The Webretailer News Digest for May 6, 2022
Amazon’s Q1 2022 report disappoints analysts but isn’t bad news for sellers
Contrary to the headlines you might have read, the sky did not fall for retailers when Amazon.com announced its Q1 2022 results on April 28. You can be forgiven if you had that impression because headlines filled with hyperbole like “stock plunges” or “demand cools” or “boom is over” will do that to you. If you were a stockholder, you might have felt the impact of a few chunks of sky hitting terra firma, because stocks did drop based on reported slower growth, diminished forecasts, and a $3.8 billion Q1 loss for the giant conglomerate. But if you are an Amazon seller or vendor, there’s actually some good news hidden within the report.
First, let’s look at the big numbers and why they matter. The $3.8 billion loss was the first loss since 2015 which shocked many analysts. Amazon blamed the loss on various factors, including the supply chain, its stake in electric truck manufacturer Rivian, the Ukraine war, and the COVID-19 pandemic. The corporation recorded sales of $116.4 billion in the first quarter of 2021, up only 7% from the previous year compared to the 44 percent increase seen during last year’s Q1.
However, Marketplace Pulse notes that Amazon expected sales to slow. Per their latest report, “From Q1 2016 to Q1 2020, sales on Amazon grew on average 17% year-over-year. If growth happened in equal parts over the past two years, it would have been 18% (instead of 44% and -3%).” While it’s true that the reopening of society due to the lessening effects of the pandemic, combined with inflation, has lowered eCommerce sales across the board, the reality is there’s a lot to feel good about in this report.
Let’s dive in and see why Amazon sellers shouldn’t panic like Chicken Little or Henny Penny yet.
Here’s the good news for sellers in Amazon’s Q1 results
Amazon sellers should look favorably at the results of Q1 2022. Here are four reasons why:
1. Sales grew 7% – Even with several adverse global events in the play, sales continued to grow by 7% (9% excluding foreign exchange). The pandemic “bubble” may be bursting, but shopping online has become more adopted by more people globally than ever before—and Amazon is the number one place to do it outside of China.
2. Amazon fulfillment will be better than before – In Amazon’s press release, CEO Andy Jassy said that “our Consumer business has grown 23% annually over the past two years, with extraordinary growth in 2020 of 39% year-over-year that necessitated doubling the size of our fulfillment network that we’d built over Amazon’s first 25 years—and doing so in just 24 months.” As a result, Amazon sees “encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
3. Prime Day is coming in July – After a June Prime Day in 2021 and an October Prime Day in 2020, the global shopping event is returning to its long-time home month of July in 2022 in more than 20 countries. With money tight for many folks right now, 200+ million Prime members will be ready to shop for bargains. Here’s a handy list of 2022 Prime Day deadlines to know about.
4. The second half of the year will be better – Amazon’s forecasts for Q2 2022 are for 3% to 7% growth compared with Q2 2021. This number is lower than expected, but again, last year was much higher than expected, so it’s most likely it will average out as did the first quarter. In the long view, sellers can expect to rebound in 2022 Q3 with Prime Day and Q4 with the holiday shopping season.
eBay offers $10k grants to US small business sellers
eBay’s 2022 Up & Running Grants will offer $10,000 grants to 50 small company sellers in the United States. The program helps small eBay businesses in the United States scale, grow, and prosper online.
Grants are to be used for business requirements such as physical and digital store renovations, new equipment and inventory, technology, recruiting, and training. The new eBay Academy provides recipients with guided online learning resources. Recipients also receive direct training and mentoring from expert sellers and small business growth advocates.
eBay is looking for sellers from a variety of backgrounds who can contribute their unique experiences and inventory to the marketplace while also being dedicated to their communities and the eBay ecosystem.
Applicants must be an existing eBay seller who has had an active listing in the last six months and has a performance rating of “above standard” or “top-rated”; or be a new seller who joined eBay between June 1, 2021, and February 28, 2022.
Small business owners on eBay are urged to apply for Up & Running Grants using the online application. Sellers will be requested to provide information about their small business and how they intend to utilize the award to expand it. The program is an excellent opportunity for new or existing sellers to level up their business for 2022.
Read more at eBay.
Meta’s ecommerce efforts are just meh
Facebook and Instagram Shops’ parent company Meta has been dealing with several stumbling blocks as it tries to boost the social networking platforms’ ecommerce profile. After a 2020 rollout rode the pandemic home shopping boost like most other online marketplaces, a recent pullback has laid bare the challenging reality of what it takes to run a competitive ecommerce business.
According to a Wall Street Journal report, numerous retailers have expressed dissatisfaction with Meta’s eCommerce launch, claiming that it lacks basic features such as the ability to display products in various colors and sizes if they aren’t sold directly through Facebook and Instagram. There have also been limits on where a merchant can ship items and provide speedy delivery.
Other issues dogging meta’s efforts include the departures of key executives, privacy changes at Apple that resulted in significant advertising data loss, and bugs infesting Facebook Ads attribution tech. In April, Facebook was accused by sellers of not sending payment for sales done through its platform. There has also been noticeable tension between Facebook and eBay over eBay using Facebook for customer support.
The upside for sellers in accessing such a massive and activated number of potential buyers through social media channels is tremendous. While some retailers recognize the potential of connecting with customers through Facebook and Instagram’s vast user bases and are willing to ride it out, the Journal article notes that others are finding that setting up Shops is too complicated and buggy to be worth the time and effort. Time will tell if these are just growing pains for Meta or if running successful eCommerce marketplaces is not their sweet spot.
Read more at Wall Street Journal.
Fanatics looks to dominate sports merchandise ecommerce
The sports merchandise and memorabilia company Fanatics has been making a significant push into the ecommerce domination of its category. A recent $1.5 billion funding round has raised the company’s valuation to $27 billion—or approximately 11,739.13 Tom Brady rookie trading cards.
According to Digital Commerce 360, the company has been expanding from its bread-and-butter of DTC official sports merchandise into new partnerships and opportunities. These include Fanatics’ recent purchase of Topps and its license to produce baseball cards, a retail partnership with Kohl’s, and long-term partnerships with colleges like the University of Miami.
Of interest to sellers in the suddenly hot again trading card market is that Fanatics is not likely to purchase a trading card grading company, but is more likely to sign an existing company in the space as a brand partner. This is the same model that eBay has followed to some success. It will be interesting to see if competition between eBay and Fanatics arises in the future, given eBay’s growth in the trading card resale market.
Fanatics has not been shy about its plan to become the largest player in its arena, openly touting its desire to become a $100 billion-valued company. With a closed ecosystem that doesn’t allow for third-party sellers, Fanatics will remain strong competition for anyone in the sports merchandise game for the foreseeable future.
Read more at Digital Commerce 360.
Also in the news
- Change to restricted product policies. Amazon UK.
- Learn with our new Advertising quick tips videos in Seller University. Amazon US. Amazon UK.
- New return address settings for seller-fulfilled returns. Amazon US.
- eBay is raising ad fees sellers pay on June 1st. EcommerceBytes.
- eBay UK Lowers Per Order Fee For Home, Furniture & DIY. Value Added Resource.
- Sellers must give eBay the right to alter listing ads. EcommerceBytes.
- Surging prices force consumers to ask: Can I live without it? CNBC.
Webinars in the week ahead
May 10: How Brands Can Leverage Analytics to Drive Productive Retailer QBRs. ChannelAdvisor.
Various dates: Amazon advertising’s global webinar program continues with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization, and tips. Amazon.
For US sellers
May 10: The Amazon Prime Day 2022 Prep Panel. Tinuiti.
May 10, 11: Amazon Small Business Academy Pathways Series May. Amazon.
May 11, 12, 13: Seller University Webinar: Introduction to creating and listing products. Amazon.
For UK sellers
May 10: Faire B2B marketplace US/UK/EU webinar. Tamebay.
May 11: Introduction to Customer Reviews (New Tool). Amazon.
Various dates: Attend our exclusive webinar on getting prepared for Prime Day 2022. Amazon UK.
Various dates: Amazon webinars covering selling, fulfillment, SFP, advertising, and Amazon Business. Amazon.
Etsy co-founder, now ice cream man, says marketplace is not “playful” enough
And finally, Etsy co-founder Chris Maguire, who left the company in 2008, was interviewed for a recent article on CNBC.com. Currently the proprietor of Tubby Robot Ice Cream Factory in Philadelphia, Pennsylvania, the frozen treat entrepreneur shared a very vanilla opinion on the changes in the craft marketplace since its beginning:
“They had this playful aesthetic. And I don’t see that as much on Etsy now,” Maguire said. “It’s kind of more geared towards, ‘We’re selling stuff and we’re selling as much as possible, and that should be the driving goal.’ But it’s, you know, there’s not quite as much playfulness.”
While this comes as no surprise to anyone who has been following Etsy’s rocky road in 2022, it’s interesting that CNBC reached out to a second banana for a quote on their Etsy piece. Someone at the network needs to wake up and smell the coffee because this source has been up to his elbows in peanut butter fudge swirl.
Indeed, the recent and rather ineffectual Etsy seller’s strike, poor Q1 2022 numbers, and seller outrage over fee increases have certainly taken playfulness out of Etsy sellers’ lives and left shareholders feeling darker than dark chocolate. It’s also true that there have been more manufactured goods than ever on the marketplace lately—and that stinks of burnt sugar and seawater.
But has the Ice Cream Man looked at Etsy’s Weird Stuff category recently? What’s more playful than handcrafted All Seeing Lemons, Corn Scented Ears of Corn Soap, or (yikes) Jeffrey Dahmner Coffee Mugs? If that’s not playful, well, then it’s certainly disturbing.
Maybe the bigger issue isn’t that Etsy isn’t playful anymore—it’s that it’s turning into eBay.