Sales growth slowed, but Amazon still added $24 billion to the top line over and above last year’s stellar increases. Net income rose by 48%. These are fantastic results and the disappointment from some quarters is largely a consequence of Wall Street’s inability to understand that online growth isn’t going to keep growing at an accelerated pace. Against this positive set of numbers, it is clear Amazon is dong a lot of things right. The biggest threat is something completely outside of its control: government antitrust investigations and policy shifts.

Pandemic infused growth will revert to the mean. But more interesting is, did it match with the overall retail slowdown? If it did not, the takeaway is Amazon lost some ground to Target, Walmart and others.

When Amazon’s results are looked in the context of its direct competition and overall retail, more meaningful conclusions could be drawn.

Last year’s surge was due to the pandemic. Amazon — and many other retailers — realized this was a spike and not permanent. The good news is that people who had learned to use and enjoy the convenience that Amazon and other retailers offered during the pandemic will continue to shop this way, even if not at the same frequency. The result is better sales than pre-pandemic numbers. For now, forecasting the numbers needs to be realistic and not based on mid-pandemic numbers.

Interesting question, and I’m not sure my take will be popular, just personal. The reason my spend at Amazon has gone down is it is no longer the first place I look, unless I’m in a hurry. And that is because I really, really don’t like the way the company has treated its workers. I don’t think I’m the only one who feels that way. I mean, I never loved the amount of air it ships and excessive amounts of cardboard, but until the pandemic, it just didn’t occur to me how problematic its workforce treatment is. Shared PTO during a pandemic? Seriously? Ice scarves for warehouse workers when the temperature outside is over 100? I have no words. Jeff Bezos riding “that thing” to the edge of space instead of using the money to help the human condition on earth in some manner shape or form? The height of self-indulgence. These things matter. So, I see the biggest challenge is actually building back the brand. It matters less than the fact that its previous… Read more »

I had a district manager once who told me, “don’t run it up, you have to beat those numbers next year!” Funny. But that’s what happened here. Amazon is like a pop star in that we just can’t wait for them to fail. Of course the numbers were funky! Remember what happened last year? True test for all of retail will be the scores in ’22.

Slower growth from Amazon in a world emerging from the pandemic has to be some of the least surprising news ever. They had solid growth and a record Prime Day. Third party sales are up. The migration to ecomm continues. Alibaba is lurking nearby. Walmart is selling its platform tech. When Amazon has difficulty comping on Prime Day or when third party sales slip, we’ll know they are having real challenges.

The fact is that overall, Amazon is still continuing to experience growth. It’s unrealistic to expect that sales would be sustained at the levels they were during the height of the pandemic. However, the fact that third party sellers are such a fundamental part of its continued growth is a red flag considering how many other retailers are ramping up marketplace models. Additionally, more and more retailers are increasing the speed at which shoppers can get product in their hands much faster, further heightening the competition between them and Amazon’s core differentiator.

Unfortunately, unless some of these newer surges get under control (I am in Missouri, so I understand we have more new cases than most), I think that Amazon is going to have another holiday season where they dominate sales as people will be at least slightly more hesitant to go out and about. Competitive advantages will continue to be seen through their logistics and AWS as a revenue source.

It’s no surprise that Amazon sales growth is softening against huge 2020 numbers, so the comparison to 2019 is more valid. Amazon and other online retailers will continue to gain share at a faster rate, especially if the pandemic led to some long-term changes in shopping behavior. I’m not sure we have the answers to those questions yet, but in the meantime Amazon would be smart to accelerate building out its physical-store footprint too.

It’s going to get interesting as Walmart’s marketplace and Alibaba’s 3 day ship to anywhere in the world begin to take hold. Amazon has true competition on the same playing field, perhaps for the first time in their history.

The biggest challenge is that expectations are based upon predictions. For expectations to be accurate predictions need to be accurate. During the pandemic predictions have not been accurate and will not be accurate until we return to some sort of normalcy. As a result, a 27% increase in sales should be viewed as excellent news.

Will the Delta variant continue its dominance and spread? Will another variant become dominant and spread? Will customers stay home again? Will customers want to be out and about shopping? Will customers want to continue using Amazon? Will customers be drawn to other vendors? In light of this uncertainty will investors decide to hold Amazon’s future sales to their prediction or will they be pleased with 27% growth?

Yes, growth slowed, but let’s be realistic — Amazon had a blowout 2020 thanks to the shopping conditions we all had to endure during the height of the pandemic. Given the big numbers Amazon generates, that’s a tough act to follow, even with Prime Day included in Q2. These numbers still represent a success for Amazon. And with their logistics strength, it’s safe to say they still have growth ahead of them even if they will meet more and more challenges from competitors and perhaps more importantly, from government regulators.

It’s always a challenge for large companies to meet successful past quarters. In many cases the growth is not always sustainable. In the case of Amazon, their retail marketplace is becoming even less significant as Amazon becomes an even larger conglomerate. The retail organization also faces the possibility of real saturation — at least it’s North America business, the bulk of its operations. Most people who would purchase from and use Amazon are already doing it. So the real question is where is the growth coming from? What kind of changes can be substantive for a $386B company with over $21B income? They would need $100B in annual growth to budge their sales even 27% like the 2nd quarter. The only answers can be found in truly revolutionary market entries. Alternatives might include real competition (or buyouts) against JD.com or Alibaba — if they want to stay in the same market. Going after entire industries and the industry leaders are the only other options for something substantive. Efforts like going after FedEx and DHL –… Read more »