[Amazon Q4 2022 Earnings] Seller Services and Advertising Drive Revenue As Ecommerce Sales Slow Down

Amazon just came out with its Q4 2022 earnings report, revealing that North America has accounted for a bigger chunk of its retail sales than last year, while its third-party seller services and advertising businesses continue to drive revenue growth.

Overall Revenue Up, But Ecommerce Sales Down

In the aggregate, Amazon finished the year strong with a $149.2 billion revenue in Q4 2022, which is 9% higher year-over-year. That being said, its ecommerce growth slowed down significantly, dropping to only $64.5 billion, which is 2% lower than the same quarter in the preceding year ($66 billion). This is despite the ecommerce giant holding a “second Prime day” as one last push for the holiday season and making its Buy with Prime feature available to all sellers in the US.

Source Q4 2021 Revenue Q4 2022 Revenue
Online Stores (ecommerce) $66.075B $64.531B (down 2% Y/Y)
Physical stores $4.688B $4.957B (up 6% Y/Y)
Third-party seller services $30.320B $36.339B (up 20% Y/Y)
Subscription services $8.123B $9.189B (up 13% Y/Y)
Advertising Services $9.716B $11.557B (up 19% Y/Y)
AWS $17.78B $21.378B (up 20% Y/Y)
Other $710M $1.25B (up 77% Y/Y)

Its biggest revenue drivers still include Amazon Web Services (AWS), which grew 19% year-over-year, and Advertising, which grew roughly 20% year-over-year. Adding to the list, though, is its Third-party seller services, which grew to $36.3 billion from $30.3 billion last year (up 20% year-over-year)—this segment includes Amazon FBA and the plethora of other opt-in programs for sellers on Amazon.

Amazon Advertising Is Booming

Despite some of its tech competitors struggling to step up their ad revenues, Amazon’s advertising business continues to be a huge revenue driver for the ecommerce giant since it broke the advertising segment off of the “Other” category a few quarters back. Most of its ad revenue comes from advertising related to its ecommerce business, particularly advertising paid for by the millions of third-party sellers on its marketplace. 

It posted ad revenues of $11.6 billion in Q4 of 2022, up 23% year-over-year, outpacing other advertising giants like Google and Facebook.

Related Reading: [Ultimate Guide] Amazon PPC Strategies and Tips

North America Made Up for More Sales Than Last Year

Amazon’s retail sales in North America grew by 13% year-over-year, while its international segment decreased by 8% (or increased by 5% excluding changes in foreign exchange rates). 

  Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Net Retail Sales (North America) $82.36B $69.244B $74.43B $78.84B $98.37B
Year-Over-Year Growth (excluding F/X) 9% 8% 10% 20% 13%
Net Retail Sales (International) $37.27 $28.759B $27.065B $27.72B $34.46B
Year-Over-Year Growth (excluding F/X) 3% 0% (1)% 12% 5% (down 8% raw Y/Y change)

This is somewhat unsurprising, considering the cost-cutting measures that the company implemented throughout 2022, particularly in the latter half of the year. 

Big Losses of the Year

Amazon posted a net loss of $2.7 billion in 2022 compared to its humongous net income of $33.4 billion in 2021, which is largely attributed to blistering pace of ecommerce during the pandemic. 

Its expenses for the last quarter of 2022 also included $640 million worth of severance costs, as it let go of more than 18,000 employees in November. It also imposed a hiring freeze on corporate ranks and even paused a number of warehouse projects in order to curb “uncertain and difficult” economic outlook.

Lastly, Amazon is expecting a much slower growth rate post-COVID to previous years, forecasting net sales to be between $121-126 billion in the first quarter of 2023, or somewhere around a 4% to 8% increase year-over-year, reflecting the $125.1 billion figure forecasted by market analysts. 

Full details on Amazon's Q4 2022 performance are available on its Quarterly Results page.

Justeen David

Justeen has years of experience in writing about technology and consumer electronics. When he's not helping you navigate the intricate world of e-commerce, he's busy geeking out over Tolkien's legendarium.

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