All the images I included in this post come from an AlphaSense expert call transcript. There's a 2-week free trial (no CC required) using this link. You can download as many calls as you like during your free trial.
This week I read an interesting call with a digital marketer on Amazon's 3P services and ad spend.
They believe 3P GMV is growing due to:
- Sellers getting better at selling on Amazon
- Amazon's expanded services
- Pullback in certain 1P categories
- Ability to cash out
Incremental ad spend will probably slow down now that it's at 10-15% for sellers. Only very high-margin products can justify spending more on Amazon Ads:
Walmart is closing the gap with Amazon regarding advertising. There's still a large gap but the company is going aggressively for Amazon. Amazon is less efficient but the base is much larger:
There are of course pros (customer acquisition, fulfilling) and cons to Amazon, but the expert believes that sellers will end up leaving Amazon if they continue to get squeezed
The "squeeze" can also translate to higher prices for Prime members:
Sellers try to cover a lot of real estate ground on Amazon (brand ad + sponsored ad + organic listing) to enhance credibility:
Amazon is trying to grow ad spend by offering more ad products.
The percentage sellers spend might not change but the pie will get bigger, fueling ad growth:
Amazon can come out with a game changer which would be an automatic bidding bot to achieve the highest level of sales possible with a pre-determined budget:
According to the expert, Amazon is catching up to Google ad capabilities pretty fast. Same goes for Walmart:
All the images above come from an AlphaSense expert call transcript. There's a 2-week free trial (no CC required) using this link
. You can download as many calls as you like during your free trial.