Contrary to the headlines you might have read, the sky did not fall for retailers when Amazon.com announced its Q1 2022 results on April 28. You can be forgiven if you had that impression because headlines filled with hyperbole like “stock plunges” or “demand cools” or “boom is over” will do that to you. If you were a stockholder, you might have felt the impact of a few chunks of sky hitting terra firma, because stocks did drop based on reported slower growth, diminished forecasts, and a $3.8 billion Q1 loss for the giant conglomerate. But if you are an Amazon seller or vendor, there’s actually some good news hidden within the report.
First, let’s look at the big numbers and why they matter. The $3.8 billion loss was the first loss since 2015 which shocked many analysts. Amazon blamed the loss on various factors, including the supply chain, its stake in electric truck manufacturer Rivian, the Ukraine war, and the COVID-19 pandemic. The corporation recorded sales of $116.4 billion in the first quarter of 2021, up only 7% from the previous year compared to the 44 percent increase seen during last year’s Q1.
However, Marketplace Pulse notes that Amazon expected sales to slow. Per their latest report, “From Q1 2016 to Q1 2020, sales on Amazon grew on average 17% year-over-year. If growth happened in equal parts over the past two years, it would have been 18% (instead of 44% and -3%).” While it’s true that the reopening of society due to the lessening effects of the pandemic, combined with inflation, has lowered eCommerce sales across the board, the reality is there’s a lot to feel good about in this report.
Let’s dive in and see why Amazon sellers shouldn’t panic like Chicken Little or Henny Penny yet.
Here’s the good news for sellers in Amazon’s Q1 results
Amazon sellers should look favorably at the results of Q1 2022. Here are four reasons why:
1. Sales grew 7% – Even with several adverse global events in the play, sales continued to grow by 7% (9% excluding foreign exchange). The pandemic “bubble” may be bursting, but shopping online has become more adopted by more people globally than ever before—and Amazon is the number one place to do it outside of China.
2. Amazon fulfillment will be better than before – In Amazon’s press release, CEO Andy Jassy said that “our Consumer business has grown 23% annually over the past two years, with extraordinary growth in 2020 of 39% year-over-year that necessitated doubling the size of our fulfillment network that we’d built over Amazon’s first 25 years—and doing so in just 24 months.” As a result, Amazon sees “encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
3. Prime Day is coming in July – After a June Prime Day in 2021 and an October Prime Day in 2020, the global shopping event is returning to its long-time home month of July in 2022 in more than 20 countries. With money tight for many folks right now, 200+ million Prime members will be ready to shop for bargains. Here’s a handy list of 2022 Prime Day deadlines to know about.
4. The second half of the year will be better – Amazon’s forecasts for Q2 2022 are for 3% to 7% growth compared with Q2 2021. This number is lower than expected, but again, last year was much higher than expected, so it’s most likely it will average out as did the first quarter. In the long view, sellers can expect to rebound in 2022 Q3 with Prime Day and Q4 with the holiday shopping season.
Read more at Amazon, Marketplace Pulse, and Engadget.
eBay offers $10k grants to US small business sellers
eBay’s 2022 Up & Running Grants will offer $10,000 grants to 50 small company sellers in the United States. The program helps small eBay businesses in the United States scale, grow, and prosper online.
Grants are to be used for business requirements such as physical and digital store renovations, new equipment and inventory, technology, recruiting, and training. The new eBay Academy provides recipients with guided online learning resources. Recipients also receive direct training and mentoring from expert sellers and small business growth advocates.
eBay is looking for sellers from a variety of backgrounds who can contribute their unique experiences and inventory to the marketplace while also being dedicated to their communities and the eBay ecosystem.
Applicants must be an existing eBay seller who has had an active listing in the last six months and has a performance rating of “above standard” or “top-rated”; or be a new seller who joined eBay between June 1, 2021, and February 28, 2022.
Small business owners on eBay are urged to apply for Up & Running Grants using the online application. Sellers will be requested to provide information about their small business and how they intend to utilize the award to expand it. The program is an excellent opportunity for new or existing sellers to level up their business for 2022.
Read more at eBay.
Meta’s eCommerce efforts are just meh
Facebook and Instagram Shops’ parent company Meta has been dealing with several stumbling blocks as it tries to boost the social networking platforms’ eCommerce profile. After a 2020 rollout rode the pandemic home shopping boost like most other online marketplaces, a recent pullback has laid bare the challenging reality of what it takes to run a competitive eCommerce business.
According to a Wall Street Journal report, numerous retailers have expressed dissatisfaction with Meta’s eCommerce launch, claiming that it lacks basic features such as the ability to display products in various colors and sizes if they aren’t sold directly through Facebook and Instagram. There have also been limits on where a merchant can ship items and provide speedy delivery.
Other issues dogging meta’s efforts include the departures of key executives, privacy changes at Apple that resulted in significant advertising data loss, and bugs infesting Facebook Ads attribution tech. In April, Facebook was accused by sellers of not sending payment for sales done through its platform. There has also been noticeable tension between Facebook and eBay over eBay using Facebook for customer support.
The upside for sellers in accessing such a massive and activated number of potential buyers through social media channels is tremendous. While some retailers recognize the potential of connecting with customers through Facebook and Instagram’s vast user bases and are willing to ride it out, the Journal article notes that others are finding that setting up Shops is too complicated and buggy to be worth the time and effort. Time will tell if these are just growing pains for Meta or if running successful eCommerce marketplaces is not their sweet spot.
Read more at Wall Street Journal.
Fanatics looks to dominate sports merchandise eCommerce
The sports merchandise and memorabilia company Fanatics has been making a significant push into the eCommerce domination of its category. A recent $1.5 billion funding round has raised the company’s valuation to $27 billion—or approximately 11,739.13 Tom Brady rookie trading cards.
