With Amazon reporting its earnings this week, there was much news about eCommerce, competing platforms and the challenges around supply chain, inventory and fulfillment.
The metaverse also continued to earn space in the news, with Activision Blizzard and Meta releasing earnings reports too.
Teikametrics CEO Alasdair McLean-Foreman joined PYMNTS to discuss some of the headlines in This Week in Payments.
Amazon’s Growth Rate Slows, Although on a Bigger Base
During the week, Amazon reported blockbuster earnings. The growth rate was a little lower in the past but on a much bigger base.
Google talked about its own growth in advertising revenue as well as the things it’s doing to drive business to small businesses.
See more: For Google, Retail’s Omnichannel Future Is Happening Now
McLean-Foreman said Amazon and its third-party sellers continue to be hampered by inventory challenges and shipping costs, with the average cost of shipping a 40-foot container around the world having risen 80% or 100% over the last year to around $10,000.
“The earnings report in Q4, it was muted, but a lot of that is to do with the supply chain and holiday being impacted as such,” McLean-Foreman said.
Third-Party Sellers Account for Greater Share
The percentage of units sold on Amazon by third-party sellers continues to increase. McLean-Foreman said Teikametrics has seen signs of improvement for third-party sellers even though they still face challenges in inventory, consolidation and competition from Chinese marketplaces.“On average, we are going to see it perform better, I think, this year and in the first half of 2022,” McLean-Foreman said.This earnings report was the first in which Amazon cited and listed the revenues from advertising, and it was over $9 billion in the quarter — larger than YouTube.“The profitability from that advertising business for Amazon is really a cost for the sellers,” McLean-Foreman said. eCommerce Grows on TikTok, Facebook Shops and Instagram Shops The growth of eCommerce on TikTok, Facebook shops and Instagram shops will put pressure on the other channels around advertising. For example, while Amazon knows what you buy, Facebook parent Meta knows who you are, so it is well positioned to focus on eCommerce.“I think that will lead to an opportunity for sellers and brands and direct consumer businesses to find other channels, other than Amazon,” McLean-Foreman said. “I’m excited about that future.”In addition, Meta’s Instagram platform provides consumers with the opportunity to discover brands they’ve never heard of, so […]
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