Our Take on Amazon Q2 Earnings: Advertising, Grocery and Prime Day – Oh My!
As Prime Day showed, brands (including our customers) that mastered the Amazon flywheel by maintaining fully-stocked digital shelves were well-positioned to match Amazon’s expanding distribution network, Prime-enabled fast delivery and robust grocery services. And, we have the data to prove it. Customers that used CommerceIQ’s automation and machine learning insights during Prime Day performed 6x better than the average seller driven by 63% lower out of stock and 14% higher ROAS than the market.
This type of efficiency is more important than ever before because every retailer and brand will face price increases this year due to rising shipping and materials costs. Sellers that have already figured out how to direct ship containers to e-commerce fulfillment centers will have a definite advantage. When price elasticity begins tightening for major brands and profitability pressures reach an all-time high, we expect to see more sellers looking for ways to operate in a lean and mean way using automation.
CommerceIQ’s e-commerce management platform gives brands like Nestle and Georgia Pacific the power to forecast demand, prevent OOS situations and use ad spend strategically as a lever to drive traffic to higher-profit well-stocked products. Selling millions on Amazon requires automation at scale and cross-functional data synchronization across sales, supply chain and advertising to properly forecast demand and proactively take control of Amazon’s complex purchase order system to work in their favor. Once again, this reinforces Amazon’s “hands off the wheel” model, proving that brands who figure out how to harness the power of selling on an algorithmic marketplace will win big. Others will be left behind.
Finally, we would be remiss not to mention the consumer psychology at play in Q2. This quarter gave us a window into the post-pandemic economy and despite retail reopening, e-commerce as a whole continued to show sustained shopper penetration.
While nobody can predict the impact of these reopenings on Q3, it’s safe to say Amazon will continue to be the main driver of e-commerce growth, which is on track to grow at a 23% CAGR trajectory expected to reach more than $1.2 Trillion in US sales next year. One area to watch out for is how aggressive Walmart, Target, and other online retailers with physical locations are in their Buy Online, Pick Up in Store (BOPIS) offerings.
And, while we applaud brands that are starting to build out their own DtC digital commerce presence, it’s important to keep in mind that 85% of sales still happen on indirect channels like Amazon. We do not expect this to change.
Ready to get started? Request a demo today to see how we can help you succeed on Amazon and other marketplaces.