On Thursday July 28, 2016 Amazon reported their Q2 2016 earnings. In this blog post, we analyze the earnings with an eye towards implications for online and offline retailers, as well as Amazon sellers. As with Q1, this was another Q where several of Amazon’s growth metrics accelerated. Amazon’s growth flywheel of Prime/FBA/Marketplace is really humming and driving the acceleration.
There was a lot in this quarter for sellers to consider, so let’s dive in:
Amazon Q2 Results dashboard
First, here is the Q2 16 Results Tracker where we look at the most important metrics. Remember that comScore reports desktop growth at 10% and mobile at ~5% for a total of 15% which is what we think of as the ‘e-commerce baseline.’ In other words, if you grow faster than 15%, you are gaining share and if you grow less than 15%, you are losing share. The Department of Commerce (DoC) reported a preliminary Q2 acceleration of 20% for e-commerce.
Amazon Q2 16 Growth Cube
Another way to ‘visualize’ Amazon’s growth is to peel the onion on the category and geographical sides of the business. We do that in what I call the Amazon growth cube.
Highlights for sellers from Q2
- Amazon overall grew 31%, almost 2X the growth rate of e-commerce, quite impressive at their scale.
- EGM was again a standout and grew 34% all-in, 32% in the US and 36% non-domestically.
- Active buyers was a bit of a mystery because Amazon declined to update this metric for the first time ever saying they preferred for investors to focus on other metrics (free cash flow).
- EGM was 80% of Amazon’s business in Q1, a new high water mark.
- Amazon re-iterated that Prime Day was a big success this year.
- Amazon revealed there are now 1900 Alexa skills.
- FBA units shipped is growing faster than the 28% paid unit growth, which is why they have announced ~18 new FCs.
Amazon 1P vs. 3P
This picture shows the trends of Amazon’s 1P and 3P GMV over the last 5 years.
Amazon’s strong 1H 2016
Amazon is off to a very strong start to 2016. Amazon’s forecast for Q3 gave a wide range of 22%-32% y/y growth with 27% at the mid-point. We’ll be watching Q3 closely to see if Amazon can continue to outpace the growth rate of e-commerce as we head into the critical holiday season.
This blog was written by Scot Wingo, Executive Chairman, ChannelAdvisor