Amazon Reverses Slowing Sales Growth

Amazon’s sales rose 22% in the third quarter, the biggest gain in two years. Since also growing 22% in Q3 2017, Amazon’s first-party sales - not the total GMV including the marketplace, but only sales where Amazon is the retailer - have only been growing 13.5% on average.

Amazon Retail Products Sales Growth

Compared to last year, Amazon’s sales growth has doubled - it grew only 11% in 2018. Amazon’s North America business grew 35% compared to 24% last year, while International slowed down from 18% in 2018 to 13%.

Slowing sales growth in the past quarters has hinted at a potential change in strategy, with the company turning its focus into growing the marketplace business instead. Earlier this year, Bloomberg reported that “vendors selling less than $10 million in products each year on the site will no longer get wholesale orders from Amazon,” instead forcing brands to become third-party sellers. What some have called the “vendor purge” seems not to have materialized.

Earlier this year, Amazon crossed the threshold of having less than 50% of its revenue come from retail sales. Amazon now generates more revenue from AWS cloud hosting, Prime memberships, the third-party marketplace, and advertising, than it does from selling products online itself. These revenue segments continue to grow faster, despite the acceleration to 22%; however, Amazon is not purposefully shifting into being only a marketplace.

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Juozas Kaziuk─Śnas

Founder of Marketplace Pulse, Juozas wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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