Amazon Ultrafast Fresh Starts Strong; Walmart Matching Amazon; Amazon Sales Growth Slows

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Amazon Ultrafast Fresh Trial Goes Well in Philly
Our research indicates Amazon is seeing better than expected results from their Ultrafast Fresh (UFF) trial in the Philadelphia market, with brands seeing notable sales lifts in this market relative to other markets. This was an important test as many manufacturers were waiting to see meaningful sales improvements before investing more in the eTailer. Amazon appears likely to expand this test to Las Vegas next, along with a few other markets in 2Q. If these tests go well, Amazon anticipates expanding it to another ~40 markets in the second half of the year. We see potential for this or other home delivery offerings to become leaders in the online grocery space as our work indicates consumers prefer home delivery to in-store pickup, assuming similar pricing and assortment.

Source: Vudu.com

Walmart Entering Original Video Content Business; Matching Prime Overnight Shipping?
Walmart continues to push to compete with Amazon’s leading eCommerce businesses, with Bloomberg reporting this week that the Bentonville retailer is planning to develop at least six original programs in the next year, unveiling the first to advertisers this week. Walmart’ programming will be aimed at families watching shows together, appealing to kids, parents, and couples on date night. The first program will be a reboot of the 1980s comedy “Mr. Mom”. The programs will be ad-supported with both traditional interstitial ads as well as potentially including “shoppable content” – the option to buy products seen in the shows. Walmart also hinted on twitter that they would match Amazon’s plans for one-day shipping without including a membership fee, although it remains unclear how exactly they would accomplish that given Amazon’s supply chain leadership in delivery to the home.

Source: Amazon Filings, CRC Analysis

Amazon Sales Growth Slows in 1Q19
Amazon’s 1Q19 earnings release indicated revenue growth slowed across most of their product categories, including both their 1P and 3P sales, although profitability did improve both Q/Q and Y/Y. Amazon has indicated that they will be improving Prime Shipping to 1-Day, which could reaccelerate growth in coming quarters.  

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