Amazon Shows Q4 Revenue Increase?

Supply Chain Still An Issue

Through the holiday season supply chain woes plagued not only merchants but consumers as store shelves weren’t replenished at typical rates. But that didn’t slow Amazon, which showed a 9% increase in revenue through the holiday season despite a lackluster showing through the summer months in Q3. 

“Though bolstered by online holiday spending, Amazon’s continued push into brick-and-mortar grocery and retail, as well as advertising, has helped the company overcome supply chain bottlenecks and aided its fourth-quarter earnings beat — and the e-commerce giant is not slowing this physical expansion anytime soon,” said Sean Turner, CTO, Swiftly.

How Amazon Is Building Back Stronger

How did Amazon start their turnaround from Q3? By balancing known supply chain and labor shortages, and incentivizing people to come work for their company. 

“Frontline workers continue to be critical to the success of every enterprise — Amazon is not unique here. They represent a large expense, but the sheer number of frontline workers presents an opportunity for efficiency and cost savings,” said Steve Kramer, CEO, WorkJam. “At the end of Q3, Amazon had 1.468 million employees. In Q4, Amazon set out to attract even more to support industry growth with bonuses that are now commonplace across sectors, and especially prevalent in distribution and freight. Going forward, I’d expect Amazon to see that financial investment as the tip of the iceberg, and that there’s still quite a bit of work done to further invest in its workforce to give them the tools, flexibility, and transparency they need to succeed. As its workers move in favor of unionizing, Amazon will gain a strong understanding of what employees need, and ultimately give them an opportunity to change the trajectory and day to day of warehouse careers.”

How Smaller Merchants Can Compete With Amazon

Despite supply chain issues the 2021 holiday season showed overall growth in spending as people rebounded from the lockdowns that plagued the 2020 holiday season. To compete with giants like Amazon, though, experts say there has to be a strategy. Building a true omnichannel experience, according to Turner, is one way smaller merchants and brands can better compete with the digital giant. 

“Retailers and brands need to work together to offer their customers a personalized experience that highlights products that are on shelf, in stock or ready to ship. Those that don’t are pushing consumers to do more of their shopping with Amazon. By combining the advantages that customers are used to online like real time inventory and AI driven personalization with the cost and convenience advantages of brick and mortar stores, grocers can take market share back from the ecommerce giant,” said Turner. 

Becoming comfortable with Amazon Advertising is another tool merchants can use to launch products and storefronts. 

“For retailers with boots on the ground, Amazon Advertising has become the only way for these brands to launch their products quickly, successfully, and more effectively than with any traditional advertising approach ever before by giving brands the data they need to quickly pivot as needed. It’s also released several new products that will be a game-changer for brands in 2022, including a Creative Assets feature that will allow for brands to better identify their buyer personas, native dayparting, improved brand metrics that allow for full-funnel marketing, and Sponsored Display CPM Charge mode which will allow for more effective advertising attribution. Amazon will continue to be integral in helping advertisers influence buyers with even more effective advertising at each stage in the buyer’s journey,” said Cara Ferguson, VP of E-commerce, Adlucent.

What To Expect From Amazon In ‘22

As to what merchants can expect from Amazon over the coming year, deeper connections with consumers are likely through Amazon’s wealth of customer data, according to one expert. 

“As a first-party data machine, Amazon’s ad platform has successfully been able to curate personalized experiences for users online and effectively capture consumer attention and loyalty. Relying solely on its own conversions and sales data, Amazon has successfully implemented a first-party data strategy that has resulted in stronger consumer engagement and stream of revenue. To follow Amazon’s example, companies looking to compete need to implement first-party data methods to increase consumer loyalty and sales,” said Matt Fiskness, CSO, Adswerve. “Amazon’s visual search capabilities and programmatic advertising are also lending to the retailer’s success. In Q4 2021, Amazon launched new display ads for its Twitch offering, furthering its measurement tools to engage with audiences across its growing gaming sector – also placing the retailer alongside other tech giants competing in the gaming sphere.”

We may also see Amazon push farther into the physical retail space. 

“With physical retail sales still accounting for over 87% of total sales, it’s no surprise that Amazon will continue the push to merge the physical and digital shopping experiences,” said TJ Waldorf, VP, Marketing & Customer Experience, 1WorldSync. “Adapting on and offline strategies to keep pace with consumer expectations will be a priority for retailers in the coming year. By grabbing their share of physical retail, Amazon is setting itself up for success 5-10+ years from now. The blended approach will build brand loyalty, optionality and experiences across the various channels consumers prefer to shop and buy, regardless of product category. Amazon will lead the charge in establishing a baseline of strategies that marry the two worlds and retain consumers early on.”

“2022 will be business as usual for Amazon as the company continues to streamline its delivery services for its retail, grocery, and pharma sectors. Despite having extensive e-commerce and warehouse fulfillment capabilities, Amazon’s past few quarterly earnings suggest that the retailer can sometimes be affected by ongoing labor and supply shortages, as some prime shipping dates have exceeded their 2-day shipping timeline,” said Kevin Beasley, CIO, VAI. “Amazon has continued navigating the brick-and-mortar approach, introducing cashierless grocery stores last year and a recently announced in-person clothing store, highlighting the company’s move to potentially become a rival for many retailers. As consumers become more comfortable with tech-enabled and contactless shopping experiences, such as curbside pickup and contactless delivery, we can expect to see other retailers and grocers follow in Amazon’s approach moving forward.”