EP321 - Amazon Q3 2024 Earnings Recap
In today’s episode of the Jason & Scot Show, Jason and Scot dive into the latest developments shaping retail, tech, and consumer trends heading into the 2024 holiday season. Here’s a breakdown of the topics covered in this jam-packed discussion:
🎉 Holiday Season Sentiment & Retailer Anxiety
• With the holiday season shorter than usual due to a late Thanksgiving, retailers face the challenge of fewer shopping days. Consumer behavior trends indicate a shift toward essential purchases over non-essentials, creating mixed expectations for holiday spending.
• The impact of the election is expected to influence consumer sentiment, media spending, and holiday promotions, with Amazon and Walmart predicted to perform above market averages.
📈 Amazon Q3 Earnings Highlights
• Retail & GMV: Amazon’s retail revenue surged by 7.2%, with U.S. gross merchandise volume (GMV) rising 9.9%—nearly three times the industry average.
• Efficiency Improvements: Amazon’s focus on fulfillment efficiency under CEO Andy Jassy is paying off. The company’s same-day delivery options and regionalized inventory system have led to a 25% improvement in fulfillment cost efficiency.
• Growth in Essentials: With increased demand for everyday essentials, Amazon is capturing market share from traditional pharmacies, offering same-day delivery for prescriptions in select cities.
🏢 Amazon’s New Store Concepts
• Whole Foods & Amazon Grocery: A new Amazon grocery concept opened in Chicago, catering to convenience items like packaged snacks and sugary drinks, which contrasts with Whole Foods’ health-conscious inventory.
💸 Amazon’s Profit Engines: AWS & Advertising
• AWS: With a 19% increase in AWS revenue, Amazon is now operating at a 38% margin. Demand for AI-powered compute continues to push AWS growth, even as it faces GPU supply constraints.
• Advertising: Amazon’s advertising revenue reached $14.3 billion, growing 19% year-over-year. With a nearly 70% estimated gross margin, advertising may soon outpace AWS in profitability.
🛒 Rise of AI-Powered Search & Perplexity’s Native Checkout
• Perplexity’s Surge: Scot shares his switch from Google to Perplexity as his primary search engine, noting the emerging competition from OpenAI’s ChatGPT search. Perplexity now includes shopping links, allowing users to
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