Amazon Q1 2022 earnings - Edge by Ascential responds
San Francisco 2 May 2022: Amazon recorded a net loss of $3.8 billion in its Q1 earnings published at the end of April. In the announcement, CEO Andy Jassy said that Amazon would now be focusing on “improving productivity and cost efficiencies” after a period of breakneck growth as a result of government stay-at-home orders during the pandemic. Amazon reported revenue up 7% year-on-year to $116.4 billion and cautioned on Q2 sales calling out challenges from inflation, the war in Ukraine and supply chain disruption.
Commenting on the earnings announcement, Deren Baker, CEO, Edge by Ascential, said:
“Amazon has had a challenging quarter, however, the challenges that the company is facing are shared throughout the retail sector. Inflationary pressures and rising shipping and logistics costs put pressure on retailers and brands across the board. Despite these challenges, data from Edge by Ascential shows that ecommerce will continue to be the #1 driver of retail growth in the US (2021-2026) and growing by 14% worldwide in 2022.”
On inflation and rising delivery and logistics costs:
“With inflation in the US at 8.5%, the highest in four decades, and rising shipping costs, brands and retailers across the board continue to face pressure to raise prices and cut operational costs.“
“While worldwide economic growth is expected to slow this year, our data forecasts that worldwide ecommerce growth based on gross merchandise value (GMV) will still be 14% in 2022, even after the bumper years of ecommerce growth during the pandemic (up 37% in 2020 and 16% in 2021).
Amazon’s becoming a retail technology platform:
“With the launch of Amazon 'Buy with Prime' for merchants, Amazon is looking to become a major player in the emerging retail-as-a-service market. Over the past few months, Amazon has made significant investments in retail innovations designed to reduce customer friction, such as Just Walk Out Technologies, which they are licensing to third-party retailers.
“Retail-as-a-service is the next big market opportunity for Amazon. With increasing labor and operational costs throughout the retail sector, Amazon is well-positioned to offer its tech and logistics infrastructure to third parties.”
As featured in:
Digital Commerce 360 - 'Amazon posts a $3.8 billion Q1 loss despite a jump in AWS revenue' - read more here
Supply Chain Dive - 'Amazon hit with $6B in costs as it grapples with excess labor, warehouse inefficiencies' - read more here
Commenting on the earnings announcement, Jack O'Leary, Head of Advisory, Edge by Ascential, North America, said:
"Amazon is clearly indicating they are entering a new phase of operating strategy. No longer is the top priority 'chasing physical or staffing capacity.' The business is now focused on driving cost savings and efficiencies into this operating capacity (which is double the size it was pre-2020). Incrementally enhancing the Prime member experience also returns to the strategy forefront, with Amazon management indicating that same-day/one-day delivery coverage and performance is finally back to pre-pandemic levels. This best-in-class combination of delivery speed and wide assortment is what Amazon’s success was built on over the past 25+ years, and ongoing enhancements here will help retain its loyal Prime members.
"Despite some concerns around inflation, the state of the consumer is strong and this bodes well for Amazon. Unemployment is low and hourly wage growth is high, while households have higher savings levels. Additionally, Amazon is a much more diversified retail business in 2022 - it now has stores. These physical shopping assets will prove pivotal to offering the most convenient shopping experience in retail and aiding Amazon grabbing more market share in grocery. Of note, physical store sales grew 16% YoY in this most recent earnings for Amazon.
"“Amazon leadership has famously talked about how quarterly earnings results are “baked in” many quarters in advance due to the company’s future-focused mindset and willingness to invest for the solutions and capacity they will need tomorrow. Edge by Ascential still forecasts the retail business to grow worldwide at 13% annual compound annual growth rate (CAGR) through 2026 (gross merchandise volume). If anything, these most recent results are indicative of a new phase for Amazon post-pandemic, where getting back to its strategic priorities returns to the forefront.”
As featured in:
Adweek - 'What loss? Why Amazon isn't sweating Q1 miss' - read more here
About Edge by Ascential:
Edge by Ascential helps global and local brands to win in digital commerce in a new and complex era of omnichannel retail. Our unique combination of industry-leading data, analytics, market research and expert consulting solutions inform the ecommerce-driven go-to-market strategy, optimization and performance measurement of the world’s largest brands. A subsidiary of Ascential plc, we support our clients to always make the right investment decisions, drive margin growth and achieve the necessary edge to grow. More than 400 global brands depend upon our weekly, daily and real-time data-driven insights. Edge by Ascential has Verified Partner status on Amazon Ads.
Ascential delivers specialist information, analytics and eCommerce optimization platforms to the world's leading consumer brands and their ecosystems. Our world-class businesses improve performance and solve problems for our customers by delivering immediately actionable information combined with visionary longer-term thinking across Digital Commerce, Product Design and Marketing. We also serve customers across Retail & Financial Services. With more than 2,000 employees across five continents, we combine local expertise with a global footprint for clients in over 120 countries. Ascential is listed on the London Stock Exchange.
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