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With the arrival of the first financial reporting season of 2024, in the fiercely competitive North American e-commerce arena, Amazon once again announced to the industry with its gorgeous performance data that it is still the well-deserved "e-commerce overlord."
It is learned that on April 30th local time, Amazon released its first quarter financial report of 2024. During the reporting period, Amazon achieved net sales of $143.313 billion, a year-on-year increase of 13% , slightly higher than the market expectation of $142.6 billion. Among them, North American business sales increased by 12% to $86.3 billion; international sales increased by 10% to $31.9 billion.
It is worth noting that Amazon's net profit in the first quarter was as high as US$10.4 billion, a significant increase of 229% year-on-year, far exceeding the market expectation of US$8.686 billion. It continued the high growth trend of the previous quarters and its profitability was significantly enhanced. As for why the first-quarter revenue and profits were better than expected, Amazon pointed out that it was mainly driven by the growth of advertising and AWS cloud computing business . Specifically, Amazon's core business AWS achieved net sales of $25 billion in the first quarter, a year-on-year increase of 17%, and actual operating profit was more than $2.2 billion higher than expected. Amazon CEO Andy Jassy said that the combination with artificial intelligence capabilities is helping AWS business to re-accelerate growth, and the annual revenue run rate of the business has now reached $100 billion. At the same time, through a series of cost-cutting and efficiency-enhancing measures, Amazon's cash flow has increased significantly. In the past 12 months ending March 31, 2024, Amazon's operating cash flow increased by 82% to US$99.1 billion. Looking ahead to the second quarter , Amazon expects net sales to be between $144 billion and $149 billion , up 7% to 11% year-on-year, while operating income is expected to be between $10 billion and $14 billion , significantly higher than $7.7 billion in the same period last year. It is obvious that after getting rid of "excess capacity packages" by reducing costs and increasing efficiency, and installing "AI" as a new growth engine for its core business, Amazon's business has once again grown rapidly. Even though its e-commerce business is improving, Amazon still faces challenges from emerging platforms amid fierce competition in the global market, especially from China's "Four Asian Tigers".
According to Sensor Tower data, Amazon's downloads fell 22% year-on-year in 2023 , most likely due to consumers turning to fast-growing Chinese e-commerce companies such as SHEIN and Temu, whose downloads increased by 56% and 861% year-on-year in 2023, respectively. Judging from information disclosed by the industry, the “Four Little Dragons Going Overseas”, which are still in the explosive period, have not stopped their rapid pace and remain ambitious in the face of Amazon’s strong offensive.
It is learned that according to the latest "2023 Global E-commerce Platform Report" released by Webretailer, global e-commerce sales reached 6.3 trillion US dollars in 2023, and it is expected that by 2025, this figure will exceed 7.5 trillion US dollars. Against the backdrop of industry growth, according to LatePost, Temu, TikTok Shop, Alibaba Overseas E-Commerce and SHEIN have all raised their transaction volume targets for 2024, with year-on-year growth rates of 233%, 150%, 125% and 40% respectively. Temu has set a transaction volume target of US$60 billion in 2024, which is 3.33 times the annual sales of approximately US$18 billion in 2023, a year-on-year increase of 233%; Based on the transaction volume of US$20 billion in 2023 , TikTok Shop expects the target to increase by 150% to US$50 billion in 2024; Alibaba's overseas e-commerce business, mainly AliExpress and Lazada, has set a goal of achieving a transaction volume of US$85 billion to US$90 billion this year, a year-on-year increase of 125%; SHEIN expects its transaction volume to increase by 40% year-on-year this year, with a target of US$63 billion .
According to the "2024 Mobile Market Report" released by data.ai, the "Four Little Dragons" of China's e-commerce will see a surge in global downloads in 2023, dominating the top four in the 2023 global shopping app download growth rankings. To trace back to the source, the booming business of the four little dragons going overseas is inseparable from the escort of full-trust management . Through the full-trust management model that eliminates intermediaries, the four little dragons going overseas, backed by domestic high-quality supply chains, are able to achieve extreme cost compression, and fight for a path forward in 2023 when the market traffic end is tending to be saturated, using "cost-effectiveness" as a weapon. However, while this model helped the "Four Little Dragons" to quickly increase their sales volume by selling at low prices, it also imposed more burdens on them (slow logistics, high marketing costs, etc.), and to a certain extent created a situation where merchants were competing fiercely on prices but had endless quality problems, resulting in a surge in platform traffic while user conversion and retention rates were insufficient. According to Sensor Tower data, although SHEIN and Temu achieved rapid year-on-year growth in downloads in 2023, their average retained user penetration rate was only 66%, nearly 30 percentage points lower than Amazon. In this context, in 2024, the "Four Little Dragons" represented by Temu and AliExpress will turn their attention to "semi-custody": AliExpress fully opened the "semi-hosted model" in January this year, giving the ownership of goods, pricing rights, and operating rights to merchants, and handing over logistics fulfillment services to the platform, anchoring POP merchants that have not joined the full-hosted model; Temu launched its semi-hosted business on the US site in March this year, handing over the ownership of goods and logistics fulfillment to merchants, while the pricing and operating rights still belong to the platform. It is mainly aimed at mature sellers whose goods are located overseas to alleviate their slow logistics fulfillment.
In addition, it is learned that SHEIN will also start recruiting merchants in a semi-custodial model in early May, and like Temu, will choose the United States as its first stop. However, unlike Temu's semi-custodial model in which it controls pricing, SHEIN attracts merchants through negotiated pricing. According to the "Research Report on Chinese E-commerce Giants Going Global" released by HSBC, it is expected that by 2027 , the GMV of China's "Four Little Dragons Going Global", including Temu, Alibaba International, SHEIN, and TikTok , will exceed US$100 billion. At the same time, under the trend of globalization, it is expected that the GMV of Chinese e-commerce in overseas markets will increase to US$500 billion in 2025. It is foreseeable that as the four little dragons accelerate their overseas expansion, cross-border sellers will see more opportunities: get rid of Amazon dependence and embrace more diversified e-commerce platforms; the dividends of innovative full-hosting and semi-hosting models will be released, giving more imaginative incremental space... In the current environment where the multi-platform operation model has become the main theme, entering the Four Little Dragons has obviously become an ideal choice for many sellers to expand their channels. Of course, although the Four Little Dragons have been singing all the way in 2023, how long their rising momentum can be maintained is still full of variables, and sellers still need to make careful assessments before entering the market.
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