A weekly podcast with the latest e-commerce news and events. Episode 286 is a hot take on Amazon Q4 2021 earnings.
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Amazon released their Q4 (and full year) earnings for 2021 on Thursday February 3rd. In this episode we do a deep dive into all the details.
Key Topics:
- Amazon North American Revenue grew 18.4% in 2021, which was just above the industry average of 17.9%
- Amazon has broken out their ad revenue for the first time. In 2021 total revenue was $31.16B growing at 32% Year over Year. Ready Jason’s Forbes Article here.
- Amazon is raising the rates for Amazon Prime from $119 to $139 per year.
Want to learn about Amazon’s sneaky fulfillment advantage (Amazon Key for Business)? Check out our YouTube video here
Episode 286 of the Jason & Scot show was recorded on Thursday February 3, 2022.
Transcript
Jason:
[0:23] Welcome to the Jason and Scot show this is episode 286 being recorded on Thursday February 3rd 2022 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-hosts Scot Wingo.
Scot:
[0:38] Hey Jason and welcome back Jason Scott show listeners.
I’m dying to talk Mandalorian with you but I don’t want to do any spoilers so I’m just going to skip the Star Wars chat this week until I think we’ll give it until all the episodes out plus two or three weeks and then we can talk about so until then.
It’s business only.
Jason:
[0:58] I accept your promise for a later conversation I would only say watch it people go watch it.
Scot:
[1:05] Yeah it’s gotten really good okay so it has been Star Wars dramas aside it’s been a mega cap Tech stock drama this week so it’s been a very interesting week.
And we’re excited to kind of culminates in the Amazon news that came out today so this is this is our hot take on Amazon’s Q4 but I think it’s important to back up
about six steps before we jump into that briefly so setting the stage back in episode 257.
We were super Clairvoyant and in March of 2021 you and I were the first I’m pretty sure and we can get you into fat check this.
A lot of people were talking about am apples I DFA and that’s their new privacy where they’re killing the cookie and doing a variety of things to really limit the amount of tracking available to apps.
Inside of their ecosystem amongst email and a bunch of other stuff but the primary one is apps can no longer really track what’s going on
there’s a lot of talk in the ad World about that but you and I believe were very early talking about the impact on e-commerce so.
So we had that and then you know I went back and looked at our notes and our prediction was that this was going to put Facebook in a world of hurt.
So then Flash Forward.
[2:25] Past this is a in your hot tub time machine and episode 285 which we did a couple weeks ago our previous episode you took us through some really good data we got a lot of really good feedback from that show from folks and everyone enjoyed your presentation.
And except for that one person who said that you’re too verbose and your slide presentations are too long so shame on them anyway they in there.
Jason:
[2:48] They’re probably not listening to our super long podcast.
Scot:
[2:51] It probably we self-selected them out there listening to some 5 Minute Podcast.
Or they’re listening to us on 4X and they’ve totally missed this whole segment anyway so you one of the data points you put out there that is that e-commerce crew 18% that right.
Jason:
[3:09] You do yeah well no retail grew 18%.
Scot:
[3:11] Retail grew 80% okay so that was kind of the watermark and then e-commerce grow a little bit more is that correct like 21 or so.
Jason:
[3:18] So we don’t know for sure non-store sales grew about 20.
Scot:
[3:22] Yeah okay so we’ll call it 18 to 20 then last week and over kind of like the last.
Since College January 20s the stock market has really slid into a bit of an abyss so the there’s the whole saying don’t fight the Fed so the
inflation has been on a terror so the FED has signaled they’re going to do some pretty aggressive raising of interest rates.
So the market kind of did a total sell off and basically went into this let’s throw out all the babies all the bathwater we don’t care everything’s so expensive and it kind of went into what Wall Street people call quote-unquote risk off so
we don’t want any risk anymore we love to risk now hit
so that was the set up kind of coming into this last five days and then on January 27th which was last week Apple had a surprisingly strong quarter.
[4:14] Serving one ever was kind of like on pins and needles because they’re the supply chain really hasn’t improved in some areas it’s gotten worse seven was like surely Apple could not have had a good quarter there’s no way they could get all those complex little
cogs and widgets that go inside your phone but sure enough being Apple they were able to navigate that and they actually had a pretty surprisingly strong quarter
now Apple doesn’t call out anything around there add product or anything like that so it was just kind of a is largely a hardware type discussion
then so the market got a little relieved and then next up to bat was Google or alphabet and that was Tuesday this week so February 1st
and they blew it out of the water so they had very strong earnings and in the conference call their CEO Sundar pichai he specifically several times mentioned e-commerce and
it was kind of interesting because I was thinking you know they’ve really done anything in e-commerce Dave
they’ve they’ve kind of played around with Google shopping and they made it free and then they charge more and they’ve got this experiment to be a Marketplace but if you ask anyone including you and I you know it really hasn’t been like they done anything particular
they did call out I’m pretty sure you probably picked up on this that they’re going to do more Integrations with YouTube on e-commerce and then they have a
Tick-Tock competitor called YouTube short setting.
[5:39] Or short and they’re going to do kind of a livestream tie in there with e-commerce so that was the that was that was the take there.
[5:48] Wall Street was loved this result and the stock shot up 20%.
And when we’re talking about these companies as a reminder these are mini all these companies we’re talking about except Facebook are well over a trillion dollar and market cap.
So when you move something like that 10 or 20% that’s two and four hundred billion dollars of Market.
[6:11] Money sloshing around up and down so so this was an up
and it was like you know it was like effectively three to four hundred billion dollars of value added to Google literally in a.
12-hour day so that was interesting.
[6:28] Then so that was kind of a roller coaster was on the upside and then Facebook now called meta reported the next day on Wednesday and that was the exact opposite it was a total and complete
bloodbath the CFO got on and specifically talked about three reasons that they had a really bad quarter the first one was the iOS changes and then they kind of quickly moved on and talked about inflation and then
exchange rates where the dollar has gotten weak because of this fed tightening
but then as they got into so that was the cfo’s prepared remarks and then in the Q&A
Wall Street analyst being good at sniffing out trouble they spend all their time on the iOS changes the IDF a and it was interesting to asked
Sheryl Sandberg and they finally kind of got her pinned down and I thought this quote was interesting.
And she said Apple created two challenges for advertisers one is the accuracy of our ads targeting decreased so that they’re lost targeting which,
increases the cost of driving the outcomes the other is that measuring the outcomes because we’re.
And then the CFO came back on and said you know just to be specific we missed about 10 million dollars of Revenue this quarter due to these iOS privacy settings.
[7:45] And then and then I said well how how long is it going to take you to figure this out and they said this is going to be a significant headwind for our business and it’s a number of verticals and it’s gonna be a multi-year problem
so yeah that was not good and basically you’re.
You’re the ad Guru here but you basically can’t Target and you can’t measure so you know they’re bad that is not good if you’re spending money on the Facebook platform.
Any any comments on that before I go into a another little piece of the story.
Jason:
[8:16] I think you summarized it really well like I feel like it’s even more acute when you’ve spent the last like 10 years telling people that targeted ads are the best right like that so I think that’s a challenge and I think,
meta don’t really talk about it but I would actually argue there’s kind of three challenges that you can’t Target as well you can’t measure the effectiveness
but also a heck of a lot of the best-in-class advertising on Facebook is what I would call real time optimized wide because they had this like real-time closed loop of performance you could.
Dynamically generate some add content see how well it worked and then change it on the fly so the ads got better really fast and part of the,
the problem with,
not being able to measure it as well is it breaks that real-time Loop so so I would I would say that also is adding insult to injury in terms of the.
Effectiveness on Facebook so I feel like after their earnings there was kind of a consensus that like man,
advertising dollars are shifting from Facebook to Google because Google has a less acute version of this
data problem than Facebook has and Google has more measurable Commerce events on their platform than Facebook does at the moment.
Scot:
[9:37] Yeah and that’s that’s exactly right so.
So and just so listeners understand to the problem is most people are using the Facebook platforms so which the.
They have WhatsApp but they don’t make any money off what’s up that I’m aware of they make a little bit it’s de minimis so where they’re where they make their money is off Instagram and Facebook and ads inside of there
will guess what people use that you know.
[10:00] Instagrams level like 99% mobile and Facebook’s probably 80 90 percent mobile so they have some desktop traffic where you’re still probably getting some decent first-party cookie data but you know.
So then
what’s called 85% in aggregate of their ad businesses on the inside the mobile app a big chunk of that well over half is inside of the iOS
and then the other problem is Google wants Apple to this Google has increasingly decrease the ability of apps to track things to see if it’s just
it’s pretty bad well Wall Street was freaked out and basically the stock went down 26 percent in one day today and that’s the biggest one-day drop ever
and they lost two hundred and thirty two billion Market in market cap so so basically what happened is
you know Google backed up the truck Google and apple backed up the truck and load it up
a big 30% chunk of Facebook and split it between them and drove off into the sunset it was pretty.
Pretty interesting to watch this happened in literally like a 72-hour period and to your point Wall Street figured this out pretty quickly and said hmm.
[11:12] Google was kind of talking about how that they kept talking about e-commerce
Facebook keeps talking about these people that want to really track things so while streets kind of figured out that what’s happened here is e-commerce dollars
the all those Shopify merchants and all the way from mini little Shopify stores all the way up to the big guys they very rapidly this is the challenge in the digital world
you can move dollars instantly two different mechanisms unlike TV where you’re locked into the Super Bowl ad for for six months or whatever so over the over the course of.
Effectively the holiday period dollars sloshed out of the Facebook ad bucket and into the Google and then I imagine also into the Apple ad Network
um as well so and then we’ll talk about Amazon also so that was really fascinating as a third party Observer to watch that happen and how rapidly these it’s kind of funny it was.
I would say these changes.
Have been known but then happened like rapidly and almost makes you start to be a conspiracy theorist right so back in March last year you and I were talking about this and we could kind of see it coming
but then it really didn’t hit until fourth quarter and if you were in hindsight if you were diabolical and really trying to put the crunch on this e-commerce segment on Facebook that’s exactly when you would
would really kind of clamp down on them so I don’t know if there’s any of that going on but it was it was really really brutal for those guys.
Jason:
[12:39] Yeah and you didn’t there’s some slightly weird timing just in that like shortly after these changes happened who took it in the shorts right away was like Snap
and they you know they came out right away and said hey we’ve had a material dip and their stock took a dump and comparatively Facebook wasn’t as hurt in the narrative coming out was we’re better insulated from these changes than others and it’s now starting to feel like
maybe no you weren’t.
Scot:
[13:09] Yeah and then you know it does hurt confidence because if we knew all these things were coming in March why did it take till Q4 for them to realize how much it impacted so yeah I don’t I think
I think we’ll find out a lot more it’s all still fresh information and all these companies also file
more detailed documents later as they file with the SEC and the will be combing that for listeners to see if there’s any other tidbits for what Facebook says about this idea of a problem surfacing.
Jason:
[13:36] Yeah one another tidbit before we go on to Amazon for deep listeners you’ll remember our privacy show where we kind of talked about these these problems wounding and we talked about.
Google’s proposed alternative to the third-party cookies was this cohort based system that they called flock and
side note fun fact Google has already completely abandoned flogged.
Scot:
[14:03] Yeah yeah yeah.
Jason:
[14:05] So like it’s really the wild west right now like they’re they’re you know turning off these old Legacy Solutions and they’re kind of winging it on what they expect to replace them with.
Scot:
[14:17] And in some way they don’t care because they’re you know they’re winning.
Jason:
[14:22] Yeah no rush.
Scot:
[14:23] Yeah not a big rush we’re coming to save you Facebook give us about six years we’re on our way we’re really really coming
coming fast okay so then you know the market kind of held its breath and was like holy cow we thought you know Apple did great and then Google and then we thought for sure Facebook would be doing okay because to your point that kind of signal that everything was good
and then they totally crashed what’s going to happen with Amazon so these stocks are called Feng we don’t you and I don’t talk about
Netflix but that’s the end but you have Facebook Apple Amazon Netflix and Google that’s the Fang and so we don’t talk about Netflix but they’re having a.
Jason:
[15:03] Blockbuster alumni I’m contractually prohibited from talking about Netflix.
Scot:
[15:08] Will be happy to hear they had a little bit of a rough spot too but anyway so.
This was the most dramatic turn of events that I’ve ever seen and I’ve been following a stocks for quite a while and since maybe 08-09 when everyone was kind of like what is going to happen to these companies through this Great Recession so so I would call this kind of like.
Wanted a 14 15 year kind of event that we kind of witness it’s me.
Seven was kind of sitting there wondering what’s going to happen to Amazon and in you know I think a lot of people felt like it was going to be,
pretty bad now you know you and I know that Amazon is largely immune to these problems because
yes they drive a lot of volume through their app but they have the benefit of inside the app closing a transaction and they have first-party cookie kind of they have a lot of first-party data is kind of how to think about that and closed loop
so you know in many ways they’re actually sitting in a really good position in the Commerce world because they do have that data and
and then inside of the app and then they can even sell some of the ads so you could imagine if you had extra dollars the problem with.
If you move dollars from Facebook to Google a lot of times you can’t spend more on Google you can but it’s not super effective because you’ve covered all the Search terms you can’t create more volume so then I think a lot of those dollars probably sloshed on over to Amazon as well
so that was the setup.
[16:34] So one one one just quick wholesale note Amazon lot of these companies report two sets of numbers they just report the absolute and then they do it without the impact of foreign exchange
gyrations and in Wall Street they call that X FX all the numbers we’re going to give you our XFX unless we explicitly stated otherwise and it does swing the numbers a lot because of the interest rates changing you know the
the dollar went from strong to weak and it created a lot of headwinds vs. Tailwinds on these foreign exchange calculations
okay so Revenue came in at 137 point four billion which was in line with Wall Street estimates and it represents 10% overall growth if you take the fourth quarter of
2021 and compare it to the fourth quarter of 2020 now you have a good observation about prime day.
Jason:
[17:28] Yeah so as we’ve talked about before Prime day has moved around a bunch which is problematic for comps so if you remember in 2020 Prime day was in.
Late October so kind of right on the shoulder between Q3 and Q4 and so you know some of the cops are saying now are against the like Prime day augmented sales and this year Prime day was in.
Q early Q3 two years ago it was in late Q2.
Scot:
[17:59] Okay and then one of the other key measures there’s like six ways you can report
earnings for Amazon but will do ebit so earnings before interest and tax and that came in at 3.5 billion and that blew a Wall Street estimates of 2.5 billion so a billion dollar kind of.
Overall win on the profitability of the business so
what what had happened is Wall Street and Amazon Wall Street at Amazon’s guide last quarter to Q3 when they did the results they had put a lot of extra cost in there due to covid and supply chain and all these in labor and it
It’s seems like that did not end up being nearly as expensive as Amazon had initially thought or they were sandbagging we’ll never know so I would call that a revenue meet and a bottom line be
so that was that was a positive and then we’ll go through some more of the details and then the guide is really in a couple other things or what really got,
Wall Street pretty excited so it’s hard to predict so in the after-hours Amazon is up 14% And you know the the analysts are coming out
as we’re recording this very positive on the quarter so I think
I don’t know if it’s going to be a Google level result but it’s certainly not going to be a Facebook level down 26 type result so you know I think Amazon is going to become in the win column
let’s peel the onion little bit and go into why.
Jason:
[19:20] Yeah so start with one that’s not that financially material but Amazon breaks out their sales for physical stores
and they grew 17 percent for the quarter so they were just under 5 billion and
in brick-and-mortar sales and and for Amazon brick-and-mortar sales is largely Whole Foods there’s you know.
A smattering of Amazon book stores and a couple of five-star stores and you know we now have like 30 of these.
These non Whole Foods grocery store so you know one day it will be more material but it today it’s mostly Whole Foods.
[19:56] What’s interesting about 17 percent is physical stores had actually been shrinking for Amazon and.
Part of the the the likely reason for that is the pandemic shifted a lot of people from.
Shopping in a whole food store to having groceries delivered to their home and Amazon has has like somewhat unique accounting practices that that sales shifts from
from Whole Foods and physical store sale to a
in e-commerce sale when when you get those groceries delivered to your house so kind of you know it that artificially made stores look small so I just think it’s interesting because this is a weird time in the history of e-commerce
ordinarily
e-commerce for most retailers as you know over the last decade has grown kind of like 15 to 20 percent a quarter and brick-and-mortar stores grow like 32 Port four percent a quarter and so this q 4
because e-commerce is comping against the monster Q4 from last year and brick-and-mortar was really soft last year and is doing better this year it’s like the first time in our lifetime we’re in many cases.
Brick and mortar is growing faster than then e-commerce and that was actually true for Amazon in North America.
[21:18] So that online sales just for Q4 actually went down for Amazon by one percent and again I would I would attribute that largely to you know
comping against a crazy number that also had prime day in it.
Scot:
[21:33] You want to do the Geo segments you want me to.
Jason:
[21:37] Sure why don’t you do the quarterly ones.
Scot:
[21:43] Okay so North America grew nine percent and so this these are all cordially so this whole section where in is quarterly comparison so we’re comparing Q4 of 21 to Q4 of 20
so North America grew nine percent International was down one percent and that’s kind of what that’s a that’s kind of what netted out to be
this looks at online and offline so that’s what netted into the 10% go through.
On the third party side there’s two line items at Amazon reports we won’t get gmv calculations from analyst for another week or so but when we do we’ll mention those on the show so seller Services which is revenue from largely from.
[22:23] The.
Prime no sorry from FBA is that grew 12 percent to 30 billion and seller units remain stable at 56% so
we use this nomenclature first part of units in third-party so therefore first part of units were 44 percent and third party were 56%.
It’s important to note this is a unit measure not gmv and you know you historically.
The GM V for first party is the Espeon first party is significantly higher than third party because you’ve got all the Amazon owned and.
Branded products like candles and all that good stuff so usually.
Usually the gmv is more flips the other way where it’s kind of maybe 60 first party forty third party we’ll see.
And then this is exciting and I texted you the second I heard this because I called it retailgeek.
For the longest time they have kept the ad business kind of tucked under this exciting category called other where they have a bunch of other things,
does the name other and for the first time they have broken this out as quote unquote ad services are you excited too.
Jason:
[23:35] Yeah yeah that was a big deal I’m mildly annoyed because I want to say in
20 21 of my Jason and Scot show predictions was that they would start breaking out ad revenue and I feel like I didn’t get credit for that prediction and then you know the next year when I gave up on it they of course did it.
Scot:
[23:52] I called him to tell him it was okay to finally finally do that now that the prediction had lapsed.
Jason:
[23:56] Yeah that’s kind of petty of you I’ve been meaning to talk to you about that but yeah so so for the first time they disclosed how much General Revenue they generate in on ads the CFO was asked why they did that and he’s like.
[24:11] It just was becoming more and more material and I was getting tired of saying on all these earnings calls and other which is why largely the ad business so.
For the quarter they they reported ad revenue of nine point seven billion.
Um so for the year they reported 30 1.1 billion in ad revenue and they also showed their growth rate.
Their growth rate decelerated a little bit for that business to 32% so they’ve got a an annualized business is generating Thirty 1 billion and AD Revenue that’s growing at 32%.
To put that in perspective in September emarketer estimated their ad business at like 24 billion so.
Materially bigger than I think some people realized and by far the third biggest digital ad Network.
In North America and so super exciting that there were starting to get more visibility into it as we’ve talked about a lot on the show retail media networks is a big trend.
Um across all retailers but you know Amazon represents about 77 percent of the total retail media Network size at the moment.
[25:34] And I always like to contrast that with the business that analysts will have the most at Amazon which is a WS.
So you know the common narrative is the most profitable sexy business and Amazon is a WS.
And it had a great quarter it grew by 40% which is actually an acceleration of its growth which is.
Pretty remarkable if you if you think about what a big business it was they sold almost 18 billion in Q4 and I want to say they’re annualized.
Aw s business was like 63 billion and they made like 18 billion in net income on that so that’s that’s a.
Super good business that you’re still you know growing it nearly fifty percent on a business that’s spinning off 18 billion dollars a year in cash but.
It also is highly Capital intensive so they have to spend a bunch of money to make that money and so if you compare the
the 60 billion that they make on a WS that they have to buy all this hardware for against the
30 billion that they make on ads that they have almost no cost of goods associated with the ad business is almost certainly more profitable to Amazon than a didn’t even a WS.
Scot:
[26:59] Do you think it was a bit of a flex to break this out kind of after seeing Facebook had such a rough time I don’t think they could have done.
Jason:
[27:07] Yeah I think the timing is not right I think that like this was inevitable like I don’t know what I mean you probably are more familiar with.
Like I think the the Gap reporting requirements are that it’s quote unquote material and it’s like now that we see the number it’s kind of hard to argue it’s not a material number so I assume at some point they they run into SEC problems if they.
Disclose that but I.
Scot:
[27:32] The definition of materiality is 10% in my recollection so and you know I think it could be argued it’s one of those squishy things where you know I don’t think this is ten percent of Revenue is it.
Jason:
[27:45] No
Scot:
[27:46] No but Eva died probably is so then why yeah that’s probably it probably triggered something on the bottom line out imagine.
Jason:
[27:54] Yeah and so one other side note I want to call out on AWS this news actually broke.
Yesterday but then they definitely cooked it into their earnings called today the Amazons been on a nice winning streak with AWS clients.
That are there are moving to the cloud but one that would be most relevant and somewhat surprising to our listeners is yesterday Best Buy announced that they were moving
all of their IT services to AWS and the reason that’s surprising is obviously Amazon and Best Buy are.
Are occasional Frenemies but they’re mostly competitors and you know it’s somewhat surprising that a retailer like Best Buy would
by its infrastructure from a direct competitor like Amazon.
Scot:
[28:40] It is and I think some of the you know I’ve heard that like some of the retailers even ask their vendors that not to use AWS or you know they they.
Jason:
[28:50] Yeah I think that’s a general policy at Walmart for example is that like that you can’t host any solution you’re pitching the Walmart on on AWS.
Scot:
[29:00] Oops okay anything else that you saw that was interesting and adds an AWS.
Jason:
[29:07] No no but that was exciting.
Scot:
[29:10] Yes oh so Wall Street is a what have you done for me lately so the once they once they kind of heard that the revenue and was in line and
the bottom line was beat for the quarter then it’s kind of like well what’s it looking like for next quarter so Amazon’s Guidance the guided revenues for the first quarter to 112 21 17 billion
those in line with Wall Street,
the bottom line was better than Wall Street was expecting a 3.9 percent Gap margin compared to Wall Street at 3.6 so again that was kind of a sigh of relief and then that Revenue range is pretty.
Pretty slow so it’s three to eight percent growth.
So I don’t I don’t know if this is a lapping thing they’re saying or not or maybe their sandbagging here but that felt kind of like pretty slow to me,
but again it’s kind of like how does it match the expectations of the forward guidance not like what is the absolute number so Wall Street seemed to like that and then.
Did you want to do the annual View.
Jason:
[30:11] Yeah so so for the year that top line revenue growth was like twenty one percent.
North America ended up being 18.4 percent for the year I think I mentioned that earlier in international was 22 percent,
those two numbers are getting closer together by the way like you know historically International was much more and growing much faster and there still is a lot more International that’s not as penetrated by Amazon so that’s a little bit interesting.
The North American number 18.4% sounds like a pretty good number until you you realize.
They’ve never been below 20% before so that’s that’s kind of a Debbie Downer and then the US Department of Commerce data says all of retail was up.
By 18 percent normally e-commerce grows faster than brick and mortar so if all the brick-and-mortar retailers in America on average grew 18 percent and then you know the biggest best e-commerce.
Retail in North America only grew 18.4% I would actually call that kind of lackluster.
Scot:
[31:22] Yeah the you know doing that on about a 500 billion dollar number those is a pretty good the Amazons defied the law of large numbers for quite a while.
Jason:
[31:31] Yeah unfortunately they’ve ruined it for themselves like I totally agree like if you if you just started a business and and Drew out this hockey stick everybody would be perfectly satisfied but
based on the the unrealistic expectations that Amazon has habitual eyes Dart 12 it’s a,
slightly tougher so letting for them now.
Scot:
[31:53] One couple of other tidbits that I thought were interesting as someone that hires a lot of folks Amazon reported that for the end of the year they just cross 1.6 million employees
I cannot even wrap my head around that.
What does that that’s like the size of my residential area is all employee in the triangle area where I live is 1.2 million so there’s more people to work at Amazon that live in my entire
area here my 30 mile radius the other thing I thought was interesting and again like.
[32:26] Yeah we’ll get a look at the queues in the case and all that jazz when they file them I guess it’s K is when they for the annual
and that’s the SEC docs and they did report one I’ve been keeping an eye on is fulfillment investment and the cost for fulfillment only grew ten percent year over year in the fourth quarter
and that has been more running at like 40 50 percent and like
like me you probably see a lot of new Amazon Vans out there and a lot of activity going on in the shipping world so it feels like that data point indicated to me that they may be added
bit of a end of a so Amazon goes to these phases where they’ll have kind of a
invest in Harvest kind of cycle so it feels like we’re at the end of a
delivery invest cycle and kind of heading into Harvest when the cost of shipping is kind of caught up to the amount of volume that they’ve surged up to it this latest covid driving everyone to digital
any other tidbits you saw.
Jason:
[33:28] So a couple of small things first of all with regards to that that Capital spending there was an interesting,
segment in the the Web Conference where the CFO kind of drilled into
expectations for future Capital spending and he kind of broke it out and he said hey the biggest chunk of our capex goes to AWS infrastructure that’s still a really fast growing business and that that kind of investment that
piece of Investments probably going to have to continue the second biggest chunk of our investment is fulfillment and he actually broke out
delivery and and.
Warehouses and you know he kind of implied that that both of them had probably gone over the peak investment and that they would probably be able to start slowing those Investments and so I have a feeling.
That that was good news to Amazon or to investors and then he did mention that less than five percent of their total capex goes into things like
new stores so all of these people including me tracking all their new store Concepts
in wondering if there’s some like big large scale deployment looming,
totally possible but they’re certainly not foreshadowing that in there.
In their capex spending at the moment and then the the other.
[34:56] Like potentially big piece of news that I think really was catnip to investors and I suspect will show up in that stock price tomorrow is that they also announced that they are increasing the price that consumers pay for Prime so
I think it was 120 bucks a year 100 119 a year and now it’s going up to 139 a year so they’re adding.
20 dollars to that super valuable super sticky service and I think investors will like that because it shows,
how you know sticky they think they are with with consumers that they’re able to get away with that kind of price hike in that of course will fall straight to the bottom line.
Scot:
[35:42] Yeah Zack and I are you going to cancel your Prime subscription.
Jason:
[35:45] I am not.
Scot:
[35:47] What do you like ten boxes a day someone at Amazon is calculated the point at which that they’ll they can make you leave so that they could get some of their money back.
Jason:
[36:00] Yeah side note on that,
you know I feel like there are all these advantages that Amazon has that we don’t talk about very much and I actually made a short little YouTube video about one of them that we’ve talked about on the show before Amazon key for business so if you’re you’re bored
you can I’ll put a link in the show notes you can watch my little YouTube video about about some of the sneaky advantages Amazon has that make themselves more sticky.
Scot:
[36:25] Yeah
yeah that’s an interesting they’ve tried with Amazon key they tried going in your garage and your car and consumers did not care for those two options but I suspect I haven’t seen your awesome video I suspect you’re talking about where they work with property managers to get access to multi-unit.
Jason:
[36:41] Exactly I’m specifically talking about multi using unit dwellings I’ve actually heard slightly different I’ve heard the car thing was a total dud,
which sounds like what what you heard as well but I’ve heard that the in some Suburban areas that the garage access is actually working pretty well so I.
Scot:
[36:59] Okay we’ll save that for a future episode anything else you want to talk about.
Jason:
[37:07] No I think that’s it for Amazon that was a lot it was an exciting quarter Ruiz.
Scot:
[37:12] Yeah so just to kind of put the kind of
the tale of the tape if you will so the Biggest Loser was Facebook / meta they really got hammered by these changes and they thought they had figured it out and it turns out in the fourth quarter they had not so those those
fluid ad dollars left there left their coffers and went into Google’s apples and Amazon’s so those were the net winners for the quarter so it’s a really interesting
kind of set of events and yeah we will continue to report on it as we learn more as the company’s file they’re more detailed filings.
Jason:
[37:48] Yeah
and and Scott in honor of my coworker who accidentally sent me an email saying that my my presentations are too long and rambling I think we’re gonna try to end this show a little early this week and so if you enjoy the shorter show you have my my coworker to thank and you can certainly send us that that feedback
but if you’re using our show to get your workout in on the at the gym and and suddenly you’re not getting as much cardio as you used to you you have that employee to blame.
Scot:
[38:22] Yeah and this is either way I hope you like the our content and if you’d leave us a five star review on your favorite podcast listening technology that would be amazing thanks everyone.
Jason:
[38:34] And until next time happy commercing!
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