Amazon forecasts slower growth as it laps last year’s insane online sales gains
Stakeholders in most retail companies would be doing a happy dance after posting second quarter results that showed sales up 27 percent. For Amazon.com, however, the results showed a slowdown from more recent quarters as the easing of social restrictions created by the widespread availability of COVID-19 vaccines led many consumers to take part in more in-store shopping experiences vs. ordering online.
Amazon CFO Brian Olsavsky said that the retail and technology giant’s numbers were down from the mid-30 percent range the company experienced last year in the earlier months of the pandemic, but that it represented a gain over 2019’s results. In short, year-over-year comparisons would likely look less flattering for Amazon this year based on 2020’s pandemic-fueled results.
“We do expect this pattern of difficult year-over-year revenue comps to continue for the next few quarters,” Mr. Olsavsky told analysts yesterday on an earnings call. “As we move forward and start to comp COVID ‘s impact on our revenue growth, we encourage you to also look at the multiyear compounded annual growth rate since the onset of the pandemic to better put this growth in perspective.”
Amazon’s CFO pointed to the importance of the company’s Prime members and third-party sellers to its continuing success. He said that membership continues to increase and members are spending more with the company than non-members. He did comment, however, that even Prime members have pulled back some on spending in light of the opening of the economy.
Third-party sellers remain a critical and growing part of the Amazon retail story. Units sold by marketplace sellers represented 56 percent of the total on the Amazon platform in the second quarter, up from 53 percent year-over-year.
One twist to Amazon’s quarter was the inclusion of Prime Day in the numbers. The sales event, which typically took place in July, was pushed to the fall last year due to the pandemic. In 2021, Amazon moved it up to May. Mr. Olsavsky said that the company would have seen its growth rate in the mid-teens if not for the boost it received from the two-day promotion.
“Prime Day was very successful,” said Mr. Olsavsky. “We passed the record set in last fall’s Prime Day, which was a very different time of year to have Prime Day and start to bump up against early holiday shopping, so we’re really pleased.”
- Amazon.com Announces Second Quarter Results – Amazon.com, Inc.
- Amazon.com, Inc. (AMZN) Q2 2021 Results – Earnings Call Transcript – Seeking Alpha
DISCUSSION QUESTIONS: What do you see as the biggest challenges facing Amazon through the rest of 2021 and into 2022? Where do you see opportunities for further substantive growth?