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Jeff Bezos Confirms Amazon's Growth Is Slowing (bloomberg.com)

Posted by BeauHD on from the no-longer-growing-like-a-startup dept.

An anonymous reader quotes a report from Bloomberg: Jeff Bezos's latest shareholder letter, released on Thursday, opens with the first-ever disclosure of Amazon's total share of sales from the merchants that use the company's e-commerce sites as a sales conduit. The company has long said that those merchants sell about half of the individual items sold on Amazon, but it has never given their contribution to the total value of physical merchandise sold on the site. That number -- a common e-commerce metric known as gross merchandise volume -- has always been a secret at Amazon. Not anymore. Based on Bezos's letter and Amazon's previous disclosures, it's possible to roughly calculate Amazon's gross merchandise volume dating back to 2015. It's a remarkable number -- nearly $300 billion worth of goods sold on Amazon last year. Compare that with the $95 billion in total merchandise and ticket sales reported by eBay, the distant No. 2 player in U.S. e-commerce. (Walmart sells more than $500 billion in merchandise each year, and China's Alibaba sells more than $700 billion in goods.)

But there's a dark cloud in Amazon's figure. The growth of Amazon's total merchandise sales slowed considerably last year, according to Bloomberg Opinion calculations based on Bezos's disclosures. This figure is not the first sign than Amazon's retail juggernaut may have slipped a bit. In 2018, Amazon's nearly $300 billion in GMV was about a 19 percent jump from the prior year. That was notably slower than the rates of increase of 24 percent and 27 percent, respectively, in 2017 and 2016. It's hard to explain the slowdown in Amazon's merchandise sales growth. If anything, it seems as if Amazon is grabbing a larger share of e-commerce sales and that the internet is stealing more sales from physical stores, which have accounted for something like 90 percent of all U.S. retail sales. And yet Amazon's retail sales growth -- although still impressive -- is slowing noticeably.

7 of 111 comments (clear)

  1. Um by cascadingstylesheet · · Score: 5, Insightful

    Of course growth slows. How could it not? They grew fast and they are giant.

    What, do they need to take over 150% of ecommerce or something? Nothing can grow forever.

    1. Re:Um by Nidi62 · · Score: 5, Insightful

      Of course growth slows. How could it not? They grew fast and they are giant.

      What, do they need to take over 150% of ecommerce or something? Nothing can grow forever.

      Because Wall Street needs (and assumes) companies to have constant and continuous growth to keep the financial markets afloat. All these valuations assume companies will keep growing at 10, 15, 20% and, if they miss a target by even 1% (oh no, a company only made $990 million profit instead of $1 billion, the horror!) they all scream the company is failing and the stock price tanks. This in turn screws over other people and promotes inefficiencies as companies focus more on meeting Wall Street's expectations, cutting workforces and using other tactics to bump earnings just enough to meet some arbitrary target, focusing on short term "growth" over the long term health of the company.

      --
      The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
    2. Re:Um by Quakeulf · · Score: 4, Insightful

      Growth for the sake of growth is the ideology of a cancer cell.

  2. I would assert it is retail as a whole by ctilsie242 · · Score: 5, Insightful

    If it isn't obvious, we are starting to see signs of a recession coming our way. Amazon is a retailer, and just like any other, they are subject to how well-off people are doing financially. Come crappy times, retail sales are going to suffer.

    This isn't to say Amazon will go the way of Sears. AWS will ensure that they are not going anywhere, because businesses always outsource/offshore when a recession hits, even if it costs them more, so more businesses will be doing lift-and-shifts to the cloud in order to save on CapEx costs, even though their monthly burn rate will spike.

    Of course, if Amazon really starts hurting, they can always raise rates on AWS services, and with so many companies shackled to the cloud with no way to leave (good luck getting away from Lambda), they will pony up the higher rates, and pray the deal doesn't get altered further.

    1. Re:I would assert it is retail as a whole by tomhath · · Score: 1, Insightful

      There aren't any signs of a recession. My guess is that the slow growth is caused by three factors:

      1) Amazon is no longer the only game in town. Most retailers, especially Walmart, are competing better
      2) The market for e-commerce is finite, Amazon's growth will slow eventually
      3) A smaller but still relevant factor is the Washington Post. A lot of people really don't like the direction it took after Bezos bought it

  3. Also in the letter. by Anonymous Coward · · Score: 3, Insightful

    The news I found more intersting from this letter was this part:
    "Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! "

    Of course he's going to call for his competitors to do the same. AMZN just raised their expenses, giving competitors an advantage. By calling for them to do the same, he calls for them to raise their own expenses.... it brings the playing field back to where it was, removing any advantage that may have come from the difference. Not so altruistic as Bezos would like it to sound!

  4. Re:No wonder... by Anonymous Coward · · Score: 5, Insightful

    neglected to uncheck the box

    IMHO these kinds of traps are definitely on the company. They try to trick people into buying add-on services with patterns designed to slip by unnoticed. It's shady as fuck.