Amazon product sales declining for the 1st time

Even Amazon seems to be an immortal company that has to obey some kind of rules of retail growth. The huge pandemic jump in revenue (+54% to Q1/2019) has forced the growth of Amazon’s revenues to decline severely.

Q1/2022 marks the first time that Amazon product sales have declined (-1,8% YoY).

Despite the decline in product sales, the service sales kept on growing by a robust 17,6%. Even that growth has come down significantly over the last four years. As a result of the faster growth, services have for the first time become bigger than product revenues.

The growth of services has been driven by Ads and Subscriptions, both of which still saw double digit growth.

Ads and Subscriptions are both $30+bn annual revenue businesses. Almost Fortune 100 companies in themselves.

Both Retail segments performing poorly

The International segment of the Amazon business has traditionally been more volatile. For years it wasn’t able to generate profits. For the last two quarters, also the North American segment has been unable to generate profits, despite the rapid growth of the highly profitable Ads business.

The growth of the North American segment has for the second quarter in a row remained below 10% Year on Year growth.