What Does Amazon’s Q3 2023 Earnings Report Mean for Ecommerce Brands

Every quarter Amazon reports earnings and gives the market an update on the trends they are seeing.  While Amazon started out as an online retailer, they have grown into many other businesses such as Amazon Web Services, streaming, and grocery.  All these extra businesses make it difficult to understand what is happening in the online segment. This is our attempt to pass along the information brands need to know about Amazon. 

The key takeaways are:

• Total ecommerce sales on Amazon grew an estimated 15% YoY, which has been an acceleration from the 10% growth we saw at the start of the year and the 4% growth we saw last year.  This reacceleration is largely due to the ecommerce getting back to its “trendline” growth rates post COVID impacts.  It also shows that Amazon is growing strongly despite any macroeconomic trends and shows a continued market share gain for both Amazon and ecommerce.
• 3P marketplace sales continue to outpace 1P sales.  We estimate that 3P sales increased 20% YoY and now accounts for 66% of total GMV on the platform.  This 20% growth rate has largely been consistent for the past year and up from the 10% growth rate we saw in 2022.  1P continues to grow, but at a far slower pace than 1P.  1P grew an estimated 7% YoY, which is roughly ⅓ the rate of 3P.
• The Amazon advertising business grew 27% YoY to $12 billion in Q3.  This shows the continued trend that advertising is growing faster than overall GMV growth. Advertising is now roughly 7.8% of GMV on the platform and continues to grow.  Essentially, advertising is getting more expensive and accounts for a large portion of most brands’ income statements.