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Amazon’s Q1 Earnings Report 2023: Wins, Losses, and Future Predictions

Amid troubling economic trends, Amazon still put together an impressive performance in Q1 of 2023. Here’s what’s growing, what’s slowing, and what’s around the corner for the eCommerce giant.

  • May 3, 2023
  • /
  • Brian Burt
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Amazon Web Services is a subsidiary of Amazon that provides on-demand cloud computing platforms to individuals, companies, and governments, on a metered, pay-as-you-go basis. It might not seem particularly relevant until you realize what an important part of Amazon’s overall revenue stream it has become.

In many ways, it’s the backbone of Amazon’s predictable quarterly profit reports.

Last year, in 2022, AWS was in high gear, with eCommerce suffering through a post-pandemic hangover.

Now, one year later, things are very different.

Amazon’s Differentiation Leads to Big Profits

Financial advisors are constantly preaching about diversification, or mixing a variety of channels within an overall system in an attempt to reduce risk should one individual component fail or significantly diminish.

Amazon sellers are certainly familiar with the concept.

Amazon recently announced 2023 Q1 results that show net sales increasing 9% to $127.4 billion in the first quarter, compared with $116.4 billion in the first quarter of 2022. A big part of that increase came from the strength of two pillars of eCommerce growth in 2023, Amazon’s increasingly sophisticated advertising platforms, and artificial intelligence.

“Our advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands,” CEO Andy Jassy said in the earnings statement.

However, Amazon’s AWS cloud computing operating income was only $5.1 billion, compared with operating income of $6.5 billion in the first quarter of 2022. That’s a big slowdown in Amazon Web Services, from 37% to 16% growth. One year ago, Amazon Web Services was a double threat for Amazon, with both the highest-growth and overall profitability.

Grocery Slowdown, Warehouse Pause, and Layoffs

New CEO, Jassy took over for founder Jeff Bezos in July 2021, after the latter executed a managerial step back. Since that time he’s been behind a campaign to reduce costs. By closing down unprofitable ventures, slowing warehouse expansion, pausing the rollout of its Amazon Fresh stores, and substantial layoffs, (Amazon recently laid off 27,000 employees, the largest job cuts in its 29-year history), the hope seems to be to streamline Amazon’s processes and restore profitability.

Amazon has over 500 Whole Foods stores in the United States, and Amazon’s pumping of the brakes tells that their grocery model is still suffering a few growing pains. “We wish we were further along at this point,” Jassy said in answer to a question on the subject. “We’ve tried lots of ideas. We haven’t yet found conviction around the format that we want to expand much more broadly.”

Amazon Q1 Highlights

Once again, if you’re an Amazon seller, we don’t need to tell you how focused the eCommerce giant is on their customers’ experience. Making it easier to be an Amazon customer is job #1.

Here are just a few of the innovations and highlights from the first quarter of 2023.

ChatGPT Has Got Amazon’s Attention

When the entire eCommerce community is talking about ChatGPT, you know it’s going to be on Amazon’s radar. During Q1, Amazon announced the launch of CodeWhisperer, a tool built on ChatGPT that can create code-based projects based on spoken commands.

Amazon said that “During a productivity challenge, participants who used CodeWhisperer completed tasks 57% faster (on average) and were 27% more likely to complete them successfully than those who didn’t use CodeWhisperer.”

That’s just the beginning of Amazon’s determination to invent and innovate. Amazon regularly builds new products and services that customers have asked for, and also invents new ones with the hope of getting out in front of all those desperate customer requests.

Along with the launch of CodeWhisperer, Amazon announced Amazon Bedrock, a new managed service that offers customers the easiest way to build and scale enterprise-ready generative AI applications.

How Canopy Management Can Help

Amazon has been at the forefront of the eCommerce world for over two decades, providing a platform for millions of businesses to sell their products. With the rise of eCommerce, Amazon has become the go-to destination for shoppers across the world, making it a valuable advertising platform for businesses looking to reach new customers.

Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts.

Canopy is determined to make sure that as Amazon sellers, you not only have an entire team of eCommerce experts at your disposal, but that whether you’re a partner or not, you have all the tools (and information) you need to make the decisions that help you succeed.

Canopy’s blog page is a great resource for the entire range of eCommerce sellers, from newer entrepreneurs, to seasoned online-selling professionals.

When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”

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