Third-party seller service revenue hits a new high, will Amazon reduce its own-operated share?

On July 28th local time, Amazon released its second quarter financial report, as follows:

Revenue: $121.23 billion, up 7% year-over-year, beating Refinitiv expectations of $119.09 billion

Net loss: $2.028 billion, compared with a net profit of $7.778 billion in the same period last year

Cloud service revenue: $19.7 billion, up 33% year-over-year, above Street Account's estimate of $19.56 billion

Advertising revenue: $8.76 billion, up 18% year-over-year, vs. Street Account's estimate of $8.65 billion

As online shopping gradually cools down, Amazon is currently actively developing other businesses. It is understood that Amazon has now begun to vigorously deploy in areas such as healthcare, self-driving taxis and home robots, and the data points on online sales in the financial report also indicate the transformation of its core areas.

According to the financial report, the proportion of private brands and third-party sellers in Amazon's revenue structure is changing in the second quarter.

In the second quarter, Amazon's online store net sales were $50.855 billion, down 4% from $53.157 billion in the same period last year, accounting for less than 42% of its overall net sales. Data tracked by GeekWire shows that this share is a record low.

Five years ago, Amazon's private-label brands and stores accounted for about 60% of its total sales , but the most recent quarterly figures show a 4% decline from the $53.2 billion in the same period last year . This long-term shift is due more to the rapid growth of Amazon's other businesses, including Amazon Web Services and third-party seller services.

According to the data on third-party seller services in the financial report , the net sales of this group were US$27.376 billion, a 9% increase from US$25.085 billion in the same period last year , and a year-on-year increase of 13% excluding the impact of exchange rate changes.

The above data shows that third-party sellers are becoming increasingly important in Amazon's online business in the second quarter. It is reported that in the second quarter, sales from third-party sellers accounted for as much as 57% of Amazon's online product sales . Amazon's Chief Financial Officer Brian Olsavskey said this is another historical high.

Amazon's third-party seller services, which include sales commissions, logistics and warehousing fees Amazon collects from third-party sellers, have set records for the non-holiday quarter.

Comparing Amazon's self-operated business and third-party seller business, it is not difficult to see that the revenue from providing services to third-party sellers is more than that from its self-operated business.

Earlier reports said that Amazon was considering drastically cutting or completely withdrawing from its own-brand investment due to weak online sales and pressure from regulators. Although Amazon officially refuted this "rumor", it is understood that sales of many products under Amazon's own brands have not increased this year.

As the revenue from third-party seller services gradually grows and the sales and volume of self-operated brands gradually decline, under the current economic conditions, perhaps the rumors are not groundless . In the future, Amazon's self-operated share may continue to decline, and platform resources will then be more inclined towards third-party sellers .

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