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Three Takeaways from Amazon Earnings for Online Sellers

Amazon announced its fourth-quarter and full-year performance last week, and there was a lot to digest. EcommerceBytescovered the highlights of Amazon earnings from the seller’s point of view.

While there’s a lot of buzz and conjecture about Amazon getting into other businesses that can be distracting, here are three takeaways from other publications that are relevant to online merchants.

1) Amazon’s Net Shipping Costs Topped $5 Billion in 2015 
Geekwire zeroed in on Amazon’s shipping costs, reporting that its net shipping costs topped $5 billion for first time, which was fueling the push to build out its own delivery network.

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“In the fourth quarter, despite bringing in an all-time high of $2.33 billion in shipping revenue (fees collected from customers) Amazon’s gross shipping costs (the total amount paid to UPS, FedEx and others) also reached a new high of $4.17 billion.”

“Amazon was also able to keep one important measure of shipping costs under control: Shipping revenue in the fourth quarter covered about 55.8 percent of shipping costs, the same ratio as in the 2014 holiday shopping season, and significantly better than the low of 36 percent reported by the company five years ago.”

EcommerceBytes’ take: Shipping costs are top of mind for all online sellers, including those on Amazon. Merchants would do well to be as disciplined as Amazon when it comes to finding ways to cut costs.

Read more on Geekwire.

2) Amazon’s Future Growth Will Happen Outside the US 
Amazon is well established and growing in the US, but it has more geographies to capture, and TechFlash says Amazon’s future growth will happen outside the US.

The publication points to the fast-growing number of Amazon Prime memberships outside the US as well as products and services expanding internationally, such as Prime Now. It also noted the fact that Amazon’s international segment performed better than the previous quarter, and pointed to Amazon’s growth in India.

EcommerceBytes’ take: Online merchants will have to weigh the opportunity of international selling versus the costs and risks involved – and whether or not to participate in international FBA is another factor in strategic decision-making.

Read more on TechFlash.

3) Amazon Remains Focused on Customers 
RetailCustomerExperience.com said Amazon’s focus remains on the customer in its coverage of the company’s post-earnings call in a piece titled, “Amazon: We’re focused on boosting customer satisfaction, customer experience.”

“While Amazon didn’t hit analysts’ expectations with its Q4 earnings, it remains steadfast and on target when it comes to providing exceptional customer service and creating a better-than-ever retail customer experience,” the publication wrote. “That’s the message Amazon leaders drove home in between providing insight on income, revenue, profit and operating costs across its expanding portfolio of businesses.”

It also quoted Amazon CFO: “We have a lead in this space (ecommerce) and we don’t take that for granted and want to serve customers better each year.”

EcommerceBytes’ take: Sellers are facing new performance metrics that Amazon is imposing to ensure its third-party merchants are aligned with its own focus on customer satisfaction, and all signs are pointing to ever more stringent standards for 3P merchants.

Read more on RetailCustomerExperience.com.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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