3 minute read

 

If there ever was a time to reset expectations amidst a tough (digital) retail environment, it was now.

 

But to the contrary, Amazon delivered decent results and sounded an upbeat outlook.

 

Maybe it’s a sign of just how far expectations have declined that GMV growth of 5% Y/Y feels positive, but Amazon’s not seeing an increased need for discounting and inflationary pressures were fairly consistent in 2Q as to what it saw in 1Q. Further, its advertising business remains strong.

 

The digital sales results for Walmart and Target (reporting in a few weeks) will be interesting to watch based on Amazon’s commentary this evening, which largely struck back at the narrative of consumers returning to stores in droves.

Most Interesting Commentary from Management

  • Inflationary pressures remain, but were relatively consistent with what it experienced in 1Q22 (more positive than peers)
  • It's not seeing an increasing need to discount nor does it seem to be feeling pressure Walmart and Target have announced recently (more positive than peers)
  • Advertising strength remains because its low funnel, highly measurable. (more positive than social media peers)
  • No layoffs or signs of that coming (more positive than peers)
  • It continues to see positive spending trends amongst Prime members relative to pre-pandemic spending

Amazon 2Q22 Results Summary

Amazon’s gross merchandise sales held steady compared to the prior two quarters at mid-single digit growth. While partially aided by inflation, the results, including the acceleration in the 3P business were a welcome sign amidst a worsening retail environment.

  • North America (+10% Y/Y) performed better than International (down 12% Y/Y).
  • 3P (+9% Y/Y) continued its outperformance of 1P (down 4% Y/Y)
  • The company guided next quarter to 13-17% Y/Y growth, an 800 basis point acceleration from the June quarter. This includes a benefit from Prime Day occurring in the quarter plus an easier comparison.

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