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Fri Oct 28 2022 09:22:21

Amazon Q3 Results Were More about an Uncertain 4th Quarter

By: Ina Steiner

Amazon shared its third-quarter financial results on Thursday, but reaction was focused on its belt-tightening amid what it called an uncertain fourth quarter due to macroeconomic challenges.

Net sales (including its non-retail AWS business) increased 15% in the third quarter, year-over-year - or 19% excluding the unfavorable impact of foreign exchange rates.

Amazon's Chief Financial Officer Brian Olsavsky addressed the importance of third-party sellers on Amazon's business:

"Throughout the quarter, our worldwide stores business continued to stay highly focused on our customers and driving inputs that matter most, which helped to accelerate sales growth in the quarter.

"We now offer our widest selection ever, we've taken actions and driven strong recovery of in-stock rates, and we continue to work on improving delivery speeds, all while ensuring our pricing remains sharp for our customers."

"Third-party sellers and the products they offer remain an important strength of our offering for consumers, representing 58% of total paid units sold in Q3, the highest percentage ever. It's up from 56% in Q3 of last year. And we're working with these partners, most of whom are small- and medium-sized businesses, to build an even stronger offering."

Olsavsky revealed that companies that use its AWS cloud services have been looking to control costs due to ongoing macroeconomic uncertainties.

Two headlines summarize some reaction to Amazon's third-quarter results:

Amazon shares plummet after weak holiday salesforecast
"‘This is uncharted waters for a lot of consumers,’ says chief financial officer Brian Olsavsky." (Link to FT.com)

Amazon Returns to Growth but Signals Slowness Ahead
"The e-commerce giant, which also turned a profit in its latest quarter, indicated sales in the holiday period might rise at their lowest level since 2001." (Link to NYTimes.com)

The Chief Financial Officer made note of the war in Ukraine and rising energy and fuel costs, which impacted Europe more than the US.

As consumers look to save, it could benefit online sellers, depending on what they're selling and their sourcing methods and profit margins. One topic left out of the discussion was Covid as we enter the winter months, which has impacted consumer behavior in the past.

Amazon posted the Q3 earnings press release on the Investor Relations section of AboutAmazon.com.

Comments (4) | Permalink

Readers Comments

Amazon Q3 Results Were More about an Uncertain 4th Quarter

by: Chicago48

Mon Oct 31 04:14:35 2022

My beef with AMZ as a seller (and a buyer) is that stupid 2-step verification process. When I'm out and have to use my cell phone to log-into AMZ, it always requires the 2-step verification. Even when I check "keep me signed in" and "don't require on THIS device". There are other ways to authenticate ID. No other site does the 2-step.

Amazon Q3 Results Were More about an Uncertain 4th Quarter

by: Stone Cutter

Mon Oct 31 12:37:34 2022

* It’s about, how people “feel” *

1) As the U.S. is in “full employment”, economics are not that bad. People still have money to spend as noted by the banking industry, so why are consumers holding back?

2) As a seller on Etsy, activity prior to every election period, drops. And this year, this midterm election is VERY CONTENTIOUS. I believe that depending on the results of mid-terms will determine sales growth for this holiday season.

I do not believe that consumer spending is entirely dependent upon personal finances, but rather, HOW PEOPLE FEEL about life moving forward. Politics matter as many believe the U.S. is on the brink of losing its democracy.

Wall Street believes that a Republican held House and Senate will be good for “the greedy”, however, how will the average consumer feel about more political strength for the wealthy.

Time will tell..

Amazon Q3 Results Were More about an Uncertain 4th Quarter

by: Chicago48

Mon Oct 31 15:08:11 2022

@Stone Cutter, re Inflation and recession times. Whatever we're in, people are still spending money and finding ways to cut corners and costs. For example, the ball stadiums are filled with spectators. Tickets are in the $100 range and people find money to go the ball park. They also buy Broadway tix and concert tix, which aint cheap.
Many households have cable + streaming services. Americans are still driving big trucks and SUVs, yet they complain about prices.

Amazon Q3 Results Were More about an Uncertain 4th Quarter

by: Stone Cutter

Mon Oct 31 21:02:00 2022

@Chicago48

I agree. Especially, this past summer, consumers spent a bunch of money on entertainment, post Covid....and yet complain about inflation.

Also, the banking industry recently said that default rates for mortgages, charge cards, and car loans are very low. Consumers continue to pay off their debt, which is great.

My personal observation throughout the years, is that consumers shop later each holiday season due to the ease of “online”. I’m hopeful that this holiday season won’t be as bad as many retailers believe it will be. We just need to get past the midterms.

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