Jeff Bezos steps down as CEO and Q4 results of Amazon are record-breaking

We are also looking forward to seeing how Amazon will position itself against local big player Allegro after it officially announced its market entry in Poland.

Comment: Bezos steps down & Amazon’s Q4

Yesterday was a historic day for Amazon in many regards. Here are our thoughts on the most important updates:

What does Jeff Bezos’ transition from CEO to Executive Chairman mean?
Symbolically, it is a very big step in the company’s history. However, it was also somewhat expected as Bezos has been leading Amazon as its founder and CEO for already 26 years. Even if the move comes at a surprising moment for some people, it is actually only logical. Amazon is facing big challenges with regard to possible antitrust lawsuits, especially because of its dominant market position in the U.S. and Europe. The legal battles will require great attention and effort by the company’s management.
At this point, Jeff Bezos prefers to spend more time on his other passion projects though: space company Blue Origin, the Washington Post, and his Earth Fund. Still, Bezos will continue to have an enormous influence on the most important decisions taken at Amazon. Accordingly, major changes in the online giant’s strategic direction are very unlikely.

What can be expected of Andy Jassy as Bezos’ successor?
Since last summer, it was foreseeable that Andy Jassy would become Amazon’s next CEO after Jeff Wilke (Global Head of the E-Commerce Business) announced his retirement. Jassy has been heading Amazon’s cloud division Amazon Web Services (AWS) since 2006.

In this regard, we have two theses:

1. With AWS, Jassy has managed to build THE profit engine for Amazon. Hence, an even stronger focus on profitability for the whole company is very likely.

2. Jassy does not have a rigid view on online retail being the company’s core business. Therefore, he will pay even more attention to other parts of the business besides e-commerce.

What do the Q4 2020 results tell us?

The most important finding for us: The revenue growth exceeded all expectations. With a total of $ 386 billion, Amazon’s 2020 turnover is up 38% year-over-year. What is remarkable is that online retail as the core business has been growing significantly more than the cloud division AWS (30% YOY), which has not been the case in a long time.
What is also impressive: international marketplaces show the biggest growth for the first time (a whopping 40% YOY). In Q4 2020, Amazon even grew 57% YOY internationally (the U.S. was up 40%). The main reasons for this positive development were the rescheduling of special promotion events (‘deal weeks’) and the closure of brick-and-mortar stores during the holiday shopping season due to the COVID-19 pandemic.

Amazon also beat all forecasts in terms of profit. Net income grew an incredible 118% YOY in the fourth quarter. The overall profit in 2020 stands at $ 21 billion – 84% more than the previous year.

Of course, we were also curious to see how Amazon’s advertising business has developed in the past year. In 2020, advertising revenue grew to $ 21.5 billion, which is a 52.5% increase in comparison to 2019 ($ 14 billion). At the beginning of last year, we had estimated the advertising business to bring in around $ 18 billion.

General Updates

Amazon Founder Jeff Bezos to step down as CEO

Amazon founder Jeff Bezos will step down as CEO of the world’s largest online retailer. Andy Jassy, currently CEO of Amazon Web Services (AWS), has already been named as his successor. However, after handing over the leadership of Amazon, Bezos will continue to exert great influence in his new role as the company’s Executive Chairman and focus primarily on new innovations and strategic projects.

Amazon’s Q4 revenue: Over $100 billion for the first time

With the announcement of the personnel change in the management of Amazon, the company also published its sales figures from Q4: $ 125.56 billion in sales were generated – 44% more than in the same period last year. This is the first time Amazon has surpassed the “magic threshold” of $100 billion. For this quarter, the company expects revenue to fall to around $100 billion – still almost 40% more than in Q1 2020.

Amazon launches in Poland

Amazon announced it will open its marketplace in Poland shortly, but an exact date has not yet been set. Sellers can already register their products on amazon.pl. Upon the market entry, Amazon will face stiff competition by leading local online marketplace Allegro.

Many new Amazon sellers from China

On Amazon marketplaces in the US, Germany, Japan, and UK, 75% of new sellers stem from China so far in 2021 – up from 47% in 2020. For Chinese brands, Amazon depicts the most efficient way to reach European and American customers. However, local sellers still account for the majority of sales on their respective marketplaces.

Amazon must revert blockage of a seller account

In December 2020, Amazon accused a German seller of manipulating customer reviews and blocked his account accordingly. However, the seller took legal action against Amazon’s decision – and was proven right: the Regional Court in Munich issued a judgement that the marketplace must explain the reasons for the blockage.

Update on Amazon’s Brexit FAQs

Amazon has updated its FAQs regarding Brexit, the Partnered Carrier Program and the free trade agreement between Great Britain and the EU. The customs requirements and regulations are now available. Amazon has added some offers to the Partnered Carrier Program that are valid until the end of March, but the program is currently suspended.

Higher taxes for Spanish companies selling on Amazon

Amazon is increasing taxes by 3% for Spanish companies on its platform, following the introduction of a ‘digital tax’ in Spain (as previously introduced in France, Italy and the UK). The measure is supposed to be implemented from the beginning of April 2021.

Changes that caught our attention

Retargeting via Sponsored Display Ads was previously only possible directly on Amazon. The feature has now been expanded so that it is also available outside of the marketplace. This means that online users who have clicked on advertised or similar products can be targeted again.

There is a new Q&A feature for sellers on Amazon: video replies. According to Amazon, “Buyers find videos more helpful than just text”. However, the option of a written response remains.

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