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Amazon News – July 2020

Welcome to the monthly summary of all the most interesting & important things that happened on Amazon in July 2020. Every month, I summarize and publish on my site the most interesting news in Amazon’s huge content world. A world I live in every day as part of my work. The purpose of the blog is to keep us all up to date with Amazon news, activities, and initiatives so that we can find out about things that could affect our business and identify new or existing opportunities.
Another interesting month full of activity for Amazon – Amazon publishes the financial statements of the second quarter and presents record profits! It also launches smart shopping carts based on its cashier-less technology that are just what was needed for these times. The carts minimize contact between customers and cashier at the checkout by simply eliminating this step in the buying process. Amazon opens around 30 Amazon Go stores in the UK, opening new markets in Sweden And Russia. Announces interesting news for sellers, a particularly ambitious satellite project and Jeff Bezos appears before the US Congress.
 
If you have friends or co-workers that this blog can interest, inspire or help in business, feel free to share and pass on the content to expand their knowledge on the subject.
 
Enjoy!
 
1. As per my tradition, we will start with what customers searched for on Amazon in July 2020. Face masks remain at the top of the search table and this month they occupy 6 of the top ten searches. This month a new search word joined the top ten – desk. We can assume that since many people transitioned to work from home and realized that the situation is not going to end soon, they started looking for desks and work areas.
Amazon brand analytics (July 2020)

2. In early July, Amazon released its second-quarter results. Without a doubt, Amazon is one of the companies benefiting from the situation. This is the most impressive quarter that Amazon has had so far thanks to the significant changes brought on by the COVID pandemic. And more customers purchasing products online worldwide.

  • The company’s net sales exceeded all forecasts and showed a 40% increase this year and stand at $ 88.9B in the second quarter of the year.
  • Amazon announced in April that it expects to lose up to $ 1.5B in the second quarter due to high operating expenses related to the pandemic and despite forecasts surprised and doubled its profitability year-on-year and stands at $ 5.2B.
  • Amazon spent over $4B in the second quarter on expenses related to the Coronavirus – employee protection, payment of grants, and more.
  • The huge increase in Amazon purchases covered the unforeseeable expenses and brought profits. For example, purchases of food and household goods (grocery) – tripled in the last quarter, year on year.
  • Sales in North American countries increased by 43% to $ 55.4B compared to a 38% increase in the rest of the world of $ 22.7B.
  • Amazon has hired over 175,000 new employees since March!!!
  • Amazon’s revenue from Advertising (listed as “other”) increased by 41% year over year. It seems that Amazon has started to focus on the area of advertising with the addition of video campaigns, remarketing, and more.
  • The reduction in marketing expenses and travel expenses helped increase the company’s profitability in the second quarter.
 
“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners. We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.”
 
3. One of the nice things Amazon has launched this month are “smart” shopping cards called Dash Carts. The smart cart looks just like a regular cart only slightly smaller. It was built on Amazon’s cashier-less technology and it is equipped with cameras, sensors, and a smart monitor that automatically monitors what the customer put in his cart and charges him accordingly. The customer can finish the purchase and leave the store with the cart without having to stand in line at the checkout. The smart cart differentiates Amazon from its other competitors in an extraordinary way, and in addition, the smart cart is just the right thing for the Covid-19 period, reducing the contact between people in queues at the checkout and with the cashier.
 
“We try to hide that complexity away from customers so you don’t have to learn any new behaviors” Dilip Kumar, Amazon’s vice president of physical retail and technology
 
4. Amazon plans to open 30 physical branches of Amazon Go Grocery in the UK. A food store that uses Amazon’s cashier-less technology and allows the customer to pick up the products and leave the store without going through the checkout. Cashierless technology is very much in keeping with the spirit of the time and it seems that Amazon is investing in this application.
 
 
5. Amazon Prime Day – In light of recent events, Amazon is working hard to return its logistical operations to normal, raise inventory levels and restore compliance with the delivery times it is committed to. This is probably why Amazon’s big sales event has been postponed again and is now expected to take place in the week of October 5th. Anyway, after the release of the financial statements, it seems that Amazon does not really need Prime Day this year to generate sales.
 
6. News for sellers on Amazon US – Starting in September, sellers on Amazon will be required to display their business name + address publicly on Amazon. In Europe, Japan and Mexico, seller details are already displayed publicly in the seller profile. Some say it’s part of Amazon’s broad efforts to fight “problematic” merchants on the platform. As I wrote in last month’s post, the broader plan is to set up a new global team within Amazon that aims to deal with counterfeits sold on the platform – “The Counterfeit Crimes Unit”.
 
Example from Amazon UK:
7. Amazon is starting to prepare for the holidays and is posting restrictions on inventory sent to warehouses by third-party sellers. The goal is to ensure that only goods that are considered in demand during the holidays will be sent to Amazon and the warehouses will not be filled with products that are irrelevant, don’t sell at a good rate, and just take up shelf space. The main news is that starting August 16 if the IPI – Inventory Performance Index of an Amazon merchant falls below 500 (until now it was 400) Amazon will limit the storage of the same seller in warehouses for the holiday season. In a broader sense – the IPI index measures how efficiently an Amazon trader manages its inventory over time. A more detailed explanation can be found at the following link.
 
8. Amazon prepares for launch in Sweden – Amazon has begun preparations for the launch in Sweden. At the moment the Swedish site – amazon.se is still referring to Amazon Germany with the option of shipping to Sweden, but soon Swedes will also be able to enjoy the platform without having to pay for shipping from Germany. The launch project is called “Project Dancing Queen” a name that probably drew inspiration from the famous ABBA band song.
 
9. Amazon expresses interest in acquiring/investing in the Russian online trading platform Ozon. Ozon showed 115% increases in sales in Q1 this year in light of the Covid-19 and 200% increase only in April. In general, Russia has enormous potential for all e-commerce companies in the world.
 
 
10. I already wrote in February about Amazon’s ambitious satellite project called Project Kuiper. It’s expected to launch over 3,200 satellites into the air and provide low-cost Internet. This project competes with Alon Musk’s SpaceX. In late July, the FCC – Federal Communications Commission approved the project and Amazon plans to invest over $ 10B in it.
 
 
11. And let’s end with Jeff Bezos’ appearance in the Senate – the main arguments against Amazon dealt with the issue of competition. When asked if Amazon uses third-party sales information for business decision-making, Bezos replied that it could not guarantee that Amazon’s policy prohibiting the use of such information was ever violated. The committee noted that they interviewed a number of employees who reported that the policy on the subject was not enforced and in practice, they accessed information from third-party sellers. According to the policy, employees are only allowed to access aggregated information.
The committee asked Bezos whether Amazon uses information about merchants to produce competing products and even gave examples on the subject. Bezos was also asked whether Alexa prefers Amazon products, how Amazon handles imitations, and more – Bezos not always answered unequivocally and sometimes even said he did not remember and will come back with answers.
 
I hope you enjoyed and found interest in this summary. Let me know what you thought and what questions or comment you had at info@wise-commerce.io
 
If you also want to receive the Amazon News monthly summary by email (coming out once a month), feel free to sign up here at the bottom of the post, and the next monthly summary will reach you directly by email.
 
Have a great week and see you next month,
Meirav

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