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January 29, 2013

Amazon Q4 2012 Preview

Amazon reports their Q4 2012 results after the bell today January 29th 2013 (Tuesday).  eBay and Google had a very strong showing, so now all eyes are on Amazon to see if they lost share from those two Titans, or all Titans took share from the rest of e-commerce. 

The following table details the usual key metrics we track in Amazon's results for sellers/retailers that we think most illustrate how not only Amazon is doing, but most importantly for reader's of this blog, the health of the third-party (3P) marketplace.

Amzn_q4_preview_dashboard

 

1P vs. 3P for Q4

One area I have been writing about a lot lately is an analysis that Amazon's 3P business is getting large, in fact so far for 2012, I believe it is trending larger than 1P on a GMV apples-to-apples basis.  For a refresher, here's a chart from a past blog post:

 

Amzn_q4_preview_chart3

If Q4 comes even close to where I projected, then we'll have the first year that 3P > 1P on a GMV basis.

Jordan Rohan, Internet Analyst @Stifel had a Q4 Amazon preview report that had a couple of interesting datapoints along these lines based on his analysis and thoughts.  First he had this chart that shows his analysis and projections going forward for GMV from 1P and 3P:

Amzn_q4_preview_chart1

As you can see, he also has a similar view that for the first time, in 2012 3P GMV should be slightly larger than 1P.  Then going forward, you see that by 2014, 3P is quite a bit larger in his model.

 

The second datapoint I thought was interesting was a look at the growth rate of 1P and 3P:
Amzn_q4_preview_chart2

In this chart, the blue line is overall product sales growth (uses the left axis) and the right side is 1P's share of overall product sales - when you look at the delta of the two lines (where the red is below the blue essentially, you have 3P growth taking over.  

For Q4, Rohan's thesis is that 1P will bump up as last year's comp was tough due to the Thai floods.  We'll be watching this trend very closely and digging into the numbers to figure out what's going on with 1P and 3P.

What else to look for?

Additionally, we will be keen to hear anything about:

  • Distribution center build out - right now we are tracking 8 US DCs that have been announced but not opened.  Sometimes in their quarterly releases Amazon offers some details on new initiatives in this area which we'll be looking at closely.  Stay tuned for a new blog series diving deep into Amazon's DC network - as more sellers expand into FBA, we are getting more and more questions about this and have some interesting datapoints to share.
  • Any Prime/Fire updates - Prime is the turbo-booster of Amazon and we're always keen to see if there are any interesting new tidbits that Amazon shares.  The Kindle Fire family of devices include a 30-day Prime trial and we suspect a good up-take from that offering which accelerates the Amazon flywheel, so we'll be listening closely to any new information there.

 

As usual, we'll be posting our analysis of the results shortly after they are posted.

 

Scot Wingo, CEO of ChannelAdvisor wrote this post.  eBay is an investor in ChannelAdvisor.

 

 

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