Retail News CRM

Tag: online shopping

  • Alibaba Says China’s Slowdown Isn’t Hurting It All That Much

    Alibaba Says China’s Slowdown Isn’t Hurting It All That Much

    Alibaba Group VC Joseph Tsai says the firm is unperturbed by China’s economic slowdown. Quoted in a Bloomberg report, Tsai said Alibaba is “delinked” from a Chinese economy in which more and more business are moving online because “we’re in e-commerce and we’re digitising the whole sector”.

    He added that Alibaba’s growth is expected to continue to outpace the economy in general, as digital commerce grows at faster rates compared with more traditional retail business.

    The comments were made at the Goldman Sachs Group technology conference in San Francisco.

    According to the Bloomberg article, China’s economy expanded 6.4 per cent in the final three months of last year compared with a year earlier. Alibaba’s takings during the period rose 41 per cent to RMB117.3 billion (US$17.3 billion), representing its slowest pace of growth in more than two years. Its continued positive performance is buoyed by excursions into new business territories such as cloud services and entertainment, while assisting physical retailers with modernisation drives.

    According to the Alibaba Group VC, the situation is comparable to Amazon’s in terms of its consistent double-digit sales growth in the face of slowing economic growth within the US.

  • E-commerce firm Zilingo bags US$226m in funding

    E-commerce firm Zilingo bags US$226m in funding

    Singapore online fashion market Zilingo has achieved capital investment of $226 million in a Series D funding round. The investments were made by the firm’s existing backers, including Sequoia Capital, as well as newcomers Temasek Holdings and EDBI, and will support the business’s expansion into fresh markets in the Philippines, Indonesia and Australia, as well as build new infrastructure and modernise its supply chains.

    A report in DealStreetAsia last January suggested that Zilingo was considering listing an IPO with a view to developing offline retail.

    “Sequoia’s investment in Zilingo dates back to when the company wasn’t even yet incorporated and the name wasn’t finalised,” said Sequoia Capital (India) Singapore MD Shailendra Singh.

    “Ankiti and team have rapidly transformed their original ideas about Zilingo into a platform company that serves fashion consumers, merchants, retailers, brands and manufacturers, collectively representing a multi-hundred billion dollar market size.”

    Zilingo serves more than 20,000 merchants and retailers across Southeast Asia. It is currently valued at an estimated $1 billion.

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  • Asia-Pacific shoppers favour cross-border shopping

    Asia-Pacific shoppers favour cross-border shopping

    Half of online shoppers in Asia-Pacific make purchases cross-border, according to a recent report by yStats. The top two markets for cross-border shopping in the region are Hong Kong and Singapore while Japan shuns the trend, with over nine in 10 online shoppers buying only domestically. The tendency to buy from foreign online sellers also prevails in Australia and New Zealand, where a double-digit share of digital spending is cross-border.

    The top three destinations of cross-border online shoppers in Asia-Pacific are China, the US and Japan. Chinese online shoppers themselves prefer shopping platforms hosted by local providers, such as Tmall Global, Kaola and JD Global.

    Apparel and accessories was the most-in-demand product category. In South Korea, this sector accounted for more than one-third of e-commerce purchases from foreign sellers.

    Handheld connections prefered

    A standout characteristic of cross-border shopping in Asia-Pacific is the high level of mobile usage.

    Digital buyers in China and India were more likely to place orders on foreign websites through smartphones and tablets than through a desktop computer.

    The Asia-Pacific Cross-Border B2C E-Commerce 2018 report covers online retail imports and exports in 10 nations within Asia Pacific.

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  • Japan’s Zozo expects profit fall, cuts outlook

    Japan’s Zozo expects profit fall, cuts outlook

    Online fashion store Zozo reported its firs-ever profit decline since its launch, adding to the announcement that it plans to discontinue its innovative Zozo suit, as it moves away for custom-fit fashion. One of Japan’s fastest-growing start-ups, Zozo said it expects full-year for the fiscal year ending March 2019 to fall 12%, dipping to 17.8 billion yen ($164 million).

    Zozo said it expects full-year operating profit of 26.5 billion yen, down around 19% from a year earlier. It previously forecast profit to rise to 40 billion yen.

    Sales are still predicted to reach double-digit growth, up 20% to 118 billion yen. However, that’s much lower than an initial forecast of 247 billion yen.

    By category, private-brand revenues are forecast to total 3 billion yen, just 15% of the 20-billon yen prediction made last year. Profits at the new apparel brand will also be negative, registering a loss of 12.5 billion yen.

    Zozo holds close to a 50 percent share of Japan’s e-commerce market for mid to high-end fashion. The Tokyo-based retailer had tried to branch out by launching its private brand and a made-to-measure service. Dubbed the ‘Zozosuit’, a black-and-white spotted body suit that allowed user to take and upload personal body measurements, the suit was overhauled after complaints on how long the suits took to arrive, with some customers complaining the suit did not fit, causing more delays.

    “By distributing the ‘Zozosuit’ for free so that people could take measurements, we were hoping to create demand for the Zozotown business, including the private brand. But the impact did not have the scale that we had hoped for,” the company said in a statement.

    Zozo said it now expects to pay a year-end dividend of 10 yen per share instead of an original forecast of 22 yen.

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  • Walmart bets on India despite change in FDI norms

    Walmart bets on India despite change in FDI norms

    American retail giant Walmart and its Indian e-tail major Flipkart are betting big on India despite the revised norms for Foreign Direct Investment (FDI) in e-commerce, the companies said. “Walmart’s and Flipkart’s commitment to India is deep and long term. Despite the recent changes in regulations, we remain optimistic about the country,” the regional Chief Executive Officer of Walmart Asia and Canada Dirk Van den Berghe told IANS in a statement in New Delhi.

    The companies will continue to focus on creating “sustained economic growth and bringing sustainable benefits to India, including employment generation, supporting small businesses and farmers, and growing Indian exports to Walmart’s global markets”, added Berghe, who is also the retail giant’s Executive Vice President.

    Walmart’s assertion on the company’s commitment to India came after American investment bank Morgan Stanley in a report on Monday said the former might exit the country after the new FDI norms in e-commerce came into force on February 1.

    “An exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated,” the New York-based financial services firm said in its report titled “Assessing Flipkart Risk to Walmart EPS (earnings per share)”.

    In May last year, Walmart bought 77 percent equity stake in Flipkart for a whopping US$ 16 billion (Rs 1,16,256 crore).

    The revised FDI norms in e-commerce, however, have tightened the noose around the businesses of the country’s leading e-tailers – Walmart-owned Flipkart and Indian arm of American e-commerce giant Amazon.

    The policy revisions, issued by the Ministry of Commerce and Industry on December 26, 2018, barred e-commerce platforms providing a marketplace from exercising control or ownership over the inventory and forbids any company to sell its products exclusively on an e-commerce platforms alone.

    The e-tail companies are now working towards changing the ownership of their inventory, so as to comply with the norms.

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  • Online grocery space likely to witness traction: Nielsen

    Online grocery space likely to witness traction: Nielsen

    With consumers being increasingly preferring digital channels for their purchases, the online grocery space is likely to witness traction, according to market research firm Nielsen. Grocery is definitely going to start seeing traction as e-commerce picks up, Nielsen Executive Director Ajay Macaden said at the India Food Forum here. He, however, did not quantify the size of online grocery market.

    As per reports the online grocery market in India is expected to be US$ 5 billion by 2020, from US$ 1 billion in 2017.

    Macaden noted that packaged grocery is 40 percent in India versus a global average of 30 percent, while fresh groceries is around 41 percent against a global average of 26 percent which indicates that people are definitely picking up food online.

    Rs 3.4 lakh crore Indian FMCG industry is growing at 14 percent, is largely dominated by food that accounts for 55 percent (Rs 2.2 lakh crore growing at 15.1 per cent).

    In terms of contribution, general trade accounts for 90 percent of FMCG sales, growing at 13 percent, while the remaining 10 percent is from modern trade that is growing at 22 percent.

    In the food category, general trade accounts for 90.1 percent at a growth rate of 14.7 percent, while modern trade is growing at 19 percent.

    He observed that the FMCG industry which grew at 13.8 percent growth in 2018 was largely a volume led growth that was 77 percent of the total growth.

  • Optimistic about Indian market despite changes in new FDI policy: Walmart

    Optimistic about Indian market despite changes in new FDI policy: Walmart

    US retail major Walmart, which invested $16 billion in Flipkart, Wednesday said it is committed to the Indian market and is optimistic despite recent changes in the FDI policy for e-commerce firms in the country, according to a PTI report. The Bentonville-based retailing major’s statement came after a recent report by global consultancy firm Morgan Stanley, which had hinted that Walmart may quit Flipkart as the new foreign direct investment (FDI) policy came into effect, which would lower its profitability in the long run.

    Morgan Stanley, in a report titled ‘Assessing Flipkart Risk to Walmart EPS’ dated February 4, claimed that “an exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated.”

    “Walmart’s and Flipkart’s commitment to India is deep and long term. Despite the recent changes in regulations, we remain optimistic about the country,” said Dirk Van den Berghe, Executive Vice President and Regional CEO Walmart Asia and Canada.

    He further added, “We will continue to focus on serving customers, creating sustained economic growth and bringing sustainable benefits to the country, including employment generation, supporting small businesses and farmers, and growing Indian exports to Walmart’s global markets.”

    Tightening norms for e-commerce firms having foreign investment, the government, from February 1, barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price.

    The revised policy on FDI in online retail, issued by the commerce and industry ministry, also said that these firms have to offer equal services or facilities to all its vendors without discrimination.

    Last year on August 18, Walmart had completed acquisition of 77 per cent stake in Flipkart for about $16 billion (Rs 1.05 lakh crore), a deal which gave the US retailer access to the Indian e-commerce market.

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  • Indian consumers ask Amazon to resume Pantry service

    Indian consumers ask Amazon to resume Pantry service

    The Indian users of online grocery delivery service Amazon Pantry have taken to Twitter to urge the e-retail major to resume services ever since it was discontinued on February 1. “Currently, pantry items are not available on Amazon. Kindly stay tuned for more updates. Thank you for understanding,” Amazon responded to its Indian users in a tweet. The service became unavailable in India on February 1, the day revised norms for Foreign Direct Investment (FDI) in e-commerce came into force in the country.

    Following the new norms, Amazon has also removed from its website sellers such as Cloudtail India and Appario Retail Pvt Ltd in which it owns a stake.

    “I am missing Amazon Pantry service which catered to my monthly needs. It was super convenient,” tweeted a user.

    “What happened to Amazon Pantry? Please fix it,” read another user’s tweet.

    Under the Ministry of Commerce and Industry’s new guidelines issued on December 26, e-commerce platforms providing a marketplace are barred from exercising control or ownership over the inventory.

    They are also barred from allowing any company to sell its products exclusively on their e-commerce platforms alone.

    The Indian arm of the Seattle-based e-commerce giant did not respond to questions by IANS on the expected impact to its business in the light of the revised norms.

    While the company had earlier in a statement to IANS said that “it has always operated in compliance with the laws of the land”, it did not respond to queries on the changes it may have to make to its business model to suit the new norms.

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  • E-commerce share to rise to 12pc from 2pc in 10 years: Walmart India CEO

    E-commerce share to rise to 12pc from 2pc in 10 years: Walmart India CEO

    Share of e-commerce is set to rise, despite the growth in brick and mortar or physical retail from 2 percent to 12 percent over the next 10 years, aided by pick up in Omnichannel format, said Krish Iyer, President & CEO, Walmart India and Chairman of India Food Forum, at India Food Forum 2019 on Tuesday. Gap between physical and digital needs to be bridged as the consumer is going digital in terms of experience as also his touchpoints, he said delivering the inaugural address at the two-day India Food Forum 2019.

    Sharing his insight at Walmart, Iyer said that by enriching customer experience, the consumer started buying Rs 180 over Omnichannel instead of buying Rs 100 from the store itself and later the ratio in the store was Rs 70 while digital was Rs 110. Calling for technology adoption as key to retail growth, Iyer enumerated four key challenges led by food security, safety & nutrition, food wastage and sustainability.

    “Feeding a rising world population of 10 billion from 7 billion amid rising death of infant children due to malnutrition, changing climatic conditions are key challenges. In India, phenomenal efforts are made on the regulatory front for safety and nutrition that will follow with awareness, compliance and enforcement of law. Significant investment amounting to Rs 92,000 crore in food processing in catchment areas is needed to overcome the wastage of 30 percent of all food and 40 percent of fruits and vegetables,” he said.

    Earlier, speaking at the forum, Ajay Macaden, Executive Director, Nielsen said, “Consumers have evolved now for omni-channel even for specific categories like milk and bakery. Increased internet and smartphone penetration has led to multiple shopping channels and change in consumer behaviour.”

    In markets around the world categories such as travel, entertainment (books, music, events) and durable goods (fashion, IT/mobile, electronics) are the front runners for consumers to enter the online retail sphere. Consumers are, however, also looking for e-commerce options for an increasing range of categories, as their more immediate needs for convenience and ease expands, Macaden said.

    Consumers in APAC (Asia Pacific) have even evolved to fresh grocery and packaged goods with China, India, Japan and Korea leading the market. In fact, packaged grocery food and fresh groceries are showing the highest percentage growth of all categories in 2018 in this region, he said.

    Other key speakers at the forum included Damodar Mall, CEO, Reliance Retail (Supermarketwala), Sadashiv Nayak, CEO Food business, Future Group, Mohit Kampani, CEO, Aditya Birla Retail, C. Gopalkrishnan, Founder, N. Supermarkets, Ramesh Menon, Former CEO, Hypercity, Mohit Anand, MD, Kellogg, India and South to name a few.

  • Indonesia’s E-commerce Market Larger Than Estimated; Consumer Habits Changing

    Indonesia’s E-commerce Market Larger Than Estimated; Consumer Habits Changing

    E-commerce accounted for 8 percent of total retail sales in Indonesia last year, on course to reach 18 percent by 2023, fueled by changing behavior among tech-savvy customers who are willing to spend more for convenience, according to a recent study by American multinational investment bank Morgan Stanley.

    The study estimates the size of Indonesia’s e-commerce market at $13 billion in 2018, having grown by 50 percent annually over the past two years. It suggests that the e-commerce market in Southeast Asia’s biggest economy may follow a similar growth trajectory to that of China and expand by at least 32 percent annually over the next five years to $52 billion in 2023.

    “This is notably above our previous estimate of $7.3 billion, or 4.4 percent of sales, partially due to better data availability but also due to the rapid growth in the user base… Indonesia is now only five years behind China in terms of penetration,” Morgan Stanley wrote.

    A separate study by global tech giant Google and Singapore’s Temasek, published last December, put the size of Indonesia’s e-commerce market at $12.2 billion in 2018 and $53 billion in 2025.

    The Morgan Stanley study, based on interviews with 1,582 respondents in eight Indonesian cities, suggests that the growth trend is still in an early stage, with many indicating that they only started shopping online in the past year.

    “Interestingly, 65 percent of the respondents in our survey had only started shopping online within the past year, and the majority believed e-commerce would become their main method of shopping over time,” the investment bank wrote in the report published on Tuesday.

    “There are 195 million smartphone users in Indonesia and only about 30 million online shoppers. The growth potential of the user base is still clearly huge,” it wrote.

    Apart from smartphone penetration, low data costs and the growing number of people with bank accounts serve as crucial enablers for continuing e-commerce growth, Morgan Stanley said. Data costs about 50 US cents per gigabyte in Indonesia, compared with $2.1 per gigabyte in China. About 49 percent of the adult population in Indonesia now has a bank account, compared with 20 percent in 2011.

    Apparel 

    Clothing and footwear fuel the sales growth, with 93 percent of respondents indicating that they bought items in this category online in the past 12 months. Half of them buy apparel at least once a month, Morgan Stanley said. In comparison, only 16 percent and 25 percent, reported that they purchased consumer electronics and mobile devices, respectively, which is the most common category in early state e-commerce.

    The study also noted changing customer behavior, which would likely affect their interaction with traditional brick-and-mortar stores. Three in every four customers said they would check for promotions or prices online before buying anything offline, Morgan Stanley reported.

    Seven in every 10 said they would continue shopping online, even if it meant they would have to pay for delivery. Morgan Stanley said this reflects consumers’ “willingness to pay for convenience.”

    “Fast shipping was the primary reason for preferring one website over another,” the bank said.

    Retailers 

    The trend presents challenges to traditional retailers to remain profitable and provides a powerful platform for small brands to challenge established manufacturers.

    “Our analysis reaffirms our medium-term concern for apparel-focused retailers like [Matahari Department Store]. The average transaction size for apparel online, per our survey, is similar to Matahari’s basket size,” Morgan Stanley said.

    “For beauty and personal care companies like Unilever, the combination of e-commerce and digital media is making it easier or cheaper for smaller companies to build brands and offer nationwide distribution,” it wrote.

    Everybody’s Game

    Investment in Indonesian internet companies has steadily risen over the past two years, which saw them attract at least $7.4 billion in capital in 730 deals.

    With all this potential growth, Morgan Stanley has yet to see clear winners in the country’s e-commerce market.

    Four players control most of the formal e-commerce sales: Lazada, Shopee, Tokopedia and Bukalapak, with the top three each controlling between 20 percent and 30 percent of the market. Bukalapak was in the low teens, according to the Morgan Stanley’s estimation.

    Lazada, a pioneer of e-commerce in Southeast Asia, is still the most preferred platform, according to the bank’s survey

    “Lazada had high usage rates across categories and genders. The cash-on-delivery option was one of the key drivers of the preference,” it said.

    Shopee was second overall in terms of usage and preference, being more popular in smaller cities and among people buying baby products, toys, and beauty and personal care products.

    “Tokopedia’s preference and usage were lower beyond Jakarta in our survey. Its usage rate was only 38 percent in second-tier cities like Surabaya, Medan and Bandung, compared to 62 percent in Jakarta,” Morgan Stanley said.

    A surprising find in the survey is that Tokopedia and Bukalapak both enjoy more than 80 percent customer recognition, but less than 50 percent had made purchases on their platforms within the past 12 months.

    “For Southeast Asia, we remain convinced that its e-commerce platform is being undervalued. Our survey not only confirms the popularity of Shopee but also that its users are willing to pay for delivery, which solidifies its path to profitability,” Morgan Stanley said.

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  • Walmart may exit Flipkart due to new FDI rules: Morgan Stanley

    Walmart may exit Flipkart due to new FDI rules: Morgan Stanley

    Retail giant Walmart may exit Flipkart after India’s new Foreign Direct Investment (FDI) norms for e-commerce companies came into force, US investment banker Morgan Stanley has warned. “An exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated,” the report by Morgan Stanley said late Monday.

    According to the report, Walmart-Flikkart saga might turn out to similar to what happened with Amazon in China in late 2017.

    “There is a precedent for an exit as Amazon retreated from China in late 2017 after seeing that the model no longer worked for them,” the report read.

    “We estimate that Flipkart derives 50 per cent of its revenue from this category, meaning Flipkart could face meaningful disruption and top-line pressure in the near term,” it added.

    The new FDI rules may require Flipkart to remove as much as 25 per cent products from its platform including smartphones and electronics that constitute a bulk of sales, said Morgan Stanley.

    On February 1, disruption was caused in the e-commerce operations in India of the two companies after the new FDI norms for the e-commerce sector came into effect.

    The norm prohibited the online retailers from mandating any company to sell their products exclusively on its platform.

    In the new policy, the Commerce Ministry also noted that the online retail firms would not directly or indirectly influence sale price of goods and services and would maintain a level playing field.

    Amazon India had to withdraw many of its products and they were listed as “currently unavailable” as the new norms prohibit the e-retailers from selling products of companies in which they have stakes.

    The two companies have together lost market capitalisation of $50 billion.

    Amazon lost market capitalisation of over $45 billion on Nasdaq while Walmart lost over $5 billion on the NYSE.

  • Amazon introduces self-driving delivery robot, Scout

    Amazon introduces self-driving delivery robot, Scout

    Amazon has introduced self-driving delivery service dubbed Scout – an all-electric self-driving vehicle that will maneuver across sidewalks in order to deliver purchased items to customers. Scout is the size of a ‘small cooler’ and can roll along sidewalks, delivering packages safely to a customer’s doorstep. The device is currently operating in Snohomish County, Washington, the company announced Wednesday.

    “The devices will autonomously follow their delivery route but will initially be accompanied by an Amazon employee,” Amazon said in a statement. “We developed Amazon Scout at our research and development lab in Seattle, ensuring the devices can safely and efficiently navigate around pets, pedestrians and anything else in their path.”

    Customers in Snohomish County can order just as they normally would and their Amazon packages will be delivered either by one of our trusted partner carriers or by Amazon Scout.

    According to the release, Amazon is starting with six Amazon Scout devices, delivering packages Monday through Friday, during daylight hours.

  • Snapdeal bats for new FDI policy in e-commerce from Feb 1

    Snapdeal bats for new FDI policy in e-commerce from Feb 1

    Leading Indian e-tailer Snapdeal on Tuesday supported the implementation of revised Foreign Direct Investment (FDI) policy on e-commerce from February 1. “Snapdeal supports the immediate implementation of the current FDI policy on e-commerce so that marketplaces are not misused to run inventory operations,” Delhi-based Snapdeal told IANS in a statement.

    The Ministry of Commerce and Industry on December 26 issued revised policy guidelines on FDI in e-commerce.

    The policy revision, which will be in force from February 1, dictates that e-commerce platforms providing a marketplace will not exercise control or ownership over the inventory.

    E-tail majors Flipkart and American online retailer Amazon’s Indian arm, however, sought an extension on the implementation of the new norms, amid protesting voices from retail traders’ bodies against granting the extension.

    “Government policy changes will have long-term implications in the evolution of the promising sector and the whole ecosystem,” American retail giant Walmart-owned Flipkart told IANS through a statement earlier.

    The new norms also barred e-tail firms from allowing any company to sell its products exclusively on their e-commerce platforms alone.

    While Amazon India had said in a statement to IANS that “it has always operated in compliance with the laws of the land”, it did not respond to queries on the changes it may have to make to its business model to suit the new norms.

    On the other hand, the Confederation of All India Traders (CAIT) has asserted that delaying the execution of the policy will allow the e-tailers to continue with their “dominance over retail trade”.

    “The modus operandi of these e-commerce companies for seeking extension (on implementation of new FDI norms) is to keep delaying fair execution of the policy,” CAIT wrote in a letter to the Ministry of Commerce and Industry this month.

    “They (e-commerce platforms) may continue with their sinister designs of operating all kinds of malpractice including predatory pricing, deep discounting and exclusivity, in order to ensure their control and dominance over retail trade and wipe out the competition,” the letter said.

    The Ministry, however, has not indicated any possible extension of deadline to implement the new norms.

  • Lazada to ramp up Southeast Asian grocery offering

    Lazada to ramp up Southeast Asian grocery offering

    Lazada Group has announced plans to ramp up its supermarket business in Southeast Asia as part of its strategy to become the region’s biggest e-commerce ecosystem. The supermarket transformation is being started off in Singapore, as homegrown online grocer RedMart is integrated into the Lazada platform on March 15 following its acquisition in 2016. Following the launch, shoppers will be able to buy groceries and fresh produce along with Lazada’s other product categories on the single platform, boosting the brand’s grocery and supermarket offering to more than 165,000 products.

    Elsewhere in the region, Lazada is looking to launch its grocery and supermarket business in at least one other city from the second half of 2019.

    The new moves are aimed at catering to the growing demand of supermarket shopping as consumers increasingly buy groceries online. The grocery market in Southeast Asia is expected to be worth US$309 billion by 2021, with shoppers filling their baskets online more than twice a month. In Singapore, seven in 10 people who buy their groceries online already do so on RedMart.

    “We want to drive the evolution of grocery shopping in the region by combining our unparalleled assortment of products and superior logistics network to transform the way customers get their daily essentials and fresh produce,” said Jing Yin, co-president of Lazada Group. “Most of us shop for groceries and other household items very frequently. This presents a unique opportunity for Lazada to be part of our daily lives.”

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  • Behind Amazon’s 63 per cent income rise

    Behind Amazon’s 63 per cent income rise

    The latest Amazon results are positive – but there is now a clear divergence in performance between the top and bottom lines. On the profit front, Amazon’s results are impressive. Net income increased by 63.1 per cent and operating income by 78 per cent. Much of this is coming from the AWS segment, where income from operations rose by 61 per cent. However, some credit should also go to the North American operation where volume increases helped ease up operating profits by 33 per cent. These uplifts come in spite of the fact that Amazon is still investing huge amounts in the business. Therefore they go a long way to justify the myriad of projects that Amazon has undertaken and continues to undertake.

    While the profit lines look rosy, the sales line presents a mixed bag. The slowdown in product growth is now tangible and although an 8.2 per cent uplift is strong compared to many retailers, by Amazon’s standards it is a weak performance. On a divisional basis, North America held up better than international markets, largely thanks to the confidence of the American consumer. Even so, sales growth in North America has also dipped.

    There are several dynamics at play here. First, is the maturity of Amazon’s operation: Amazon is now a massive retailer and it is simply unrealistic to expect it to keep on growing at its historic pace. However, more concerningly, this maturity is also coinciding with a period of rising competition. Retailers like Target and Walmart have invested heavily in their online operations and pulled out all the stops this holiday season. Our data show that they made solid customer gains, and some of that dented Amazon’s growth. In our view, the gap between Amazon and the rest is now narrowing.

    Another area of concern is Whole Foods. Amazon’s results show that sales at physical stores dropped by 2.7 per cent over last year, largely thanks to the grocery division. The investment in lower prices partly explains this, but it does not account for the bulk of the decline. In our opinion, much of this is because Whole Foods’ proposition is simply not up to scratch. Basics and commodity products still cost way more than at rivals like Target, and this is one of the reasons perceptions that Whole Foods is needlessly expensive have persisted. Such expense is not justified by store experience nor by customer service, both of which remain lackluster.

    Arguably, a holiday period that coincided with strong consumer finances should have been fertile ground for Whole Foods to thrive. However, very little effort was made to entice or enthrall customers. Aside from fresh counters, the festive product line up was incredibly poor with a noticeable lack of treats and interesting items. As a result, many consumers simply went elsewhere.

    We are cognisant that many of the Whole Foods issues are not of Amazon’s making. However, the poor performance underlines how much work remains to be done in transforming the chain’s fortunes.

    Despite these niggles, we remain positive about Amazon. The Prime platform still has enormous potential, there is plenty of upside in devices, and there are many opportunities to improve own-brands (some of which have underperformed). Taken together, along with AWS, this means Amazon has scope for future growth.

    However, it is also clear that Amazon will now need to work doubly hard to achieve any future sales gains.