After another record Prime Day in June and months of investment in its logistics network, Amazon would historically have joined its retail compatriots in beating Wall Street earnings expectations this week. But with consumers emerging from their homes to shop and socialize, therefore spending less time shopping online, Amazon missed sales expectations — a rare occurrence for the eCommerce giant.
Amazon reported $113 billion in net sales over the three months ending June 30, up 27 percent versus the same period last year but below analysts’ expectations of $115 billion. Net product sales accounted for $58 billion, while net service sales accounted for $55 billion.
Walmart isn’t scheduled to release its earnings for another several weeks, on Aug. 17. But where Amazon saw disappointment, Walmart may see strength in its retail footprint. Walmart has 4,700 stores across the U.S., with 90 percent of Americans living within 10 miles of a location, meaning the retailer may have been able to capitalize on consumers’ emergence from their homes.
Amazon Chief Financial Officer Brian Olsavsky said Amazon continues to invest in its fulfillment network as demand for Fulfillment By Amazon continues to increase from third-party sellers. Over the last 18 months Amazon’s entire fulfillment network has nearly doubled in size, and the number of products being fulfilled by Amazon has doubled in the past two years.
This logistics growth, however, is slowing further expansion of Amazon’s one-day delivery to more parts of the U.S., giving Walmart another potential leg up, especially with the retailer growing its partnership with drone delivery startup DroneUp last month.
Also, a note for those hoping for another Prime Day later this year: Olsavsky didn’t rule it out completely but told investors and analysts he had nothing to report on the matter, noting that the company’s pattern has been once a year.
A License To Sell
Walmart will begin licensing some of its technology to businesses and brands looking to enhance their online services, following in the footsteps of Amazon, which has provided its cashierless “Just Walk Out” technology to retailers for a few years.
As part of the effort, Walmart is partnering with Adobe to integrate Walmart’s Marketplace, eCommerce, and in-store fulfillment and pickup technologies with Adobe Commerce, which offers solutions for merchants and brands.
Though Amazon has seen some success by licensing its cashierless technology — airport retailers OTG and Hudson are among those currently using it — it remains to be seen whether brands will react positively to Walmart’s offerings.
What it likely comes down to is how well Walmart itself can execute digitally. With other similar services already available, it’s up to the box store giant to convince brands that it can do it best — though if it works, Walmart’s Marketplace could see a boost in seller interest.
The Lap Of Luxury
Less than a year after the inception of Amazon’s Luxury Stores, the company has opened the doors to more consumers and begun using the platform as an opportunity to introduce people to new designers. On the surprisingly slick and glossy Luxury Stores website, Amazon recently announced the debut of Mira Mikati’s eponymous brand as well as Pietro Simone beauty products. Chufy, a label launched in 2017 by art director and fashion consultant Sofía Sanchez de Betak, is also set to release on the platform.
Though luxury is a relatively new area for Amazon — Luxury Stores launched on an invite-only basis in September before later opening to a wider audience — the company is counting on its eCommerce capabilities to give it an advantage over other sellers. Online luxury purchases grew 39 percent worldwide year over year in both April and May of 2020, PYMNTS reported in a recent tracker. Online retail sales are anticipated to account for 25 percent of total luxury purchases by 2025, up from 10 percent in 2019.
It’s also an area where it stands apart from Walmart, which despite attracting more affluent customers through its grocery business, has not entered the world of high-end fashion.
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