Cross-border e-commerce weather vane performance is released. Amazon Q3 quarterly financial report was released. Compared with the net loss of more than US$2 billion in the second quarter, this time it can be said to turn losses into profits . However, after its announcement, Amazon's stock price plummeted 13%, evaporating a market value of about US$140 billion. Why? Let’s take a closer look at the data details.
Amazon's third-quarter earnings report:
Sales increased 15% year-on-year to US$127.1 billion, and net profit was US$2.872 billion, a year-on-year decrease of 9%. The revenue of
benefited from the holding of Amazon's second Prime membership day, which drove Amazon's revenue to increase by 15% compared with last year, and is much better than the revenue growth of only 7% in the first two quarters (the lowest level in 20 years).
Another thing to know is that Amazon made huge investments in Rivian, a manufacturer of electric car , which was launched at the end of last year. Of its net income of US$2.872 billion in the third quarter, was about US$1.1 billion from non-operating income of Rivian shares ! : From this perspective, the growth of Amazon's main business did not meet the expectations of analyst in the industry.
Amazon e-commerce business segment:
Amazon's overall operating income in the third quarter was US$2.525 billion, North American operating loss was US$412 million, and the international market lost US$2.466 billion.
Here we see the clues of the e-commerce business. Overall, Amazon's sales business has increased, including in North America increased year-on-year compared with last year, but at high cost, it showed negative results. The international business is even worse, not only the year-on-year decrease, but the losses directly surged from US$911 million to US$2.466 billion, resulting in a sharp drop in business revenue by almost half.
The main reason is that the dollar has risen steadily against the euro, which means Amazon has added 900 million US dollars of foreign exchange headwind. Affected by the increase in delivery fees in Europe, losses have surged directly.
Here, the difficulty of that Amazon believes is naturally in Europe . The region's economy is turbulent and the currency is weak, so imports are expensive. In addition, the impact of war, inflation , and fuel costs on Europe are much more severe than that of the United States, and can be reflected in consumer spending and e-commerce platform reports. For example, the UK and Germany are the largest markets second only to the United States, and weak consumer spending, such as luxury goods and home furnishings, will affect Amazon's international business.
Amazon Business Segment:
Amazon AWS business net sales, up 20.5 billion US dollars, an increase of 27% over the same period last year , but it still slowed down compared with analysts' expected growth rate of 32% and 39% last year.
Amazon advertising business still has surprises. Revenue rose 25% year-on-year to $9.5 billion , surpassing analysts' expectations of $9.48 billion.
Amazon's advertising revenue compared with Google advertising revenue failed to meet expectations, and many advertisers were worried that the economic recession had reduced their budgets; compared with Meta, advertising revenue fell for two consecutive quarters, suffering from Apple iOS privacy changes and foreign competitor TK. is unimaginable. Amazon's competition has strengthened against the trend in the recession of its peers' advertising business. How many sellers have contributed to this?
Not only that, Amazon's third-party seller service revenue also reached US$28.6 billion, an increase of 23%, the price has increased significantly, and advertising and service fees have also been charged significantly.
Amazon's expectations:
Amazon expects revenue in the fourth quarter to be between US$140 billion and US$148 billion, an increase of 2% to 8% compared with the same period last year. It is expected that exchange rate fluctuations will have an adverse impact , which is far from analysts' estimated revenue of US$155.1 billion. It is no wonder that the stock market is shocking and negative.
In response to this, Amazon's chief financial officer said that people's budgets are tight, inflation is still high, and energy costs are the most important, and they are ready for a slowdown in the growth period.
Financial report for this quarter We can see that Amazon’s headwind cost is very high, and the meager e-commerce profit is easily eaten by fluctuating costs. So in recent months, Amazon has been actively subtracting : includes layoffs and natural reductions of nearly 100,000 employees, freezing enterprise-level recruitment for retail business; reducing warehouse space, stopping new facilities; stopping some experimental projects, such as testing door-to-door delivery robots; closing telemedicine services, closing its online products...
So when Amazon was doing subtraction, the seller's library was also cut off again.
logistics is one of the reasons why Amazon is extremely high in costs. Amazon adopts throttling and sublease to cancel the expansion plan, and will definitely consider shrinking the seller's library capacity.
Secondly, Amazon reduced nearly 100,000 employees , mostly in the warehousing and distribution field. cooperates with staff to streamline and efficiently operate , and will only cut another knife to ensure the timeliness and efficient operation of FBA.
Now, after the third quarter report is released, it is obvious that Amazon is not so optimistic about the peak season and tends to tighten the budget more reasonably, without opening up the inventory, causing unnecessary waste and costs. In addition, Eagle Bear has also discussed that warehouse rents near Amazon port have skyrocketed, and the storage capacity is difficult to find, and Amazon's profits from sublease are not low. , so the library capacity measures are inevitable.
So for the method of expanding capacity for sellers in peak season:
Some sellers propose to sell small accounts, and you need to pay attention to the associated risks ; some sellers say that has tried to create a new ASIN on the expansion account, and subsequently improve the library capacity ; consults account managers, and opens a case and will also get some clues and unexpectedly obtain the qualification to increase the position and expand the capacity. There are also some summary in the circle: 1. Official channels insist on applying and displaying the most favorable reasons materials, activity reports, sales trends, rankings, etc.; 2. Improve sales ratio, this is the most fundamental approach, because sales impact is the key, find ways to continuously drive sales, and deal with unsold products as early as possible; 3. Rationalize the inventory capacity, Amazon is doing this to sellers, and sellers must also consider rationally allocating product inventory capacity, and determine the bets for hot products in peak seasons as soon as possible; 4. Combined with overseas warehouses, it can be urgent; 5. Accelerate inventory turnover and optimize logistics efficiency. Some sellers have long-term cooperation to accumulate multi-channel logistics, and have multiple parties to open it during the peak season in special periods. You can also select flexible acceleration dedicated service providers in the first or other parts to meet relevant needs.
