Amazon Q3 2014 Results Preview (from a seller’s perspective)

October 22, 2014

ChannelAdvisor Scot Wingo By Scot Wingo

Tomorrow, Thursday October 23rd, 2014, after the market closes, Amazon will release their Q3 results.

ComScore recently reported that US e-commerce grew at 13% y/y for the desktop, which translates to 15% y/y with mobile included, so that is the baseline for Q3 2014 growth.  eBay reported first this quarter and came in at 7% y/y GMV growth, which was ~8% below the comScore baseline.

From our SSS data, Amazon averaged 41.1% y/y growth over the third quarter, a step up from Q2’s growth rate.

It will be interesting to see if Amazon accelerates this Q as that will show strength heading into the important Q4 holiday quarter and also show that Amazon does not suffer the same issues facing eBay and perhaps is taking share.

Key metrics and themese we are watching carefully:

  • Active users  – Every other metric is “backwards facing”, so we like active users because it is forward looking and because  it tells us how many shoppers are actively buying on Amazon and that sellers will be able to market to.  Last year (Q3 2013) there were 224m active users and last quarter (Q2 14) Amazon broke through 250m.  This metric has been growing around 17%, which would yield a Q3 14 target of 262m.
  • EGM y/y growth rate – This blog is for Amazon sellers and the bulk of Amazon sellers are in the EGM category (Electronics and General Merchandise).  Last Q (Q2 14) , EGM grew at 25% with the US at 29% and non-domestic at 20%. A year ago (Q2 13) EGM grew 29%.
  • % units from 3P – For the last year this metric has been “stuck” at 40% after previously moving a point or so every Q.  We’ll be watching this one closely.
  • Paid Unit Growth/Sold Item Growth – eBay reported sold item growth of 9.1% for Q3 2014.  Last Q (Q2 2014) Amazon reported 23%, which was down from the year ago period (Q2 2013) of 29%.  It will be interesting to see if this metric accelerated or stayed flat from the first Q.  Some Wall St. Analysts are concerned this will dip below 20%.
  • fulfilment and sortation centres – Sometimes Amazon will slip in a comment on their conference call such as “we are building 15 sortation centres.”  We carefully track Amazon’s buildout and they continue significant investment in this area.
  • Fresh and same-day delivery – We are closely watching the battle between Google and Amazon for same-day and groceries.  Amazon recently rolled out Fresh in NY/Brooklyn and currently supports 15 metros for same-day delivery.  They also recently rolled out a news store pickup service in the UK. We’ll be listening for any colour on all these initiatives.
  • Holiday 2014 – Wall St. is expecting Amazon to forecast 21% y/y growth for Q4.  Anything below that will indicate Amazon isn’t feeling great about the holiday season and anything above will indicate a more positive stance.
  • Drones – Drones are just cool and we like to hear more about them.

This dashboard shows all of the metrics we’ll be watching closely to see how Amazon performed a year ago and last Q.

Amzn_q3_preview

We will have the highlights from the report out Thursday – stay tuned!

This blog post was written by Scot Wingo, CEO, ChannelAdvisor.