Here is your midweek jetpack of Amazon seller news, updates, and other useful clicks for your e-commerce business…
Amazon Sales and Profit Analysis for 2022: Top 10 Insights
Jitender Miglani, Senior Forecast Analyst for Forrester, recently shared his notes on Amazon’s 2022 results and top 10 insights.
- Amazon’s total net sales growth rate slowed to 9% year over year.
- Its operating income was nearly slashed in half, reaching only $12 billion.
- Amazon generated a $3 billion income tax benefit.
- Amazon reported a $3 billion net loss in 2022, with a net profit margin of -1%.
Top 10 Insights:
- Service sales are driving growth. Service sales include third-party seller fees, Amazon Web Services sales, and sales from advertising and subscription services. The share of service sales in Amazon’s total net sales increased to 53% in 2022.
- Slower online store sales growth. While online store sales generated $220 billion, its growth rate was at -1% YoY. The share of online store sales in total net sales declined to just 43% in 2022.
- Physical store sales remain a small portion of total net sales, representing only 4%.
- Third-party seller services continue to experience rapid growth. Amazon generated $118 billion in revenue from third-party services in 2022, representing 23% in total net sales. Third-party seller services include commissions, related fulfillment and shipping fees, and other third-party seller services.
- Subscription services grow to $35 billion. These include annual and monthly fees from Amazon Prime memberships, as well as fees from digital, video, audiobook, digital music, e-book, and other non-AWS subscription services.
- Advertising services increase to $38 billion in 2022— almost double the revenue from two years ago. Advertising services include sales of advertising services to sellers, vendors, publishers, authors, and others through programs such as sponsored ads, display, and video advertising.
- “Other” sales still make up less than 1% of total sales. This includes offerings such as licensing and distribution of video content and shipping services, as well as co-branded credit card agreements.
- The United States drives Amazon’s sales growth. The share of the US in total net sales increased to 69% in 2022 — up $93 billion to a total of $356 billion.
- The North American and international segments of the company both had negative operating income in 2022. The North American segment accounts for 62% of total net sales. It continued to grow at a double-digit rate in 2022. The international segment, which mainly comprises retail sales through online stores outside North America, decreased from 27% in 2021 to 23% in 2022. Sales in the international segment fell by 8% year-over-year in 2022, primarily due to changes in foreign currency exchange rates. Both segments had negative operating margins in 2022.
- AWS is Amazon’s fastest growing and most profitable segment — generating $80 billion in revenue in 2022. AWS, which includes sales of computer storage, database, and other services for startups, enterprises, government agencies, and academic institutions, increased its share to 16% in total sales in 2022, with a glossy operating profit margin of 29%.
Read the full analysis from Forrester here.
Here is the Amazon Profits Analysis chart from their post:
Customers increasing satisfaction with Online Retailers such as Amazon and Chewy
According to the newly released American Customer Satisfaction Index’s (ACSI) Retail and Consumer Shipping Study, customer satisfaction with online retailers improved from the previous year by 4%.
Check out this infographic from the ASCI report:
Here are some highlights:
- Chewy made a smashing debut on the ASCI report, scoring first place at 85. Chewy leads not only online retailers but also the Index as a whole.
- Amazon netted a score of 84— an 8% increase after back-to-back years of decline. They placed second overall, just a point behind category leader Chewy.
- Etsy declined by 2%, which is being attributed to challenging acquisitions of Depop and Elo7.
- Ebay retained its score of 76 from the previous year.
- The Online Retailers Category as a whole saw improvements in all aspects of the shopping experience, with quality and reliability of mobile app coming in the top spots, followed by “ease of checkout and payment process”.
The ACSI report was based on interviews of 35,685 randomly chosen customers who were contacted via email between January 2022 and December 2022.
Read the full report here.
The Robots are Growing
Jeff’s Brands’ signed a recent non-binding letter of intent with SuperBuzz, a digital marketing agency, to develop AI-based software for Amazon’s advertising platform. The software, ChatGPT, will leverage natural language processing and machine learning to enable advertisers to communicate with Amazon customers more effectively. This will allow Amazon to offer a more personalized experience to its customers, while also increasing revenue for both Amazon and its advertisers. The letter of intent is non-binding and subject to various conditions, but both parties are excited about the potential of the partnership.
Important Amazon Updates for Yo’ Bad Self
- Starting March 2, 2023, sellers who offer standalone button cell and coin batteries will be required to submit safety and compliance documentation to verify that their packaging and warning labels comply with Reese’s Law. Reese’s Law, which was passed last August, introduces new child safety standards for all products containing button cell and coin batteries manufactured after February 12, 2023. Federal standards for button cell, coin batteries, and products which contain them are expected by August 15, 2023, so the policy may eventually include other products which contain button cell and coin batteries to ensure full compliance with the new law. Read Amazon’s full announcement here.
- Starting April 10, 2023, Amazon is making the listing attribute target_region mandatory when creating product listings for the following products:
- Notebook computer
- Tablet computer
- Cellular phone
If the target_region isn’t set to “Global”, the attribute version_for_country will also be required. Take note that active listings will not be impacted by this change.
This new policy will be implemented to help customers purchase the right products and to reduce returns due to issues with language, mobile network compatibility, or keyboard layout.
View Amazon’s full announcement here.
March 2023 Sales Tax Due Dates
Click here to find your state (or states) to see your March 2023 sales tax due date.
TaxJar also has a very informative blog post on how to handle sales tax and refunds.
TaxJar automates sales tax filings across 11,000 jurisdictions and can ensure full compliance all the time. They have a free 30-day trial period if you are interested.
Learning Opportunities This Week
Here is a weekly roundup of learning resources:
- 10 Best Amazon FBA Alternatives for Sellers by export35.com
- eCommerce KPIs: What Are The Most Critical Analytics to Look at? by My FBA Prep
- Amazon Black Box by Amazon Growth Expert Todd M. Piechowski via LinkedIn
- Amazon FBA Shipping: Everything You Need to Know by FBA Bee
- What Is the Small and Light Program and How Can You Profit from It in 2023 by The Next Amazon Top Seller
- Pricing Errors, FBA Vs Other Sales Channels, and What Size Should Your Amazon Business Be to Fit Your Lifestyle by Silent Sales Machine Radio
Upcoming Seller Events 📍
New segment! Here are a few upcoming industry events that you might be interested in. Get out there and hug each other!
eCommerceFuel Live (March 5-8, 2023) – San Diego, CA
“The most impactful e-commerce event you will ever attend.” This event has an average attendee revenue of $5M and 10+ years of seller experience.
The Prosper Show (March 13-15, 2023) – Las Vegas, NV
A premier educational and networking event for Amazon sellers. The event will provide a platform for sellers to learn the latest industry trends, best practices, and strategies from leading experts in the field.
Retail Fest and Retail Global (March 27-30, 2023) – Gold Coast, Australia
A global conference that brings together online retailers, e-commerce businesses, and service providers to learn, network and collaborate about “all-things-ecommerce.” The event will take place in Gold Coast, Australia, and will feature keynote speeches, breakout sessions, panel discussions, and workshops that cover a wide range of topics.
Sellers Summit (May 23-25, 2023) – Ft. Lauderdale, FL
“The ultimate learning conference for e-commerce brands.”
Seller summit brings together e-commerce entrepreneurs, experts, and service providers to share strategies, tactics, and insights on how to succeed in the online marketplace.
Other Quick Clicks
- Amazon to spend $200 million on safety tech across its transportation network
- Amazon opening more ultrafast delivery sites
- ChatGPT has already written over 200 books, Amazon’s bookstore listing reveals
- “TikTok made me buy it”: These viral products have influenced thousands (and are available on Amazon)
- Amazon makes big telco moves including T-Mobile partnership
- Amazon invests in online grocery as supermarket’s boost in-store tech
Thank you for reading. If you have any questions, comments or violent reactions, let us know below!
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