As the bellwether for e-commerce around the world, we keep a close watch on Amazon and its latest developments. Here’s the latest Amazon news from around the globe. Amazon Q1 online retail earnings grew 31% over 2015, exceeding $20 billion and delighting analysts and investors.
In its first full year of operations, Amazon’s Business marketplace reached more than $1 billion in sales. Amazon Web Services generated $2.6 billion in revenue during the first quarter, representing 64% year-over-year growth. Amazon announced a partnership with Atlas Air Worldwide hoping to gain control of its logistics and shipping and increase profitability as a result.
Amazon is testing its Prime Membership service in the UK for a monthly fee of £7.99 ($11.51). As it expands same-day delivery in 27 US cities, the company is also working to ensure racial equality in its service areas. Amazon is teaming up with luxury clothing merchant Moda Operandi to offer high-end designer label clothing on its eCommerce marketplace. Amazon Fresh and Tyson Foods are creating a food delivery service to compete with Blue Apron which delivers more than 8 million meals monthly to its subscribers. Amazon will sell more than $8.7 billion of groceries online in 2016 but according to Cowan & Company, that is only one percent of the total grocery market of $795 billion and 25% of the online grocery marketplace. It seems as if no industry is immune to disruption by Amazon.
Amazon earnings reveal the continued strength of its e-commerce marketplace
Amazon’s Q1 earnings report was one of the company’s strongest with solid growth in its marketplace sales around the world.
Revenue generated from Amazon’s global online retail sales grew 31% year-over-year (YoY) to just over $20 billion in Q1 2016. This is up from the previous quarter’s 25% YoY growth, which totaled $25 billion in sales thanks to the holiday season.
For comparison, the retail sector at-large (online and offline) is averaging 1.75% YoY revenue growth as of last month, according to the US Census Bureau.
Merchandise accounted for 77% of Amazon’s total revenue in Q1, up from 73% during the same period last year. This proves that the company still heavily relies on retail to drive its increasingly diverse business.
Amazon’s strong growth in marketplace sales is likely being driven by its reputation to deliver reliable, speedy shipping. To keep its shipping standards high, the e-commerce giant has been heavily investing in building up its own delivery logistics division over the past year. Via businessinsider.com
Amazon’s business marketplace hits $1 billion in salesAmazon.com Inc’s business marketplace, which connects businesses with suppliers, has generated $1 billion in sales in its first year, making it a significant player in a fragmented industry worth more than $8.2 trillion in the United States.
Amazon Business offers U.S. businesses exclusive pricing and discounts for buying in bulk, free two-day shipping for orders of more than $49, tax exemption and the option to get products delivered with an Amazon guarantee. “We are continuing to grow at a rate of 20 percent month-on-month, and that highlights … how strong the need is in this segment,” Amazon Vice President Prentis Wilson told Reuters on Tuesday.
The business marketplace, which Amazon has described as one of its important areas for growth, extends its role as a middleman for third-party vendors, which account for more than 40 percent of the company’s sales. Via reuters.com
Amazon Web Services is approaching a $10 billion-a-year business
Amazon Web Services, the company’s cloud computing arm, continues to grow rapidly and is the company’s most profitable segment. Amazon said today that AWS generated $2.6 billion in revenue during the first quarter, representing 64 percent year-over-year growth. That’s a slight deceleration from 69 percent growth during the fourth quarter and roughly in line with Wall Street’s expectations.
Over the past four quarters, AWS generated $8.9 billion in revenue for Amazon. That trailing-twelve-months figure is likely to pass $10 billion sometime this year.
AWS also continues to be a profit bright spot for Amazon. The segment’s operating income, after stock-based compensation, reached $604 million during the first quarter, up from $195 million during the year-ago quarter. That was better than the company’s North America commerce segment ($588 million operating income) or international ($121 million operating loss). Via recode.net
Here’s What Amazon Stands to Gain by Building Out Its Own Delivery Network
As Amazon.com (AMZN) takes more significant steps to build out its own transportation and logistics capabilities, the dividends could well be significant, analysts say.
On Thursday, the e-commerce giant announced that it had partnered with Atlas Air Worldwide (AAWW – Get Report) to support its deliveries to customers. The long-term commercial agreements will include the operation of 20 converted freighters by Atlas for Amazon for 10 years. Operations will start in the second quarter and are expected to be ramped up by 2018. Shares of Amazon were up 0.86% on Monday to $647.75.
“Shipping is one of the most burdensome costs for retailers like Amazon,” said Frederick Moran, director of research at Burke & Quick Partners, via phone Monday, adding that Amazon handling shipping directly could be a smart, long-term way to grow profitability. Via thestreet.com
Amazon to launch monthly Prime membership subscription
Amazon customers in the UK will soon be able to pay for their Prime subscription on a monthly basis – in a new move that brings the online giant closer to rivals Netflix and Now TV. The monthly Amazon Prime programme will allow users to pay £7.99 a month for their subscription – instead of a one-off upfront payment of £79 ($113.84) a year.
The new scheme, which is currently being ‘tested’ in the UK, before being rolled out in Britain, can be cancelled at any time and offers members the very same benefits as a £79 member – including access to Amazon’s plethora of TV and music services as well as unlimited one-day/hour delivery.
The monthly payments will offer an alternative for Amazon.co.uk customers that want to join the Prime service but have been put off by the annual fee and want the flexibility of being able to cancel. Via mirror.co.uk
Amazon working to address racial disparity in same-day delivery service
Amazon has pledged to expand its same-day service to underserved people in the 27 cities in which it currently operates, and not to launch the service anywhere else without being able to cover every zip code, according to a letter obtained by Bloomberg reports. The move follows a Bloomberg investigation in April that found the company’s same-day delivery service was biased in favor of white customers in some regions; for example, the report found that black residents in Atlanta, Chicago, Dallas, and Washington were “about half as likely” to be eligible for same-day delivery as white residents.
Amazon is working to expand its delivery footprint, which will rectify the disparity in cities that are not fully covered. “Very shortly, we will be expanding Prime Same Day service to every zip code of the 27 cities where Prime Same Day delivery is currently launched,” the company said in a statement given to Bloomberg by the Congressional Black Caucus. “We will further not launch the service in any new regions, until we are able to secure a carrier for every zip code.” Amazon says it is “still figuring out the details,” but that complete coverage should be achieved “shortly.”
Additionally, The Verge obtained a letter from Amazon sent to Representative Bobby Rush (D-IL), in response to an inquiry he made regarding Bloomberg’s original report. In the letter, dated April 29th, Amazon VP Brian Huseman stated that the company is “actively working to enable service to Southside Chicago,” and explained the method behind how it selects same-day delivery markets. Those factors include how far away fulfillment centers are, the number of Prime members in an area, the company’s estimation of customer demand, and whether its partners can deliver goods until 9PM every day. A person familiar with the matter tells The Verge that Amazon is expanding its delivery capabilities and that it is working to fill gaps in its existing markets. Via theverge.com
Amazon’s Luxury Fashion Partner Moda Operandi
Once known as the “fast” and “cheap” option for online goods, it seems Amazon is now looking to add “couture” to the list of descriptors of the seemingly endless menu of products and services it offers.
According to Bloomberg, Amazon has recently announced that it is teaming up with luxury clothing merchant Moda Operandi to create a “seamless shopping experience” that will offer high-end designer label garments on its eCommerce marketplace. The partnership, as Bloomberg notes, could help Amazon up its apparel — an area of retail where it has struggled — and push its payments operation into the brick-and-mortar side. For Moda Operandi, a startup that has raised more than $130 million in the six years since it was founded, a partnership with a global eCommerce giant like Amazon would allow it to connect its physical stores with online operations on a global scale. No small feat.
How would it work? Online shoppers would start their experience at Moda’s Web store and finish at its New York or London emporiums. Shoppers can log in on Moda’s website with their Amazon ID and place items in their cart. Powered by Amazon’s connected smartphone app and utilizing beacon technology, sales associates at the Moda store will be notified when a shopper has arrived to try on clothes selected online. They can also see all of the items a customer may have browsed or liked and help guide them to other in-store purchases. When the customer is ready to check out, they can seamlessly pay for their purchase using their connected Amazon account and stored credit card info. Via pymnts.com
Amazon May Be Latest Tech Company to Get Into the Meal Kits Craze
Amazon may be the latest tech company to try to cash in on the meal kit frenzy. According to Business Insider, the e-commerce giant is partnering with Tyson Foods to create a meal kit service through Amazon Fresh, its grocery delivery arm.
Meal kits are the latest craze for technology and media companies. Blue Apron, Plated, Chef’d, Home Chef, Munchery, HelloFresh, and many others all offer the ability to order recipes and ingredients to your door weekly. Even The New York Times, in partnership with Chef’d, is launching its own branded meal kit service.
The apparent leader in the space, Blue Apron, now ships eight million meals a month through its subscription service. According to Tyson Foods TSN 1.47% CEO Donald Smith, Amazon’s AMZN 0.82% meal kits will be called Tyson Taste Makers, and will be using Amazon Fresh to source ingredients and deliver these to consumers’ doorsteps. Via fortune.com
Chart: Amazon’s Role in the U.S. Grocery Business
Amazon is reportedly partnering up with Tyson Foods to add ready-to-cook recipe delivery to its grocery delivery service Amazon Fresh. Meal kits are an upcoming trend in the online grocery market and Amazon’s entry is another sign of the company’s growing ambitions in the field of food and beverage delivery.
According to estimates by investment firm Cowen & Company, Amazon will ship groceries worth $8.7 billion this year. While that may sound like a lot, it is actually just a tiny fraction of the U.S. grocery market. Given an estimated market volume of $795 billion, Amazon’s market share amounts to little more than one percent, even though the online retailer captures more than 25 percent of the online grocery market.
Cowen & Co. expect Amazon to increase its grocery sales significantly over the next five years, but its market share is predicted to remain in the low single digits. Via statista.com
What’s ahead for Walmart?
Tomorrow, we’ll feature an update on Walmart, its e-commerce progress and online shopping strategies. The company is working hard on its omni-channel customer service and we’ll get you up to date on the latest developments with this global retail leader.