The Web Retailer News Digest for February 11, 2022
In a live call on February 3, Amazon announced its 2021 annual and Q4 results – and the ecommerce giant was “feeling the love.” While 2021 was another banner year, there were indications of slowed growth, pandemic speedbumps, and insights gleaned on what 2022 holds for the company, sellers, and consumers.
The big number to wrap your head around is $469.8 billion in net sales in 2021, increasing 22% from 2020’s $386.1 billion. That’s an awful lot of packages delivered. The company’s overall 2021 net income increased 56.4% to $33.36 billion, boosted by its investment in electric vehicle manufacturer Rivian. Without Rivian, Amazon’s profits would have been flat compared to 2020. This was largely due to pandemic-related increased fulfillment costs and increased spending on tech and marketing. And it looks like these costs will trickle down to sellers and shoppers.
Let’s break down the numbers and look at the highlights, lowlights, and what it means for 2022.
What Amazon’s 2021 numbers mean for sellers this year
Highlights from Amazon’s 2021
Full Year 2021
- A report from Marketplace Pulse indicates that $600 billion worth of goods were sold on Amazon in 2021. The total gross merchandise volume (GMV), including sales by Amazon itself and by the marketplace, doubled in three years. Most of that growth came from the marketplace.
- North American sales of $279.83 billion increased 18.4% from $236.28 billion in 2020.
- According to Marketplace Pulse, Amazon marketplace has a roughly 25% market share of the total US e-commerce spending. According to eMarketer data, Amazon accounted for 41.4% of all US e-commerce sales in 2021.
- International sales of $127.79 billion, up 22.4% from $104.41 billion.
- Net product sales increased 12.0% to $241.79 billion from $215.92 billion.
- North America net sales of $82.36 billion, an increase of 9.3% from $75.35 billion in the fourth quarter of 2020.
- International sales of $37.27 billion, a decrease of 0.5% from $37.48 billion a year ago.
- Worldwide revenue of $137.41 billion, up 9.4% from $125.56 billion a year earlier.
From the official press release: Amazon had its biggest-ever Black Friday to Cyber Monday holiday shopping weekend, with apparel, beauty, home, and toys among the top-selling categories. During the holiday season, third-party sellers—most of which are small and medium-sized businesses—achieved record worldwide sales in Amazon’s store. More than 130,000 third-party sellers worldwide surpassed $100,000 in sales on Amazon, and between Black Friday and Christmas, US-based third-party sellers sold an average of 11,500 products per minute.
Lowlights from Amazon’s 2021
CNET’s detailed report found a few issues within Amazon’s numbers:
- (Amazon’s) drop in operating income highlights the rising cost of labor and logistics costs, expenses Amazon had indicated last year would affect its business as 2021 came to a close.
- Consumer spending did little to offset those costs, with Amazon’s direct retail business growing a slim 1% in the fourth quarter, compared with a 43% growth rate a year earlier.
- Holiday shopping fueled a 12% growth rate at the company’s marketplace of third-party sellers in 2021, compared with 54% in the 2020 holiday season.
Amazon CEO Andy Jassy also noted rising costs that curbed 2021’s earnings: “As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter (of 2022) due to Omicron.”
What Amazon’s 2021 numbers mean for 2022
For sellers and shoppers, the rising prices of labor and fulfillment are going to result in higher prices. Indeed, sellers are already feeling the burden of increased FBA fees, along with higher monthly storage fees and aged inventory surcharges. For customers, PRIME fees increase beginning this month, despite supply chain hurdles curbing next-day delivery on many items.
Ongoing supply chain issues may result in more manufacturers moving their operations to domestic locations, giving larger retailers more of an advantage. With the Great Resignation driving more people into entrepreneurship, more SMB sellers may join the marketplace, assuming they can properly source and fulfill their products.
One bit of overall good news is that the increase in ecommerce brought about by the pandemic is not likely to subside, even as the pandemic itself does. A report from MarketWatch notes that “in the past quarter, especially before Omicron, which largely impacted the final month of Amazon’s fourth quarter, we saw a significant rise in mobility and return to work and life. That meant many people were getting back to shopping in stores and malls instead of via their computers. Amazon’s ability to come in flat after a massive final three months of 2020 may indicate more strength than recognized.”
2022 may be much like last year for Amazon and sellers – increasing growth and opportunity, but with the potential of a future surge as the pandemic winds down and the supply chain is restored. No matter what, be prepared for another wild ride in 2022.
FTC issues new guidelines on product reviews
In a case that may have far-reaching effects on other online marketplaces, the US Federal Trade Commission (FTC) settled a dispute involving a retailer’s alleged refusal to post unfavorable reviews on its website in late January. The commission also stated that it would take new measures to monitor product reviews. Fashion Nova LLC agreed to pay a $4.2 million fine and refrain from censoring consumer reviews of its items as part of a deal with the FTC.
Fashion Nova employed a third-party online product review management vendor to automatically post four and five-star evaluations while holding lower-starred reviews for approval. The FTC claims that Fashion Nova never approved or uploaded hundreds of thousands of lower-starred, negative reviews from late 2015 through November 2019. To its credit, Fashion Nova denied the allegations, blaming the vendor and claiming it had resolved the issue years ago. The case marked the first time the FTC had settled with a retailer accused of suppressing negative reviews.
We’ve covered review manipulation extensively in this space, including the Chinese manufacturer review scandal of Summer 2021 and the more recent incentivized Amazon review scheme on Twitter. However, none of these involved a third-party review management vendor. The fallout from this case is where it gets interesting. The FTC has sent letters to ten online review management services, asking them to review their practices to ensure they fall within the law and cease any deceptive practices. The FTC has also issued guidelines for review platforms and online retailers regarding proper collection and publishing of customer reviews in ways that do not mislead shoppers.
In other words, Amazon, eBay, and all other marketplaces – and their sellers – have been put on notice by the FTC that it is now serious about review manipulation and fraud. When the next inevitable review scandal breaks, don’t be surprised to see the FTC right in the middle of it all.
Read more at Digital Commerce 360.
Etsy hears sellers’ complaints, vows to improve support
In an inspiring example for marketplace sellers everywhere, pressure from the Etsy seller community has led to a $50 million commitment by the platform to scale seller support in a variety of needed areas. After a petition on Change.org titled “Requesting Etsy Support for Sellers” garnered over 22,000 signatures, Etsy announced this week that it was increasing its support team by 20% and substantially increasing its support budget.
Among areas where Etsy sellers can expect improvements are:
- Chat – more resources, larger support team, and 24hr email response times.
- Phone support – scheduled callbacks to reduce hold times
- Prioritizing urgent support requests with machine learning
- Expanded, easier to navigate Help Center
- Revamped account dashboards with more clarity on finances and taxes
- Easier to communicate with sellers throughout the buying process
While Etsy did not discuss the direct impetus for their decision to upgrade seller support, there’s little doubt that the petition and reporting on it influenced their decision. Etsy’s mission is “building a human, authentic and community-centric global and local marketplace.” These changes are another good step in that direction, as many sellers clearly had issues with Etsy’s support services. One wonders if any of the other major marketplaces will follow Etsy’s example and announce similar changes soon.
Read more at Etsy.
Alibaba reports US sellers increased on the platform in 2021
Alibaba.com just released their 2021 in Review and 2022 Outlook report, which shows the United States maintaining its position as one of the platform’s fastest-growing seller areas. Based on the behavior of over 200,000 merchants and over 20 million buyers on the platform, the research provides some fascinating insights into demand trends.
Food & Beverage, Agriculture, Beauty and Personal Care, Health, and Musical and Consumer Electronics were the categories with the largest demand for “Made in the USA” items between January and December 2021. While the report itself is short on specific metrics, it does provide an interesting look at the increasing globalization of marketplace selling.
Competition from Chinese manufacturers has long been a complaint of US-based Amazon sellers. Now, it appears that US entrepreneurs, driven by the pandemic, have increased their footprint in China’s largest ecommerce marketplace. It will be interesting to see if reports of backlash or resistance to US sellers on Alibaba appear in the media. Alibaba seems receptive to the US seller influx, much as Amazon has been with the Chinese – but perhaps the counterfeit shoe is now on the other foot for US sellers.
Read more at Tamebay
Also in the news
- Amazon offers new, relevant pricing data in Manage Inventory with Pricing Status to help sellers win Buy Box. Amazon US. Amazon UK.
- Amazon offers new A+ Content: Brand Story for UK sellers. Amazon UK.
- eBay 2022 Winter Seller Update with new agreement and fees. eBay.
- eBay moves all sellers to first of month billing cycle beginning May 1, 2022. Value Added Resource.
- Upgrade your eBay app to fix bugs if you want to sell. eCommerceBytes.
- eBay Promoted Listings now also for Auctions. Tamebay.
Wish becomes an invite-only platform for new merchants. Tamebay.
Webinars in the week ahead
February 15: (Canada) eBay Canada Seller Check-in. eBay.
February 16: Amazon Advanced PPC Webinar. Sellics.
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips. Amazon.
For US sellers
February 15 & 17: Amazon Small Business Academy Pathways Series February. Amazon.
February 16: Create and launch your store on Amazon. Amazon.
February 16: Winning with eBay Promoted Listings! eBay.
February 16: Coded Coupons – What are they and how to use them to increase sales. eBay.
February 16 & 17: 2022 Amazon & Retail Media Virtual Summit. Tinuiti
For UK sellers
February 15: Create and launch your store on Amazon. Amazon.
February 16: Amazon Ads – Tips for optimising your keywords strategy. Amazon.
February 17: Amazon Ads – Tips for optimising your budget and bids. Amazon.
February 18: Building your brand identity with Amazon Advertising. Amazon.
Amazon brags about dog “workers,” puts sellers and laborers out in the yard.
And finally, a recent press release by Amazon touts its top-ranked dog-friendly workplace. The ecommerce giant’s Seattle headquarters hosts as many as 7000 employee dogs per day.
There is an employee assigned to dog duty, known as the “Woof Pack” manager – and that’s not all. Dogs visiting Amazon get to enjoy a variety of custom amenities, including the doggie deck on the 17th floor of the Doppler building. In this area, dogs can run about freely while enjoying facilities such as a fake fire hydrant. Amazon has also invested in the nearby infrastructure of the neighborhood, outfitting it with a community dog park complete with rock structures for dogs to play on, dog drinking fountains, numerous poop bag stations, and designated dog relief areas.
Ironically, the title of the press release is, “Meet some of the 7,000 dogs that “work” at Amazon.” All this attention given to man’s best friend begs a bigger question: Does Amazon treat dogs better than its marketplace sellers or fulfillment workers?
Granted, marketplace sellers aren’t really in need of rock structures or fake fire hydrants. But they must endure a never-ending struggle to maintain agency as Amazon continues to encroach on how they operate their business and how much they profit from it. Along with always-changing policies and competition from unscrupulous foreign sellers being welcomed onto the marketplace, this creates problems and issues that are not easily solved by a “bring your dog to work” day.
Consider the treatment of Amazon’s fulfillment employees, struggling to unionize in the face of such well-documented slights such as: cellphone bans that may have cost lives during a tornado, COVID-19 outbreaks in warehouses, or job stress that has reached such a critical point that Amazon felt it was a good idea to install meditation booths (aka “crying booths”).
Look, we love dogs and cute dog videos on YouTube as much as the next person. But at the very least, Amazon should at least offer sellers and fulfillment employees a chewy treat, a scratch behind the ears, and a hearty “Good girl/boy.” Because as it stands, it seems Amazon’s PR team has truly gone to the dogs.
Read more at Amazon.