E586: Amazon Just Revealed Ad & FBA Costs from Q4 2024
Feb 10, 2025
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Dive into the financial implications of Amazon's Q4 2024 earnings report, revealing a 7% growth in online store revenue and a 9% increase in FBA fees. The spotlight shines on advertising, where revenue skyrocketed to $17.2 billion, outpacing the growth of FBA. Sellers are feeling the pinch from rising ad costs, prompting a call to adapt strategies. Discover Amazon Haul's launch aimed at drawing in more Chinese sellers and how holiday season developments hint at competitive pricing shifts.
Amazon's Q4 2024 earnings report indicates a 7% growth in online store revenue, highlighting a stabilizing retail environment for sellers.
The significant 18% increase in advertising revenue demonstrates Amazon's shift towards an advertising-centric model, which is straining sellers financially.
Deep dives
Amazon's Q4 Earnings Overview
Amazon reported a Q4 2024 online store revenue of approximately $75 billion, marking a 7% increase from the previous year. This growth rate is notably slower than the double-digit increases seen during the pandemic, where growth reached as high as 40% in previous quarters. The online store revenue primarily derives from vendor central sales, which do not provide an accurate representation of overall sales by third-party sellers, as Amazon only acknowledges the fees incurred from those sales. This trend indicates a more cautious retail environment, signaling a potential shift in Amazon's marketplace performance.
FBA Fees and Seller Impact
In Q4 2024, Amazon collected about $47 billion in FBA fees, an increase of 9% from the same quarter the previous year. This metric serves as an indicator of both Amazon’s revenue collection from sellers and the overall sales performance of third-party sellers on the platform. Although the FBA fee revenue growth suggests sellers are generating sales, it is unclear whether this increase is due to higher sales volumes or Amazon's fee hikes. The realization that FBA fees are rising faster than seller revenue growth could indicate that sellers are paying more for the same or less service.
Advertising Revenue Growth
Advertising revenue for Amazon reached $17.2 billion in Q4 2024, representing an 18% increase year-over-year. This growth significantly outpaces the revenue from FBA fees and showcases Amazon's shift towards becoming more of an advertising platform, similar to Google and Meta. The increase in advertising costs is straining sellers, with average advertising costs of sales climbing approximately 20%. This revenue trend is particularly troubling for sellers, as it suggests that while their sales may not be increasing, Amazon continues to extract more through advertising fees.
Dave dives into Amazon's Q4 2024 earnings report and how it will impact sellers. He dives into Amazon's online store revenue growth, FBA fee growth, and the huge growth in advertising revenue, which is one of the major sources of income for the e-commerce giant.
Amazon's Q4 2024 earnings report shows a 7% growth in online store revenue.
FBA fees collected from sellers increased by 9% year-over-year.
Advertising revenue for Amazon reached $17.2 billion, up by 18%.
The growth in advertising revenue is outpacing that of FBA fees.
Stock analysts focus on AWS and advertising revenue for Amazon's performance.
Sellers are feeling the pressure from rising advertising costs.
Amazon's overall retail growth appears to be stabilizing around 7-9%.
The podcast encourages sellers to adapt to the changing landscape of fees and advertising.
Amazon's claims of faster delivery speeds may not reflect overall sales performance.
The launch of Amazon Haul aims to attract more Chinese sellers.
Timestamps
00:00 - Amazon's Q4 2024 Earnings Overview
07:59 - Revenue Growth Insights for Sellers
16:34 - Advertising Revenue Trends and Implications
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Thanks for listening!
Until next time, happy selling!
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