And the dates fall just before Amazon’s 10th annual Prime Day sale. Meanwhile, Walmart announced a similar sale that overlaps with Target’s.

Target is No. 5 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes Target as a Mass Merchant.

When is Target Circle Week 2024?

Target Circle Week returns July 7 through 13, the retailer announced. It will feature savings on summer and back-to-school essentials, Target said, delivering more deals for members of its free loyalty program, Target Circle. The sales event will also include personalized Target Circle bonuses, the retailer said.

“Since Target Circle is free to join, Target Circle Week gives our guests more deals — at no cost — so you can stock up on everything from backyard cookout essentials to back-to-school supplies,” said Cara Sylvester, executive vice president and chief guest experience officer at Target, in a statement.

Target also added a new, paid tier to its loyalty program in April 2024, called Target Circle 360. During Target Circle Week, consumers can sign up for a Target Circle 360 subscription at a reduced cost ($49 for the first year, compared to the usual price of $99).

How much can you save on Target Circle Week deals?

Target Circle Week deals in July 2024 will include:

• Up to 50% off select toys
• Up to 40% off kitchen items
• Up to 30% off family apparel, bedding and bath
• 20% off some skin care and beauty products
• But one, get one 50% off for some food and beverage items
• Spend $50 on home care products and receive a $15 Target gift card
• Spend $40 on select products from Ulta Beauty at Target and receive a $10 Target gift card

Toys on discount will include LEGO, Monster Jam and LOL Surprise!, Target said. For kitchen and floor care, Target is discounting prices for products from Keurig, KitchenAid, Ninja, Dyson, Shark and Bissell.

Target will also bring back its “Deal of the Day” during Target Circle Week.

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The timing for Walmart Deals falls in line with two of the retailer’s main competitors, Amazon and Target. Amazon recently announced dates for its 10th Prime Day event, and Target announced the dates for its next Target Circle Week sale. Now, all three retailers will hold sales events this July. In each case, the new events will follow other recent seasonal promotions. Amazon, for instance, held its inaugural Big Spring Sale in March, and Target held a Target Circle Week event in April.

Walmart is No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. It is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of top such marketplaces by third-party gross merchandise value (GMV).

When is the Walmart Deals sale?

Walmart announces that its Walmart Deals sales event begins Monday, July 8, and ends Thursday, July 11. Unlike Amazon’s upcoming Prime Day sale, which starts at 12:01 a.m. Pacific time, Walmart Deals will begin at 5 p.m. Eastern.

“All customers can shop ‘Walmart Deals’ on Walmart.com and the Walmart app,” Walmart said in a statement.

How is Walmart Deals different from Walmart+ Week?

Whereas Walmart+ Week runs for a week (as the name suggests), Walmart Deals will run for about three and a half days. Walmart+ Week 2024 ran from June 17 through June 23.

Walmart+ is a paid membership program the retailer offers. Members must have a Walmart.com account and the Walmart app “to access the money and time-saving features of the membership,” Walmart said. Members can choose to pay monthly (currently $12.95 per month) or annually (currently $98 a year).

Walmart+ benefits include:

• Free shipping with no order minimum.
• Free delivery from store.
• Savings on fuel.
• Mobile Scan & Go in store.
• Video streaming with Paramount+.
• Early access to promotions and events.

Because Walmart+ is a paid membership, members experience the biggest perks of Walmart+ Week. On the other hand, Walmart Deals is open to all consumers, the retailer said.

Whereas Walmart+ Week was a shopping event for the retailer’s paid loyalty program members, the retailer said Walmart Deals is open to all.

Walmart Deals in July

The retailer offered a sneak peek of some promotions it will offer in its Walmart Deals sale in July.

• TCL 65” Class Q Class 4K QLED HDR Smart TV with Google TV for $398.00 (was $498.00)
• HP Victus 15.6 inch R5 4050 8/512 for $599.00 (was $979.00)
• Dyson V12 Detect Slimm Cordless Vacuum for $449.99 (was $649.99)
• Samsung Galaxy Watch4 Classic 46mm Smart Watch with Bluetooth for $99.00 (was $179.99)
• Westin Adirondack Chair for $89.99 (was 119.99)
• TCL Air Purifier for $29.99 (was $69.99)
• KidsKraft Swing Set for $248.00 (was $399.00)
• Emeril Lagasse Power Grill 360 Plus, 6-in-1 Electric Indoor Grill and Air Fryer Toaster Oven with Smokeless Technology, XL Family-Size Capacity for $50.00 (was $169.00)
• Rayovac High Energy AA Batteries & AAA Batteries, 1.5 V, 72 Pack for $19.97 (was $39.94)
• Lifetime 50in Adjustable Hoop for $249.99 (was $329.99)
• Jurassic World T-Rex for $19.97 (was $48.99)
• Hoverstar Flash Wheel Hoverboard for $62.99 (was $89.99)
• Kids’ Dodge Charger Ride On for $164.99 (was $299.99)
• AovoPro Scooter for $219.99 (was $439.00)
• Ozark Trail 10-Person Cabin Tent for $99.00 (was $170.00)
• Keurig K-Slim + ICED Single Serve Coffee Maker for $49.00 (was $129.00)
• GE Profile Opal Nugget Ice Maker for $397.00 (was $579.00)
• Nintendo Switch Joy Con with Game for $69.00 (was $99.00)
• Lego Star Wars for $35.00 (was $49.99)
• Travelhouse 3 Piece Luggage for $85.00 (was $119.99)
• Shark IQ Mapping Robot Vacuum, 60 Day Capacity Base, RV2302AE for $288.00 (was $499.99)
• Philips Sonicare DiamondClean 9000 Special Edition Adult Rechargeable Toothbrush for $149.96 (was $199.96)

Walmart Deals on back-to-school supplies

• Crayola Classic 10ct Fine Line Marker Bulk Supplies Set, 24 Packs for $35.00 (was $49.97)
• Reebok Backpack for $14.00 (was $20.00)
• Paw Patrol Backpack for $20.99 (was $34.99)
• The Children’s Place Girl’s Unform Short Sleeve Polo 2-Pack for $12.00 (was $25.95)
• Crayola Creative Fun Double Easel for $35.00 (was $54.00)
• PHANCIR Foldable Lap Desk for $17.99 (was $39.99)

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Amazon.com Inc. grew its online sales in its fiscal Q1 10.8% according to Digital Commerce 360’s analysis of their Q1 report. Amazon ranks No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers, and is projected to grow their ecommerce business to $469.0 billion in 2024, an estimated 13.8% growth from their $412.1 billion in 2023. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by third-party GMV. Learn more about Amazon’s online business on our Amazon ecommerce facts and statistics dashboard.

Amazon net sales increased to $143.3 billion in its fiscal first quarter (up 13% from $127.4 billion in Q1 2023), its operating income more than tripled. Amazon operating income grew to $15.3 billion in Q1 2024 from $4.8 billion in Q1 2023.

“Despite having hundreds of millions of items and the broadest selection available, we remain intensely focused on adding even more selection,” Amazon president and CEO Andy Jassy told investors in an April 30 earnings call. “One way is to continue adding brands we know our customers want.”

Another way to drive selection, he said, is to make it easier for Amazon third-party sellers to add their products to the marketplace.

“We’ve recently launched a new generative AI tool that enables sellers to simply provide a URL to their own website, and we automatically create high-quality product detail pages on Amazon,” Jassy said. “Already, over 100,000 of our selling partners have used one or more of our GenAI tools.”

How much did Amazon make in Q1 sales?

In North America, Amazon Q1 sales increased 12% year-over-year, reaching $86.3 billion. Meanwhile, international Amazon sales in Q1 increased 10% year over year to reach $31.9 billion. Sales from Amazon Web Services (AWS) grew to $25.0 billion in Q1, a 17% year-over-year increase.

And in North America, Amazon operating income in Q1 grew more than 5x year over year. It grew to $5.0 billion in Q1 2024 from $0.9 billion in Q1 2023. On the other hand, international operating income dipped to $0.9 billion in Q1 compared with $1.2 billion in the prior-year period. Meanwhile, AWS operating income grew to $9.4 billion from $5.1 billion.

“Customers are shopping but remain cautious, trading down on price when they can and seeking out deals,” Jassy said on the call. “In Q1, we helped customers save with shopping events worldwide, including our first Big Spring Sale in Canada and the U.S. We also held Spring Deal Days in Europe and our Ramadan event in Egypt, Saudi Arabia, and the UAE.”

Fastest fulfillment yet

Amazon delivered to Prime members at its fastest speeds ever in Q1, Jassy said. In March, across its 60 largest metropolitan areas in the U.S., he said, nearly 60% of Prime members’ orders arrived the same or next day.

“We’ve continued to inspect our fulfillment network for additional opportunities and are working on several areas where we believe we can lower costs even further while also improving customer experience,” Jassy said. “One example of this is our work to increase the consolidation of units into fewer boxes. As we further optimize our network, we’ve seen an increase in the number of units delivered per box, an important driver for reducing our cost.”

Consolidating more units into a box results in fewer boxes and deliveries, a better customer experience and a cost reduction, all while lowering Amazon’s carbon impact, Jassy said.

Amazon also seeks to revamp its processes for inbound products in the U.S. so it can place inventory closer to customers. Jassy said this will be an “iterative process throughout the year.”

Generative AI continues to fuel AWS growth

Year-over-year AWS revenue growth increased to 17.2% in Q1, Jassy said. That was up from 13.2% in Q4. AWS continues to add capabilities to each of the three layers in its generative AI tech stack, he added.

The three layers in Amazon’s generative AI stack:

• Top layer: Where developers and companies build generative AI applications, building on the foundations below.
• Middle layer: Where developers and companies who prefer not to build models from scratch — and instead seek to leverage an existing large language model (LLM) — customize it with their own data.
• Bottom layer: Where developers and companies build models themselves.

Referring to the top layer, Jassy announced the availability of Amazon Q. He called it “the most capable generative AI-powered assistant for software development and leveraging” a company’s internal data.

Jassy said Q can generate code, test it, debug coding conflicts, and transform code from one form to another.

“Today, developers can save months using Q to move from older versions of Java to newer, more secure and capable ones,” he said. “In the near future, Q will help developers transform their dotNET code as well, helping them move from Windows to Linux.”

Amazon Q also features a capability called Agents that Jassy said can autonomously perform a range of tasks, including implementing features, documenting, and refactoring code to perform software upgrades. He gave an example of asking Amazon Q to implement an “add to favorites” feature in an app. He said the agent will analyze existing application code and generate a step-by-step implementation plan that includes code changes across multiple files and suggested new functions. Developers, he said, can collaborate with the agent to review and iterate on the plan.

“The agent implements it, connecting multiple steps together and applying updates across multiple files, code blocks and test suites,” Jassy said. “It’s quite handy.”

Recent Amazon layoff announcements

Amazon said in April that it would cut hundreds of jobs in its AWS division, impacting sales, marketing and global services (SMGS) roles. It also said it would cut “a few hundred roles” on the Physical Stores Technology team.

Amazon also announced in January that it would lay off about 5% of its Buy with Prime unit, or about 30 workers. Prior to that, Amazon laid off 500 workers at Twitch, a streaming platform it acquired in 2014.

Amazon earnings

For its fiscal first quarter ended March 31, Amazon.com Inc. reported:

• Amazon sales in Q1 increased 13% to $143.3 billion. That compares with $127.4 billion in Q1 2023.
• Sales in North America increased 12% year over year to $86.3 billion.
• AWS sales increased 17% year over year to $25.0 billion.
• Operating income increased to $15.3 billion. That compares with $4.8 billion in the year-ago period.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Amazon earnings article.

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The sale on hundreds of thousands of items is open to members of Target Circle, the retailer’s free rewards program. The exclusive deals are automatically applied at checkout, Target said. There are new deals each day of the sale, with discounts on categories like apparel and grocery, and offers for gift cards based on meeting spending thresholds.

Members can also get 15% off of any one item on Target.com. Discounts will be as high as 40%, the retailer said.

Target is No. 5 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes Target as a mass merchant.

When is Target Circle Week?

Circle Week is Target’s sale for members. The retailer has held the weeklong members-only sale before. In the past, Target Circle Week coincided with Amazon’s sales event, when many other retailers also held sales. 

In October 2023, Target held its sale to coincide with Amazon’s Big Deal Days, kicking off the holiday shopping season. It also held a comparable sale in July, coinciding with Amazon Prime Day.

Target said the April sales event will offer “two times more savings” than the October sale.

What is Target Circle?

Target relaunched its loyalty program in April with a new, paid tier: Target Circle 360. 

The paid level is available at a discounted rate of $49 per year from April 7 through May 18, when the price will increase to $99. Membership offers unlimited same-day delivery for orders of $35 or more. Delivery can take as little as an hour, Target said. Circle 360 membership also includes same-day delivery from other retailers through Target’s Shipt fulfillment service. Shipt has relationships with dozens of retailers, like Big Lots (No. 237 in the Top 1000), Carter’s (No. 81), and Kroger (No. 6).

Members will also receive free two-day shipping on Target.com orders. 

The Target Red Card will be rebranded as the Target Circle Card, with 5% off purchases. Target Circle will continue on as the free tier of the membership program, while Target Circle 360 requires an annual membership fee.

Circle members can link accounts with other services to get exclusive perks, Target said. Target customers can earn Ulta reward points through Ulta Beauty purchases at Target. Members can also access free trials of Apple TV, Apple Fitness+ and other Apple services.

“We’ve spent a lot of time talking with guests about what they love about Target Circle, and we can’t wait for members to experience even more ease, savings and personal touches every time they shop,” said Cara Sylvester, executive vice president and chief guest experience officer.

The retailer first launched Target Circle in 2019. Since then, it “has helped over 100 million Target Circle members save millions of dollars every year,” Target said in a statement.

How much does Target make in online sales?

In its fiscal fourth quarter ended Feb. 3, 2024, revenue grew 1.7% to $31.92 billion, from $31.39 billion in the year-ago period. That was driven by a 1.6% growth in sales and a 9.8% increase in other revenue, Target said.

Total comparable sales declined 4.4% over the same period. Comparable store sales declined 5.4%, while online sales fared relatively better, down 0.7%. Online sales were boosted by strong same-day services including in-store pickup, Drive Up, and Shipt, Target said. They made up more than 10% of total sales and grew 13.6% in the quarter. Drive Up sales led the growth, it said. Online sales made up 21.3% of total sales, a slight increase from 20.8% in Q4 2022.

Although online sales declined year over year, they improved over the third quarter, Target said. In Q3, online comparable sales had declined 6% year over year.

Meanwhile, full fiscal 2023 revenue declined 1.6% from 2022 levels to $107.41 billion. Total comparable sales declined 3.7% in the period, and digital comparable sales decreased 4.8%. Online sales accounted for 18.3% of total sales for the year, down from 18.6% in 2022. 

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U.S. ecommerce sales in Q3 2023 accounted for 21.4% — or more than a fifth — of total retail sales.

Meanwhile, total retail sales in Q3 reached about $1.266 trillion, according to Digital Commerce 360 analysis. That’s a 1.1% decrease from Q2 2023, when total sales reached $1.275 trillion.

US ecommerce sales growth outpaces total growth

Year over year, U.S. ecommerce grew an estimated 7.7% in the first nine months. Total retail sales increased 3.9% over the same period.

“Ecommerce has been more important for retail growth this year than any year since 2020,” said James Risley, research data manager and senior analyst at Digital Commerce 360. “While in-store retail bounced back after pandemic restrictions lifted, shoppers are still turning to ecommerce more as it provides convenience and utility beyond avoiding disease.”

And U.S. ecommerce sales growth outpaced total growth in Q3 2023. U.S. ecommerce represented 41.0% of total retail growth for the first nine months of 2023. For the third quarter, online sales in the U.S. accounted for nearly half (49.7%) of total retail growth.

Still, U.S. ecommerce growth remained mostly flat in Q3 compared with the previous three quarters.

“Growth is still slower than pre-pandemic times, showing that while ecommerce growth is faster than overall growth, during the rough economic times we’re in, ecommerce is struggling along with the rest of retail,” Risley said. 

Compared with Q2, offline (in-store) retail sales declined in Q3. Offline sales cracked $1 trillion in Q2, but they didn’t in Q3, reaching about $995.5 billion, according to Digital Commerce 360 analysis. Risley said Walmart Inc.’s return to competing with Amazon Prime Day this year might have helped boost some of the online spending in Q3.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by their web sales. Walmart is No. 2 in the Top 1000.

How do we calculate ecommerce penetration?

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

Percentage changes may not align exactly with dollar figures due to rounding. Here’s last quarter’s update.

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The Top 1000 is Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. The latest analysis of the industry as a whole is published within the 2023 Global Online Marketplaces Report.

How much did Amazon make in Q3 sales?

Amazon sales in Q3 grew 13% over $127.1 billion in 2022. In North America, Amazon sales increased 11% year over year to $87.9 billion. And internationally, Amazon sales grew 16% year over year to $32.1 billion. Sales from AWS, or Amazon Web Services, increased 12% year over year to $23.1 billion.

“We saw our highest quarterly worldwide operating income ever,” said chief financial officer Brian Nowak on an Oct. 26 call with investors. It increased $8.7 billion year over year.

Amazon operating income grew at a much larger percentage than total sales compared with Q3 2022 — 343%. That’s nearly quadruple Amazon’s operating income in the year-ago period, growing to $11.2 billion in the third quarter from $2.5 billion. AWS operating income was $7 billion, up from $5.4 billion in Q3 2022.

Fulfillment and supply chain investments pay off

“Our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilize, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” CEO Andy Jassy said in a statement. “The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history. The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI.”

In addition to taking a regional approach to its fulfillment network, Amazon has begun offering Supply Chain by Amazon, which Jassy referred to as “a fully automated set of supply chain services.”

Supply Chain by Amazon can:

• Pick up inventory from manufacturing facilities around the world
• Ship it across borders
• Handle customs clearance and ground transportation
• Store inventory in bulk
• Manage replenishment across Amazon and other sales channels
• Deliver directly to customers

And Amazon sellers can do all of that without “having to worry about managing their supply chain,” Jassy said.

Brendan Witcher, vice president and principal analyst at research firm Forrester, said Amazon is one of the best in the business at delivering. Because of that, he said, it will have the challenge of setting customer expectations to always deliver on time. Witcher said it was notable that Amazon is using AI to help with inventory planning and optimizing driver routes.

“The real litmus test for Amazon’s regional supply chain will be the ability to deliver one-day and same-day delivery this holiday season with this level of growth,” Witcher said. “Fortunately, some of the volume should spread out a bit given that holiday really began with Amazon’s customers with the October Deal Days sale.”

Amazon powers up its generative AI technology

Jassy echoed points about generative AI from Amazon’s Q2 call with analysts in August. He broke down Amazon’s generative AI into three layers.

1. Lowest layer: Compute to train large language models (LLMs).
2. Middle layer: LLMs as a service.
3. Top layer: Applications that run the LLMs.

The middle layer, Jassy said, allows customers to customize those models “using their own data but without leaking that data back into the generalized LLM.”

“In these early days of generative AI, companies are still learning which models they want to use, which models they use for what purposes and which model sizes they should use to get the latency and cost characteristics they desire,” Jassy said in the Oct. 26 call with analysts. He said Amazon Bedrock “is the easiest way to build and scale enterprise-ready generative AI applications.”

“It’s pretty exciting what they’re doing for third-party sellers on the capabilities of generating web pages, generating product imagery for third-party sellers,” Forrester’s Witcher said. “They really do understand the small-business seller, to be quite blunt.”

Amazon earnings

For the fiscal third quarter ended Sept. 30, Amazon.com Inc. reported:

• $143.1 billion in Amazon Q3 sales. That’s up 13% from $127.1 billion in the year-ago quarter.
• Amazon sales in North America in Q3 grew 11% year over year to $87.9 billion.
• International sales increased 16% year over year to $32.1 billion.
• AWS sales in Q3 grew 12% year over year to $23.1 billion.

For the nine months ended Sept. 30, Amazon reported:

• $404.8 billion in Amazon sales. That’s up from $364.8 billion in the year-ago period.
• Year-to-date Amazon operating income reached $381.2 billion. That’s up from $355.7 billion in the comparable period last year.
• International sales grew to about $91 billion, up from $83.5 billion.
• AWS sales grew to nearly $66.6 billion from $58.7 billion in the comparable period in 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Amazon earnings article.

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The Walmart sales event will begin at 7 p.m. on Monday, October 9 with deals on electronics, home, apparel, toys and other products, the retailer says.

Both retailers are major players in the U.S. ecommerce landscape.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Walmart ranks No. 2. Amazon also ranks No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9 in that database.

What to expect this year from Walmart during Amazon’s Big Deal Days

Walmart is promoting the sale as a time to start shopping for holiday purchases. Customers should expect “hyper-personalized content and a curated shopping experience” the retailer said in a press release. Unlike Walmart+ Week in July, this sale is not limited to Walmart+ members, and anyone can shop the deals.

Walmart highlighted some deals that will be included in the sale, including the Apple Watch SE, Mega Barbie The Movie Dreamhouse and various Keurig models. Consumers can also consult the deals coming soon page on Walmart.com.

Holiday Kickoff purchases can be ordered with curbside pickup, same-day delivery, two-day shipping or late-night express delivery, Walmart says.

Walmart has a history of competing with Prime Day

Walmart previously held sales events that overlapped with major Amazon Prime sales. In July, the first Walmart+ Week coincided with Amazon Prime Day in July. Both retailers held online sales across different categories of merchandise. Walmart sat out the event in July 2022, however.

2022 was the first year Amazon held a second Prime sales event in October, called the “Early Access Sale.” Walmart didn’t hold a full competing event last fall. The retailer highlighted “flash deals” on its website at the time, and promoted Halloween sales, Digital Commerce 360 previously reported.

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President and CEO Andy Jassy told investors on Amazon’s Q2 earnings call that the ecommerce giant has been improving its artificial intelligence and machine learning technology. It has also been making its fulfillment network more efficient. Jassy also said Amazon Business, its B2B division, is one of its fastest growing offerings.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. The latest analysis of the industry as whole is published within the 2023 Global Online Marketplaces Report.

For more detailed coverage, read our Amazon Q2 earnings story.

1. Amazon has been refining its AI

Jassy last week said AI “is going to be at the heart of what we do.” Moreover, he said every business division within Amazon has multiple ongoing generative AI initiatives.

Among those initiatives, Amazon has built CodeWhisperer, an AI-powered coding companion that recommends code snippets directly in the code editor. This is meant to accelerate developer productivity in the coding process.

But Amazon’s work in the AI sphere is still in an early phase, he said.

“Generative AI has captured people’s imagination, but most people are talking about the application layer, specifically what OpenAI has done with ChatGPT,” Jassy said. “It’s important to remember that we’re in the very early days of the adoption and success of generative AI, and that consumer applications is only one layer of the opportunity.”

2. Faster fulfillment in Amazon’s Q2 and beyond

In its fiscal Q2, Amazon reduced the miles its drivers traveled to deliver packages to customers by 19%, Jassy said. It did so through “regionalization,” or its logistics overhaul that shifts its fulfillment network from a national one to a network divided into eight regions that can each operate on their own.

This has led to a 20% reduction in number of touches for each delivered package, Jassy said.

“When shipments come from fulfillment centers that are closer to customers, they travel shorter distances, which cost less in transportation, gets there faster and is better for the environment,” Jassy said.

He said Amazon’s development and expansion of same-day fulfillment facilities has driven this increase in efficiency. He added that the same-day facilities are Amazon’s fastest fulfillment mechanism and one of its least expensive.

The same-day facilities are located in the largest metro areas around the country, Jassy said. Amazon intends to double the number of these facilities, he said.

“While we’re seeing strong early results from this regionalization effort, we still see several ways in which we can be more efficient in this structure and we believe will improve productivity further,” Jassy said. “We’ve also re-evaluated virtually every part of our fulfillment network this past year and see additional structural changes we can make that provide future upside.”

3. Big business, small business

Jassy emphasized Amazon Business’ $35 billion annual run rate for gross sales. It serves more than 6 million customers.

Still, he said, Amazon has only a fraction of the features it needs “to address more of the enterprise at this point.” For example, there are features to make bigger procurement workloads easier for companies.

Merchants that use Amazon’s “Buy with Prime” feature, on average, increased their shopper conversion 25%. That “makes a real difference to their business,” Jassy said.

He added that those who “participate in Prime Day activities, in aggregate, experienced a 10x increase in daily Buy with Prime orders during the sales event period versus the month before we announced Prime Day.”

Although Jassy and other Amazon representatives did not mention its small business sellers on the Q2 earnings call, Amazon did mention them in its earnings release.

It said more than 60% of Amazon sales in its marketplace came from independent sellers, most of them small and medium-sized businesses.

U.S.-based independent sellers sold more than 4.1 billion products and averaged more than $230,000 in sales, Amazon said. It also announced a filter on its marketplace to search for small businesses.

Check back for more earnings reports.

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Crocs Inc. (No. 104)

Crocs reported revenue grew 12% year over year to a record $1.1 billion in its fiscal second quarter ended June 30.

“Both the Crocs and Hey Dude brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26% in the second quarter,” CEO Andrew Rees said in a written statement.

Crocs acquired Hey Dude Shoes in January 2022 for $2.5 billion. Hey Dude brand DTC sales grew 29.7% in the second quarter, and digital sales grew 36.7% in that time period. Total Hey Dude revenue was $239.4 million in the quarter, up 2.9%. 

Crocs were a top seller in Amazon’s Prime Day sales event, according to data from Web traffic measurement firm Similarweb Ltd. However, the retailer is facing “quite a lot of pressure” from gray market sellers on Amazon, Rees said in an earnings call.

Keurig Dr Pepper Inc. (No. 110)

Keurig Dr. Pepper reported net sales grew 6.6% in the second quarter ended June 30 to $3.7 billion. Sales growth was led by Keurig’s Liquid Refreshment Beverage category, which includes carbonated soft drinks, seltzers, and energy drinks. Dr. Pepper and Squirt were among the most popular brands, the beverage company said. Meanwhile, sales of single serving K-Cup pods were down 2.3% in the quarter.

Keurig did not share specifics about digital sales in the quarter. Digital Commerce 360 estimates online sales made up about 6% of total sales in 2022, reaching $859.5 million.

Harley-Davidson (No. 430)

Harley-Davidson’s consolidated revenue declined 2% in the second quarter ended June 30 to $1.4 billion, the retailer reported. The decline was driven by a 4% drop in revenue from Harley-Davidson Motor Company (HDMC), which sells motorcycles and related products. Part of the decline was offset by 19% revenue growth at Harley-Davidson Financial Services (HDFS), which provides financing and insurance to dealers and customers. 

The motorcycle retailer did not share specifics of online sales. However, Harley-Davidson is expanding its online marketplace of pre-owned motorcycles.

Mattel (No. 200)

Mattel net sales declined 12% in Q2 ended June 30 to $1.1 billion, the toy company reported. The retailer attributed the decrease to declines in the toy industry as a whole, with the expectation that consumers are waiting to make purchases for the holiday season, CEO Ynon Kreiz told investors. 

Following the release of the Barbie movie, Mattel entered 165 product partnerships in thousands of stores, Kreiz said. So far, toys and products related to the film have sold out across distribution channels, Kriez says. Mattel did not share specific figures on digital sales. Mattel president and chief operating officer Richard Dickson was recently appointed as chief executive officer to Gap Inc. (No. 20), effective Aug. 22.

Overstock.com Inc. (No. 50)

Online home furnishings retailer Overstock said revenue was down 20% year over year to $422 million for the quarter ended June 30, 2023.

The online furniture retailer completed its acquisition of competitor Bed Bath & Beyond in June for $21.5 million. Read more coverage of Overstock’s quarterly earnings here.

Tractor Supply Co. (No. 97)

Tractor Supply net sales grew 7.2% year over year in the second quarter $4.18 billion. Comparable store sales grew 2.5% over the period, which ended July 1.

The retailer announced plans to reach 3,000 U.S. locations from the current 2,164 by opening 90 new stores per year. About 30% of current stores, 700, are now organized in the Project Fusion layout, CEO Hal Lawton told investors. The retailer is adding drive-thru pickup lanes to these stores for omnichannel orders. 

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The consumer protection agency filed a lawsuit in Washington state federal court claiming that Amazon’s website manipulates users into enrolling in Prime. Subscribers pay $139 a year for the service, which provides privileges like speedy free delivery, video streaming and access to 100 million songs. The cancellation process for Amazon Prime is also difficult to find and requires multiple steps, the FTC alleged. The FTC said Amazon referred to the process internally as the Iliad, after Homer’s lengthy epic poem.

The agency has recently targeted subscription cancellations, proposing a rule in March that would require companies to make it as easy to cancel as it is to sign up.

The FTC filed the lawsuit on the same day Amazon announced its annual Prime Day sale and Walmart announced its Walmart+ Week sale.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Walmart ranks No. 2.

Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9 in that database.

FTC suit against Amazon

In its complaint, the FTC said consumers must click through five pages on the desktop web store or six on the mobile app to cancel Prime. The FTC also claimed Amazon failed to turn over information investigators sought, taking more than 18-months to produce materials.

The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers. The agency previously used the law to ding MoviePass and its former parent company, Helios and Matheson Analytics Inc., Intuit Inc.’s Credit Karma and Ericsson’s internet phone service Vonage over subscription auto-renewal and cancellation practices. Vonage paid $100 million to settle the FTC’s suit and Credit Karma $3 million to reimburse consumers.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement.

Amazon didn’t immediately respond to a request for comment.

Competing membership programs

Prime membership has been a key differentiator for Amazon, helping it convert occasional shoppers into loyal devotees who make the company their default choice when shopping online. Walmart Inc., Amazon’s biggest competitor, launched the Walmart+ subscription in 2020 for $98 a year, offering many of the same benefits.

About 167 million Amazon shoppers had Prime memberships as of March. That’s unchanged from a year earlier, according to market research firm Consumer Intelligence Research Partners. More than 90% of consumers who try a free 30-day Prime membership become paying members, according to the Chicago research firm.

Analysts say Prime membership has stagnated in the country since Amazon boosted the annual price from $119, a sign that a subscription is less attractive to consumers struggling with a stubbornly high inflation rate.

In the U.S., Prime members spend about twice as much on Amazon as non-Prime members. Amazon’s revenue from subscription services, which is mostly from Prime memberships, was $9.66 billion in the quarter ended March 31. That’s about 7.6% of its overall revenue for the period.

Amazon changed its process for cancelling Prime subscriptions last summer after pressure from the European Commission and national consumer watchdogs. The company introduced a simplified two-click process.

The suit is the third the FTC has filed against Amazon in the past month. The company agreed to pay $30.8 million to settle allegations that it failed to delete data about kids collected by its Alexa speakers and that its Ring doorbells and cameras illegally spied on users. Amazon said it disagreed with the FTC’s allegations but agreed to settlements to resolve the cases.

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