Despite the ‘weak’ guidance, everyone’s favourite cardboard abuser saw revenue of $59.7B, up 17% YoY, operating income of $4.4B, up from $1.9B in Q1 2018, and net income of $3.6B, up from $1.6B in Q1 2018. Not bad at all. How did Amazon do it? Reduced fulfilment investment (Amazon built 15% less than in 2017), hiring was down 14% YoY (excluding Whole Foods and other acquisitions), fewer leases (Amazon only grew this 10% YoY) and…they just sold a lot of stuff, around $60 billion sales won’t make anyone on Wall Street cry anything but tears of joy. AWS also did extremely well (up 41 per cent to $7.7bn, though this was slower than last year’s 49 per cent growth figures). Q1 is also given a bump as there is little minuses applied - the big one being investments and employee stock compensations, while it is good news now, other quarters may be less golden. Lots of stats came out too:
- Fire TV now has more than 30 million active users.
- Alexa now has +90,000 skills in the Alexa Skills Store
- Amazon Studios greenlit more than 20 new and returning local Prime Original Series. Amazon says the company has already spent $1.7 billion on content in Q1 '19 alone (up 13% YoY).
Unexpectedly, Amazon also announced that it is in the process of overhauling Amazon Prime delivery to offer one-day shipping instead of two for free at a cost of $800 million. Per Amazon’s CFO, Brian Olsavsky, these upgrades are coming sooner rather than later (Q2) and the goal is to make one-day delivery the rule, not the exception, for members of Amazon Prime. A huge blow for competitors as they already struggle to keep up with Amazon in this key area. Shares of Target and Walmart both declined on the news as both announced billions of spend to reach the old level.
(A new section that offers some low-level recommendations on what do with with the major Amazon news this week. )
- Review distribution strategy and partners immediately. Amazon isn’t the only game in town but the moves to be more convenient to the consumer (including Amazon Day which isn’t even fully rolled out yet) will make Amazon a force to be reckoned with and change customer expectations of at least 100 million in the US alone.
- Think about the environmental play. Amazon falls down in this area (although it is making changes). Could/should there be a play for slow delivery for you/your brand?
- Review your ad-spend lay-down. Amazon Prime now looks much more tempting for a lot of people and so Prime Video will see more eyeballs.
- Review your loyalty strategy. Amazon Prime is a great case study in what’s working - what can you borrow?
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