Amazon (AMZN) investors closed off a very strong week, with the stock gaining +12.12% the last 5 days, which means it sits at +14.33% YTD.
Despite the massive growth and success of AWS, Amazon had a tough 2022. Here's this weeks news to see if things are turning the tide... let's go through it together.
1. For that reason, I'm out!
2. Watch out PayPal
3. Cheaper Prime
4. Warehouse consolidation
5. Two new partners
LEGEND: Positive News | Neutral News | Negative News
1. For that reason, I'm out!
John Smedley, an Amazon Game Studios executive who has three decades of experience in the industry and ran the Amazon Game Studios office in San Diego for six years, has stepped down this week. Amazon has invested heavily in the gaming division but has yet to release a successful blockbuster game despite heavy investments and focus.
Gaming is growing rapidly - let's not forget Microsoft's planned purchase of Activision Blizzard - so competition here will only get tougher in 2023, and having known franchise titles will help companies continue to grow (Call of Duty, FIFA, etc.). But in Amazon's case, they need to create these brands that stick, and that's where they are struggling.
2. Watch out PayPal!
Amazon's new push into payments is seeing some strong growth. The "Buy with Prime" option for shoppers is increasing shopper conversion on average by 25%! This initiative is still not fully launched to all merchants, but will be available to all US Merchants by the end of the month so we should see a big boost from this division for the remainder of 2023.
What is Buy with Prime? It's a service that allows merchants to offer Prime shopping benefits on their own direct-to-consumer (DTC) online stores. They will also have new functionality to display reviews from Amazon.com inside their own DTC stores.
There is a lot of competition in this space, namely from PayPal, but Prime has created a very strong and trusted brand for consumers and since Amazon is already the experts in the e-commerce space, they are likely to see big success here. If the 25% increase conversion is any indication of what's to come, 2023 could be a great yet for merchants.
3. Cheaper Prime
It's being reported that Amazon India is testing a cheaper priced Prime membership, Prime Lite. Details are that this is a new tier offering, with the same benefit of free 2-day shipping, but also includes an SD version of Prime Video with ads.
Only available to certain customers currently, the annual price for Prime Lite is around $12 USD (999 rupees) vs $18.50 USD (1499 rupees) for the full prime membership.
Is this a defensive move from Amazon because Prime isn't growing as fast as expected in India, or, is this an offensive move to capture more market share? It's tough to tell right now, but make sure you're subscribed to our newsletter for any future updates on this!
4. Warehouse consolidation
Amazon will be closing down 3 warehouses in the UK which will affect 1,200 jobs. The good news is that these jobs will likely be relocated to other warehouses, with some even potentially being offered relocation assistance.
They still have plans to open 2 more warehouses by 2026, creating an additional 2,500 jobs, so this appears like a strategic move to optimize locations based on customer demand.
5. Two New Partners
BigCommerce was the first company to announce an integration partnership with Amazon this week - specifically with their Buy with Prime offering. BigCommerce now has an app to support Buy with Prime which will allow BigCommerce merchants to enable this option on their DTC e-commerce stores without the need for any code. Smart move by BigCommerce here to adopt this payment option as it will likely lead to higher conversion as we saw previously for their customers.
The second company is Rent the Runway, a clothing company, which will sell its pre-owned and design collection items on Amazon. They will be selling their existing 35 brands on Amazon, but also offer an exclusive collection on the e-commerce giants platform. Although I believe this is a bigger win for Rent the Runway than it is for Amazon, it's just another example demonstrating the power of Amazon and how brands drool at the thought of selling on their platform.
That's it for this week.
We look forward to spending a few minutes with you next Sunday for some new Amazon news!
Disclosure: I am a Amazon.com (AMZN) shareholder at the time of publishing.