Amazon announced their Q1 2012 results last night (April 26, 2012). After eBay’s impressive showing, Amazon’s BLOWOUT reinforces our belief @ChannelAdvisor that we are entering a new golden age in the growth of e-commerce. Naysayers thought that surely Amazon’s investments were going to crush margins, but what they didn’t realise is that growing at 60%, Amazon’s 3P business is starting to drive substantial margin to the business.
Before we dig into that part of the business, here’s a summary of how Amazon did vs. Wall St. and their own guidance as per our Q1 results tracker: (click to enlarge):
Another way we like to look at the results is this quadrant view:
If you think about Q1 e-commerce growing at about 18%, 34% overall growth is 2X e-commerce and then if you peel away the media part of the business (growing in-line with e-commerce) and look at EGM (Electronics and General Merchandise) growing at 43%, then you are getting to 2.5X e-commerce growth rates. At Amazon’s scale, that’s just amazing.
The power of 3P
Speaking of Amazing, 3P grew at 61% y/y – that’s 3.5X e-commerce. First party units are growing at 42%. This is our favourite chart from the Q – it plots the Third party growth over time compared to first party (red line) and the green line is total unit growth.
At these growth rates and with 70-80% gross margins, 3P is starting to help Amazon materially contribute to offsetting Amazon’s many areas of investment. In fact, Gross Margins were their best in three years – largely driven by 3P.
Other highlights from the Q
Here are some of the other highlights from the Q, that I thought sellers would find of interest:
- EGM hit a high-mark of 60% vs. Media at 34% – well on it’s way to a 75/25 split. Internationally, EGM is at 56%
- From a geography standpoint, Revenue was 56% domestic, 44% non-domestic
- Amazon reported an amazing 173m active buyer accounts – compared to 161m from Q4 – a big sequential bump in new customers
- Amazon has announced 13 fulfilment centres (FCs) already in 2012!
- Paid units grew at 49%
- Amazon was conservative (as they were in Q4) in their Q2 guidance – forecasting 20-34% y/y growth (27% at the mid-point) – after a 34% growth Q, this feels like a bit of sandbagging.
That’s it for our first take on the results. We’re doing some work on backing into the 3P GMV based on some new information we’ll share as we have time to dig into that and varify some datapoints.
SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor, where I am CEO.