EP321 - Amazon Q3 2024 Earnings Recap

11/05/24 • 47 min

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The Jason & Scot Show - E-Commerce And Retail News

In today’s episode of the Jason & Scot Show, Jason and Scot dive into the latest developments shaping retail, tech, and consumer trends heading into the 2024 holiday season. Here’s a breakdown of the topics covered in this jam-packed discussion:

🎉 Holiday Season Sentiment & Retailer Anxiety

• With the holiday season shorter than usual due to a late Thanksgiving, retailers face the challenge of fewer shopping days. Consumer behavior trends indicate a shift toward essential purchases over non-essentials, creating mixed expectations for holiday spending.

• The impact of the election is expected to influence consumer sentiment, media spending, and holiday promotions, with Amazon and Walmart predicted to perform above market averages.

📈 Amazon Q3 Earnings Highlights

• Retail & GMV: Amazon’s retail revenue surged by 7.2%, with U.S. gross merchandise volume (GMV) rising 9.9%—nearly three times the industry average.

• Efficiency Improvements: Amazon’s focus on fulfillment efficiency under CEO Andy Jassy is paying off. The company’s same-day delivery options and regionalized inventory system have led to a 25% improvement in fulfillment cost efficiency.

• Growth in Essentials: With increased demand for everyday essentials, Amazon is capturing market share from traditional pharmacies, offering same-day delivery for prescriptions in select cities.

🏢 Amazon’s New Store Concepts

• Whole Foods & Amazon Grocery: A new Amazon grocery concept opened in Chicago, catering to convenience items like packaged snacks and sugary drinks, which contrasts with Whole Foods’ health-conscious inventory.

💸 Amazon’s Profit Engines: AWS & Advertising

• AWS: With a 19% increase in AWS revenue, Amazon is now operating at a 38% margin. Demand for AI-powered compute continues to push AWS growth, even as it faces GPU supply constraints.

• Advertising: Amazon’s advertising revenue reached $14.3 billion, growing 19% year-over-year. With a nearly 70% estimated gross margin, advertising may soon outpace AWS in profitability.

🛒 Rise of AI-Powered Search & Perplexity’s Native Checkout

• Perplexity’s Surge: Scot shares his switch from Google to Perplexity as his primary search engine, noting the emerging competition from OpenAI’s ChatGPT search. Perplexity now includes shopping links, allowing users to check out directly through Amazon, hinting at a new era of AI-driven shopping.

• Impact on Retailers: Retailers need to rethink SEO strategies as search shifts toward AI-powered “answer engines” that may fundamentally change how products are discovered and purchased online.

📡 What’s Next for Alexa?

• Amazon’s next-gen Alexa, powered by large language models (LLMs), faces delays into 2025. Scalability and usability challenges highlight Amazon’s shifting internal dynamics and potential headcount reductions in its Alexa division.

🔍 Is Google Search Under Threat?

• Perplexity’s and OpenAI’s expansion into search could spell trouble for Google. With monetization still in the early stages for these answer engines, the retail industry is watching closely to see how they’ll shape online shopping behavior.

⭐️ Tune In, Subscribe, and Leave a Review!

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Episode 321 of the Jason & Scot show was recorded on Monday, November 4th, 2024.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason: [0:23] Welcome to the Jason and Scott Show. This is episode 321 being recorded on Monday, November 4th, 2024. I'm your host, Jason Retail Geek Goldberg. And as usual, I'm here with your co-host, Scott Wingo.

Scot: [0:38] Hey, Jason, and welcome back, Jason and Scott Show listeners. Well, Jason, you've been out there traveling more than I have. What are retailers saying about the holiday? Are they lots of excitement? Are they more worried about the election and they'll worry about the holiday? what's going on out in the retail end.

Jason: [0:54] Yeah i feel like the the like webster word of the year is going to be anxiety obvi...

EP321 - Amazon Q3 2024 Earnings Recap

🎉 Holiday Season Sentiment & Retailer Anxiety

• The impact of the election is expected to influence consumer sentiment, media spending, and holiday promotions, with Amazon and Walmart predicted to perform above market averages.

📈 Amazon Q3 Earnings Highlights

• Retail & GMV: Amazon’s retail revenue surged by 7.2%, with U.S. gross merchandise volume (GMV) rising 9.9%—nearly three times the industry average.

• Growth in Essentials: With increased demand for everyday essentials, Amazon is capturing market share from traditional pharmacies, offering same-day delivery for prescriptions in select cities.

🏢 Amazon’s New Store Concepts

💸 Amazon’s Profit Engines: AWS & Advertising

• AWS: With a 19% increase in AWS revenue, Amazon is now operating at a 38% margin. Demand for AI-powered compute continues to push AWS growth, even as it faces GPU supply constraints.

• Advertising: Amazon’s advertising revenue reached $14.3 billion, growing 19% year-over-year. With a nearly 70% estimated gross margin, advertising may soon outpace AWS in profitability.

🛒 Rise of AI-Powered Search & Perplexity’s Native Checkout

📡 What’s Next for Alexa?

🔍 Is Google Search Under Threat?

⭐️ Tune In, Subscribe, and Leave a Review!

If you enjoyed the episode, help us reach more listeners by leaving a five-star review on Apple Podcasts. Thanks for tuning in!

Episode 321 of the Jason & Scot show was recorded on Monday, November 4th, 2024.

http://jasonandscot.com

Transcript

Jason: [0:54] Yeah i feel like the the like webster word of the year is going to be anxiety obvi...

Previous Episode

EP320 - News, First Half Recap, Early Holiday Preview

http://jasonandscot.com

0:23 Welcome Back After Hiatus 2:51 Upcoming Events in Retail 7:28 GroceryShop 16:02 Retail Growth Trends 21:28 Concerns for Holiday 2024 30:27 The De Minimis Provision 40:27 TikTok's Impact on E-commerce

In this episode of The Jason and Scot Show, we discuss the current state of retail and e-commerce.

We analyze macroeconomic factors impacting the retail landscape, noting a 3.4% growth in core retail and a maturation of e-commerce, dominated by giants like Amazon and Walmart. We address consumer sentiment heading into the holiday season and the potential influences of the upcoming election and interest rate changes.

The episode also covers the role of AI in enhancing personalization experiences, challenges faced by dollar stores, and supply chain issues. We conclude with insights into Amazon’s recent earnings and their strategies to engage younger consumers through TikTok Shops.

Download the complete 54 page deck of all my insights from the US Dept of Commerce Retail Data for the first half of 2024 here https://rgeek.co/retail2024

Transcript [0:23] Welcome Back After Hiatus Jason [0:23]Welcome to the Json and Scott show this is episode 320 being recorded on Monday september 16th 2024 I'm your host Jason retail gee Goldberg and as usual I'm here with your co-host Scott Wingo. Scot [0:38]Hey Jason and welcome back after a very long time, Jason and Scott show listeners Jason our last show was an early May so it's been about a little over a 4-month hiatus and when people ask me I always blame you do you blame me. Jason [0:57]I do blame you and I'm bitter because in my mind. Nobody's really complaining to you but like I I've gone called out on stage by like I've I've been heckled by people that are like what are you going to do a new show. Scot [1:15]It's part of our it's it's a Nintendo like strategy where you you dribble you know if you could really constrain Supply scarcity that drives demand so yeah. Jason [1:25]Yeah it it we are we are playing 3 dimensional chess in a world of checkered players. Scot [1:31]Exactly the the real reason is as Chief digital Innovation retail and payments and grocery officer your title's gotten bigger and your your more famous your allies on a plane I can never record because I'm like how about now he's like Paris how about now Australia how about now India so you've been flying all over the world. Jason [1:52]I sadly I have been it does feel like travel is back there there have been more International trips this year than any year before coid so I I can I can only partially deny that accusation. Scot [2:08]Cool well we're glad that we have you here for for an hour give us an update what are you any uh show you know what's going on out in the world of retail as you've been expanding the globe for the Json and Scott show. Jason [2:20]Yeah it's been another Super interesting year for retail we'll we'll certainly get into some of what we think are the key topics that have been planned out this year but I have attended a bunch of events I I can't even remember which ones where since this this last show visited a bunch of customers out in the field which is always great learning new things from them [2:51] Upcoming Events in Retail Jason [2:40]but the upcoming show is in early October is grocery shopping in Las Vegas so I'll be moderating a panel on. AI enabling Next Generation personalization, at at that show which I always look forward to to grocery shop and then a week later they're they're shop talk is moving their show their other stuff to Chicago so they're going to have their first, fall shop talk that will be in my backyard in Chicago so I'll be curious to see how if the world wants another another iteration of shop talk every year. Scot [3:18]Yeah give us the behind-the-scenes did you like throw down the gauntlet and said shop talk must move to Chicago or I'm not going to attend or and run all the speaking stuff. Jason [3:28]I basically did that with everything I told every client that they had come to Chicago I told shop talk and I told you you had to come here to record the podcast and yeah you'll note we haven't had a lot of podcasts and you know I still have the same 3 customers here I've always had. Scot [3:44]But you got to show them to me for at least that's a 1 w. Jason [3:46]I did but they really just added a show they're just looking for more Revenue so like it seems like it's probably not. Not just me but I feel like your LinkedIn feed has been more active than me and mostly with ...

Next Episode

EP322 - 2024 Holiday Recap

Episode Summary:

In today’s episode of the Jason & Scot Show, Jason and Scot recap the 2024 holiday season, and give a preview of the upcoming NRF Big Show.

The week of January 20th, we'll be publishing our annual predictions show.

If you enjoyed the episode, help us reach more listeners by leaving a five-star review on Apple Podcasts. Thanks for tuning in!

Episode 322 of the Jason & Scot show was recorded on Wednesday, January 8th, 2025.

http://jasonandscot.com

Transcript Jason [0:23]Welcome to the Jason and Scott show this is episode number 322. Being recorded on Wednesday January 8th I'm your host Jason retail geek Goldberg and as usual I'm here with your co-host Scott Wingo. Scot [0:38]Hey Jason and welcome back Json is Scott showed listeners happy New Year Jason. Jason [0:45]A happy New Year and happy holidays Scott it's it's been a while it's been it's fun to catch up. Scot [0:50]Yeah you're kind of crummy when do you start giving people a hard time for saying Happy New Year I I was kind of a little worried because I was thinking I bet Jason draws the line at third or fourth of January and here we are on the 8th so I feel like. Jason [1:05]I accept all all well wishes I'm totally merry Christmas happy holidays as long as you want any of those variations are totally acceptable despite the fact that I'm nominally Jewish. And I'm New Year's at least through January my lights are still up out front. Scot [1:21]Okay good I'll I'll try to for the Valentine's show I'll make sure I don't say it that though I'll stop from there forward. Jason [1:29]If it helps people not judge me I think my Amazon smart plug is broken so I think the holiday lights might not be on. But they're still out there it's too cold to go out and get them is the problem. Scot [1:41]Yeah yeah you and I both went warm places for the holidays so that was good because I think we're both facing a cold spell here and I think actually here in North Carolina we may get snow whereas in Chicago you're not going to isn't that weird. Jason [1:56]That that is super weird even if we're both getting snow I'd be a lot more worried for you than me because I feel like we're we're a lot more used to it but yeah it's even weirder that like it's not not snowing here and you guys are going to get get dumped on. Scot [2:11]Yeah yeah we're just going to shut down and hopefully we don't lose power, the so it's been a while since we laid down a pod there's a lot we could talk about any any trip reports you you've been super busy you've done some vacationing but you grocery shopped before the break and then we definitely want to talk a little bit about holiday to kind of go through some of the tea leaves that are starting to come out on how things happened let's start let's start with a trip report anything interesting there. Jason [2:38]Yeah so at least anyone worry I have been traveling a lot I just got a note from my my favorite vendor United that they've invited me to their secret. Highest status program for for another year and this year I'm going to cross 2 million miles with United so um. Yeah I feel like that I had mixed feelings about that like it's a a cool accomplishment slash it kind of signifies that I have a sad life. Scot [3:05]And it's like congratulations all you do is fly would you like to fly some more. Jason [3:10]Yes and the general answer is no um so I did do a lot of traveling last year there were a bunch of trips running right up to holiday but, but a lot of them were sort of Private Client gigs more so than, industry events and I've been on 2 weeks of vacation so I frankly can't remember where I was right before those but the Big Show of course that I don't think we talked a lot about was was grocery shop which, isn't you know focused on the food restaurant and grocery industry in October in Las Vegas and that show continues to get. Bigger and better longtime listeners of the show will know kind of I talk a lot about how. Every industry is getting wildly disrupted by digital just not all at the same pace so some of the you know first categories to get disrupted. Digital where things like like Borders bookstore and Blockbuster video and then Circuit City and Toys R Us and the gap. Jason [4:08]And that at the moment it's the Auto industry in the grocery industry that are getting most disrupted by digital so I feel like grocery shops are particularly interesting show because, in many ways that's where all the, the rapid Evolution and action is in the in the digital space so it was a a good vibrant show and. 1 of the things I'll I'll give props to the show o...