Internet retailer Amazon claims to offer "Earth's Biggest Selection", a mammoth range of products which now goes far beyond books and music to include anything from automobile parts to groceries and from clothing to household furniture. An increasing number of these products, especially in the fashion and personal care sectors, are now own label rather than third party brands. The business is firmly established as the #1 internet retailer worldwide (though it faces increasingly strong competition from Chinese rivals Alibaba and Tencent, operating mainly in Asia). No other company has done so much to establish the reliability and functionality of e-commerce. But Amazon also historically suffered from low profit margins, and rival companies tended to outpace it in earnings growth. That laggard performance appeared to change after 2007, helped along by the launch of the Kindle electronic reader. Huge subsequent investments in infrastructure and technology prompted another slump in profitability in the 2010s. However, the evolution of the Kindle device and its various offshoots, including the Echo home speaker, and the rapid evolution of the Prime membership club has seen the emergence of a new role for Amazon as an entertainment broadcaster and creator. It has also diversified aggressively, not least through a deal in 2017 to acquire bricks and mortar organic grocery retailer Whole Foods Market for almost $14bn. At the same time, the group expanded its technological infrastructure to become a leading light in cloud storage, and made a renewed commitment to increase its profit, not just its revenues. As a result, after a comparatively slow start it has become a diversified technology giant on a par with rivals as such as Apple, Google and Facebook. The resulting effect on its stock price in recent years has elevated founder and CEO Jeff Bezos to the role of the world's richest man. He also owns the Washington Post newspaper. Amazon's revenues rose by almost a third in 2018 to $232.9bn while net income more than tripled to $10.1bn. The company is also now one of the world's biggest advertisers by expenditure as well as the #3 in digital ad revenues after Google and Facebook.
Capsule checked 28th March 2019
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Historical profile information for Amazon
Adbrands Daily Update 11th Jun 2019: Amazon was named King of the Castle for the first time in the latest annual Brandz ranking of the World's Most Valuable Brands from WPP's Kantar. A 52% increase lifted the etailer's estimated valuation to $316bn, pushing past three-year champion Google and 2015 leader Apple, who took 3rd and 2nd place respectively. Microsoft held steady at #4 while Visa replaced Tencent in 5th place. The only new entry among the top 50 was Chanel, straight in at #31. Biggest risers were Instagram, Lululemon and Netflix.
Adbrands Daily Update 26th Apr 2019: Amazon reported its 4th consecutive record quarterly profit for 1Q 2019: an extraordinary $3.56bn, more than double the year ago quarter. However revenues rose by their lowest level for four years, even if that 17% increase (to almost $60bn) is one that traditional retailers can only dream of. CFO Brian Olsavsky repeated his warning that expenses will start to rise once more during the course of 2019, putting an end to that run of record profit.
Adbrands Daily Update 4th Mar 2019: Amazon is reported to be readying the launch of dozens of new grocery stores across the US, with the first outlet pencilled to open in Los Angeles at the end of this year. At least three leases have already been signed, according to the Wall Steet Journal. The new chain will be separate from Whole Foods Market, with a different range of products pitched at lower prices. It's unclear whether the new outlets will carry the Amazon brand. The group is also considering acquisitions of smaller regional chains. At the same time, it has announced the closure of all 87 of its physical pop-up outlets which promote its own electronic devices, while also expanding its collection of bookstores and "four-star" stores which sell third-party products which have head a user rating of at least four stars online.
Adbrands Daily Update 8th Feb 2019: There are certain advantages to being the world's richest man. One such is having the means to fight back against scandalmongering tabloid journalism. Amazon founder & CEO Jeff Bezos is also owner of the Washington Post newspaper, which has, along with the New York Times, been a relentless critic of President Trump and also of the suspected shady dealings of Saudi Crown Prince Mohammed bin Salman. That has made him a target for Trump's close ally David Pecker, owner of bottom-feeding publishing company American Media Inc, which publishes the National Inquirer and other sleazy tabloids. Earlier this year, the aptly named Pecker published an exposé of an alleged extramarital affair conducted by Bezos, a move which prompted his wife to file for divorce. Bezos commissioned investigators to find out how AMI obtained a collection of intimate photographs and texts between Bezos and his alleged girlfriend. At the same time, the Washington Post has alleged that the exposé was politically motivated. Now AMI have threatened to publish further intimate material unless Bezos and the Post publicly apologise for any suggestion of political motivation. Bezos has responded by going public with the whole story, including the blackmailing emails from AMI. In an excellent and lengthy piece on blog platform Medium Bezos writes: "Rather than capitulate to extortion and blackmail, I've decided to publish exactly what they sent me, despite the personal cost and embarrassment they threaten... If in my position I can't stand up to this kind of extortion, how many people can?"
Adbrands Daily Update 7th Feb 2019: In its 10-K filing for fiscal 2018, Amazon disclosed advertising & promotional expenditure of a whopping $8.2bn. That figure was up more than 30% on the previous year and puts the ecommerce giant among the top five spenders worldwide. In 2017, only two companies - Unilever and L'Oreal - disclosed marketing expenditure in excess of $8bn. Neither has yet filed annual reports for 2018.
Adbrands Daily Update 1st Feb 2019: Amazon was the latest US company to report exceptional performance in 4Q but warn of speedbumps for the current year. For the final quarter it recorded a 3rd consecutive record quarterly profit, up 63% year-on-year to $3bn, on sales which rose 20% to over $72bn. Full year revenues were up almost a third to $232.9bn while net income more than tripled to $10.1bn. Own-products performed especially well. The company said the new Echo Dot smart speaker was its single best-selling product globally across all categories over the holiday season. Separately, the company's income from advertising continued to soar, reaching $10bn for the year. Amazon has already overtaken Apple as the world's most valuable company by market cap; it will overtake its rival in revenues as well in 2019. But... the company lowered its guidance for both revenues and profits for the current year, warning that growth would be slower as a result of government restrictions on sales in India and currency headwinds, and that profits would be dented by higher spending on global infrastructure.
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