Shares in this article
Amazon recently released the annual letter from founder and CEO of ecommerce giant, Jeff Bezos. In it, the company chief informed about the latest developments and projects that have led to the success of the Group in the past and what is planned for the future. The Letter to Shareholders, as every year, was eagerly awaited by Silicon Valley in particular, as it was hoped to gain new insights into the business practices of the e-commerce giant. In addition, this year's letter was a peculiarity compared to past years, as the Amazon CEO reported for the first time in the company's history on the sales figures of its retailers.
Amazon informs for the first time about share of sales by third party
Bezos announced that Amazon's share of Amazon's total revenue generated by third-party providers has grown from 3% to 58% in 2018 since 1999. For example, Gross Merchandise Volume increased from USD 0.1 billion to USD 160 billion, which corresponds to an annual growth rate of 52 percent according to Bezos. By contrast, the former online bookstore's first-party business has grown from $ 1.6 billion to $ 117 billion over the same period, up from 25 percent a year.
Swipe on eBay
Here comes the swipe on the e-commerce competitor eBay into play. To underscore the magnitude of Amazon's third-party revenue growth, Bezos drew comparison with eBay's numbers. Here, the net sales over the 19-year period could only grow at a rate of 20 percent, from $ 2.8 billion to $ 95 billion. The gross merchandise volume was therefore much lower than at Amazon.
To emphasize the difference, Bezos asked in the letter, "Why could independent traders sell so much more on Amazon than on eBay, and why could the independent traders grow so much faster than Amazon's own highly structured self-sales organization? ". Afterwards, the company boss presented various reasons, which in his opinion led to Amazon's success. In particular, he mentions the programs "Shipped by Amazon" and "Amazon Prime", which would offer retailers the best opportunity to sell their goods. In addition, Bezos emphasized in his letter to Aktionre the willingness to try on Amazon's new things, and taking risks in order to forestall eventual customer requests.
eBay shares on the decline
However, it was probably the direct comparison of Amazon's and eBay's numbers that led shareholders to sell their eBay shares. Shares in the Amazon competitor fell 4.55 percent to $ 35.89 following the submission of the letter to the daily low, while at launch they still cost $ 37.60. At the close of trading, there was still a minus of 3.71 percent in the price list. The closing price was therefore 36.32 USD (as of 11.04.2019).
Also Amazon shares a bit lower
It must be said that the Amazon shares were even after submission of the shareholders letter with a slight discount of 0.18 percent to $ 1,844.07 from the trade. This may be due to the fact that the figures published by Bezos indicate that Amazon's sales growth generated by the retail sector is slowing down noticeably, according to the news agency Bloomberg.
eBay CEO retired
Incidentally, eBay boss Devin Wenig did not wait long to respond to the provocation by the Amazon boss. For example, Wenig thanked Twitter for the attention Bezos would give to his company, but said that in his next letter, he would focus on "customer, goal, and strategy." He further added that eBay would not "compete" with its dealers and would not bundle its business "endless services" to create "barriers to competition".
While I appreciate the ink dedicated to @ebay we do not compete with our sellers.
– Devin Little (@devinwenig) April 11, 2019
Image sources: jejim / Shutterstock.com, Paul Morigi / Getty Images