There’s plenty of Amazon news to catch up on from around the globe and we’ve got just the highlights you need to stay up-to-date on the latest Amazon developments. Biggest news for Amazon is a report by Consumer Intelligence Research Partners (CIRP) that Amazon Prime subscriptions retention has reached 96%. Huge by any measure! Ken Kam interviews fund manager Rex Jacobsen who says the market is still underestimating Amazon. Bank of America Merrill Lynch analyst Justin Post estimates Amazon Business will reach gross merchandise volume of $3.5 billion in 2016 and could hit GMV of $25 billion by 2020.
After just three years, Amazon India is a major force with more than 30 million unique visitors to its e-commerce site according to a report in the Business Standard. Handmade sellers on Amazon are now responding to the company’s 3% increase in referral fees and new merchant fees scheduled to start in 2018. With more than 1700 employees in Ireland, Amazon is looking to add another 500 tech jobs there as well as several thousand new EU employees. Amazon’s new Prime Air Graz, Austria office will focus on “sense-and-avoid” drone technology.
Three new Amazon fulfillment offices in the US in Joliet, Illinois and Tracy and Eastvale, CA will add another 500 new US jobs. By giving away its DSSTNE artificial intelligence algorithm which powers its product search and recommendations, Amazon hopes to encourage developer innovation. Look out logistics companies. Amazon is aiming for a piece of the$150 billion global freight forwarding business. Mike Lapchick sees a problem with the poor quality of product information on the Amazon marketplace. Perhaps an advantage for competitors?
Amazon Prime retention rate hits 96%
Retention had dipped somewhat following Amazon’s increase of membership fees from $79 to $99 in March 2014 but has since recovered, according to a new report by Consumer Intelligence Research Partners (CIRP).
CIRP found that after a subscriber’s 30-day free trial expires, 73 percent become paid members. But retention after that jumps considerably, with 91 percent of Prime members renewing for a second year and 96 percent of those subscribing for a third year. Via fierceretail.com
The Market Is Underestimating Amazon
Ken Kam interviews fund manager Rex Jacobsen about Amazon.
Ken Kam: What does the market expect from Amazon?
Rex Jacobsen: Wall Street’s consensus 12-month price target is approximately $800. I think they are underestimating Amazon’s growth potential. I believe the stock price can increase 25% in each of the next two years, reaching $1,100 within two years.
Kam: What is the market missing?
Jacobsen: For quite a while, Amazon’s story was about the company reinvesting in content, technology, and infrastructure to increase market share and sales. This happened to such a large degree that profits were rare. That has now changed.
Kam: What’s changed?
Jacobsen: Let’s first talk about Amazon’s e-commerce market share. According to Slice Intelligence, Amazon’s share of the e-commerce market was 41.2% from January to April. Second place goes to Best Buy BBY +0.44% and Nordstrom JWN -0.50% with 2.7%. In 2015 alone, Amazon’s e-commerce sales increased by $23 billion. Projecting out to 2020, Forrester Research estimates that U.S. e-commerce sales will grow to more than $530 billion. Via forbes.com
Amazon’s Push Into Business E-Commerce an $18 Billion Opportunity?
Amazon (AMZN) is pushing deeper into business-to-business e-commerce, which one analyst estimates could add $18 billion in company revenue by 2020.
The B2B unit, Amazon Business, began as Amazon Supply in 2012. The initiative was rebranded in April 2015 and Amazon — which posted 2015 revenue of $107 billion — recently indicated it reached more than $1 billion in annual sales, with 300,000 customers.
Bank of America Merrill Lynch analyst Justin Post estimates Amazon Business will reach gross merchandise volume of $3.5 billion this year, resulting in revenue of $3 billion. He anticipates GMV of $8 billion next year and revenue of $6.4 billion. By 2020, estimates Post, Amazon will hit GMV of $25 billion and $18.6 billion in revenue.
“Based on recent management comments, Amazon Business appears to be ready for prime time, and we wouldn’t be surprised if Amazon invests in marketing to raise awareness as Amazon’s procurement systems improve,” said Post in a research note. Via investors.com
Amazon sets the pace for e-commerce in India
Seattle-based e-commerce giant Amazon should be happy that even before it turns three in India on June 5, the company has emerged a leader in this market. Before rivals can protest, we are not talking numbers yet. The American player has won the first round simply because it has successfully pushed competition to change the narrative and metrics of the online play.
Earlier this week, the almost nine-year-old poster boy of Indian ecommerce, Flipkart, announced in three separate interviews that customer satisfaction would be its mantra from now on. GMV or gross merchandise value of goods sold on the platform, till now the benchmark for success, will be kept aside, said Binny Bansal, who became CEO of Flipkart in January. Not too long ago, Snapdeal CEO Kunal Bahl had the same to say about shedding the GMV goalpost.
In the process, both Flipkart and Snapdeal have endorsed what the American e-commerce major has always maintained and indirectly acknowledged Amazon’s heavyweight presence in this market. Via business-standard.com
Amazon Fees to Rise for Handmade Sellers in August
First the good news: Amazon is extending its promotional monthly subscription fee waiver through the end of 2017. That means sellers who list primarily on Amazon Handmade won’t have to pay the $39.99 monthly Professional selling plan subscription fee until 2018.
Amazon explained, “To help artisans grow their businesses on Amazon, we are extending our promotional monthly subscription fee waiver through the end of 2017.” Now the bad news: Amazon is increasing the referral fee from 12% to 15% on sales in Handmade at Amazon. The marketplace explained: Via ecommercebytes.com
Amazon Expands in Europe Starting with Irish Engineers
Amazon typically announces its plans for new fulfillment centers for housing inventory, but this week it made an announcement about a different area of growth. The company made it known it’s expanding its engineering activities in Ireland with the creation of 500 new high-tech jobs.
And it won’t stop with Ireland – the latest recruitment drive is part of Amazon’s plans to create several thousand more new jobs in Europe.
The new “highly skilled” roles include data center technicians, software engineers and customer support staff among others, to be hired over the next two years at a number of Dublin facilities. Dublin engineers support new technology for Amazon’s retail operations, devices, and Amazon Web Services (AWS). According to RTE, Amazon already employs 1,700 people at a number of locations in Dublin and Cork. Via ecommercebytes.com
Amazon Prime Air opens Austrian outpost with focus on sense-and-avoid tech
As first reported by the Verge, Amazon today announced that it is opening a new development center for its Prime Air drone delivery program in Graz, Austria. This new team will focus on “sense-and-avoid” technologies for drones.
The team in Austria will augment Amazon’s existing Prime Air development locations in the U.K., North America and Israel.
Sense-and-avoid is maybe one of the most important safety features for drones. You don’t, after all, want your Amazon drone to crash into a tree — or even worse, your children — when it lands in your backyard.
“Like smart animals, the drones must know when they are getting into trouble, and avoid colliding with things, without a human intervening,” Amazon’s VP for Global Innovation Policy and Communications Paul Misener writes today. “They must be independently safe.” Via techcrunch.com
Amazon Announces Another Three Fulfillment Centers in US
Amazon will open a second fulfillment center in Joliet, Illinois, and two more fulfillment centers (FCs) in California, bringing the total number of Golden State FCs to nine. Amazon had already announced plans for five new fulfillment centers in the US so far this year.
The new FCs in Tracy and Eastvale will create over 1,500 new full-time jobs for a total of 14,000 full-time hourly associates in the state and will increase its area of operations to nine million square feet. The company also operates sortation centers in the state in Newark and San Bernardino.
Both of the new California facilities are approximately one million square feet in size and will each employ hundreds of full-time associates. At the Eastvale location, associates will pick, pack and ship smaller customer items, such as books, electronics and toys. At the Tracy facility, the second in the city, associates will pick, pack and ship larger customer items, such as big-screen televisions, sports equipment and patio furniture. Via ecommercebytes.com
Amazon’s Giving Away the AI Behind Its Product Recommendations
Amazon has become the latest tech giant that’s giving away some of its most sophisticated technology. Today the company unveiled DSSTNE (pronounced “destiny”), an open source artificial intelligence framework that the company developed to power its product recommendation system. Now any company, researcher, or curious tinkerer can use it for their own AI applications.
It’s the latest in series of projects recently open sourced by large tech companies all focused on a branch of AI called deep learning. Google, Facebook, and Microsoft have mainly used these systems for tasks like image and speech recognition. But given Amazon’s core business, it’s not surprising that the online retailer’s version is devoted to selling merchandise.
“We are releasing DSSTNE as open source software so that the promise of deep learning can extend beyond speech and language understanding and object recognition to other areas such as search and recommendations,” the Q&A section of Amazon’s DSSTNE GitHub page reads. “We hope that researchers around the world can collaborate to improve it. But more importantly, we hope that it spurs innovation in many more areas.” Via wired.com
Report: Amazon on the hunt for freight management tech
The global business of freight forwarding is worth some $150 billion annually, according to the Wall Street Journal. Designing the most efficient routes is essential to complex freight operations: It’s something that is increasingly done through tech, and it remains a burgeoning but still-evolving area.
Amazon’s entry into the ocean freight forwarding market would be significant because it could allow Chinese factories a more direct path to American consumers, Flexport’s Petersen noted in his January blog post. Adding superior technology would only enhance Amazon’s capabilities.
Indeed, Amazon’s own report on the matter, according to leaked documents obtained by Bloomberg in February, describes the ability for “one click-ship for seamless international trade and shipping,” and says “Sellers will no longer book with DHL, UPS or FedEx, but will book directly with Amazon.” Via retaildive.com
The Trouble with Amazon’s Product Content
Consistent and accurate product information is catnip for consumers in the digital marketplace. But surprisingly, Amazon – arguably the king of ecommerce – has one of the worst track records in the business when it comes to product content.
What’s going on at Amazon? And more importantly, what can other online retailers learn from Amazon’s product information practices?
Consumers Care About Product Information
Mobile technology and advances in digital commerce have helped make ecommerce a preferred channel for many consumers. But while technology makes ecommerce possible, it’s becoming apparent that product content is what motivates online consumers to complete purchases and become loyal digital customers. Via ecommercebytes.com
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