll have to see what they highlight in the Quarterly report and how the earnings come in…stay tuned!
SeekingAlpha Disclosure – I am long Amazon and Google, eBay is an investor in ChannelAdvisor where I am CEO.