What to Know About Amazon’s Fourth Quarter Results
Amazon reported advertising revenue for the first time, totaling $31.2 billion in 2021. These totals signify the ad business is now one of the fastest-growing parts of Amazon and the largest of three digital advertising platforms in the U.S. alongside Google and Facebook.By Rachel Van ClepperFebruary 7, 2022
Stay on top of the latest e-commerce and marketplace trends.
On February 3, 2022, Amazon.com shared its financial results for the fourth quarter, giving sellers and brands the insights they’ve been waiting for. Below is a quick overview of the important results from Q4 and all of 2021 on Amazon.
Amazon Q4 Result Summary
Here are the top takeaways from Amazon’s Q4 results:
1. Advertising Growth Skyrockets in Q4 on Amazon
Amazon reported advertising revenue for the first time, totaling $31.2 billion in 2021. These totals signify the ad business is now one of the fastest-growing parts of Amazon and the largest of three digital advertising platforms in the U.S. alongside Google and Facebook.
Growing an impressive 32% year-over-year, Amazon’s advertising services totaled $9.7 billion in ad revenue during quarter four. Previously, Amazon included the advertising services such as media sales and services, along with the ad tech that surrounds campaigns in the “other” business category for revenue. This shift to publicly sharing shows the importance, impact, and investments that Amazon is putting into its advertising business.
Amazon’s Q4 and 2021 results confirm the critical role advertising with Amazon is playing for brands and sellers alike. As the ads business continues to grow, and the number of ad options available proliferates search pages, the challenge will be to maintain the user experience and relevance to the consumer. A challenge Amazon is more than equipped to handle as evidenced by their new ad options for advertisers both on and off their platform. One thing we know for sure is there will be great importance, selling on Amazon or not, to find a space in Amazon advertising.
Growing an impressive 32% year over year, Amazon’s advertising services totaled $9.7 billion in ad revenue during quarter four.
2. Amazon Narrowly Missed Sales Expectations
In Q4, Amazon’s sales rose 9.4%, which is the first period of single-digit growth since 2017. The company was expected to reach $137.6 billion in revenue but instead achieved $137.4 billion. The lower-than-estimated sales numbers are not impacting investors’ confidence due to many of the investments made in 2021, which is evident by the more than 15% climb in Amazon stock after last week’s announcement and encouraging success of the advertising business. The same cannot be said for Facebook, whose stock recently dropped.
Missed sales are attributed to labor supply shortages, manufacturing, and supply chain issues which impacted Amazon during their crucial holiday sales period in Q4, resulting in higher costs. In the hopes of combatting job competition and increasing employee retention, Amazon increased its front-line employee average starting wage and competitive benefits. These initiatives brought in over 273,000 new employees last year, but they struggled to meet the high demand even with an increased number of employees.
3. First Quarter Predictions for Amazon in 2022
Net sales are expected to be between $112 billion and $117 billion in the first quarter of 2022, which would be a growth of between 3% and 8% compared to 2021. This estimate is paired with an expected operating income of between $3 billion and $6 billion, compared to $8.9 billion during last year’s first quarter.
Both advertising and sales are estimated to continue to grow in 2022, with advertising being a significant driver of Amazon’s bottom-line performance. The second quarter will yield an even greater return if it is anything like 2021, which saw an 88% growth rate for advertising due to Amazon’s annual Prime Day event.
Other Important Amazon Announcements
Increase in Price of Prime Membership: The annual Prime membership grew from $119 to $139, and the monthly Prime membership grew from $12.99 to $14.99 a month.
Increased Use of Prime Memberships: In 2021, Prime members in the U.S. received over 6 billion free deliveries.
First Physical Apparel Stores: Amazon’s first-ever physical store for apparel was opened this year in Los Angeles.
More Payment Partnerships: Amazon partnered with Affirm to include more ways to pay on Amazon with the flexibility of splitting the total cost of purchases into monthly payments. Venmo users in the U.S. also have the option of paying with Venmo for Amazon’s online stores.
Same-Day Delivery Around the World: Amazon further invested in offering Prime members same-day delivery options in the U.S., Europe, and Japan.
Prime Video Sports Viewership & Fire TV Growth: Amazon’s fourth quarter marked Prime Video’s strongest viewership for live sports globally and announced it has now sold more than 150 million Fire TV devices worldwide since 2014.
Amazon Alexa Improvements: Amazon launched new features on Alexa, including the ability to teach Alexa their preferences, such as for food and sports, to help with recommending recipes, local restaurants, and sports scores. Alexa can also start a Routine after detecting activities
About the Author
Rachel Van Clepper is a content marketing writer for Feedvisor, where she contributes to the company’s content marketing initiatives. Before joining Feedvisor, she was a senior content marketing writer for a nonprofit software company.
Final Thoughts
Whether you are a new seller or an experienced Amazon advertiser, learn how you can win on Amazon in 2022 with our upcoming “State of Advertising on Amazon Guide,” packed with everything you need to know about Amazon ads and how to use them effectively.
To get notified when this guide launches and stay up to date on more useful Amazon information, sign up for our newsletter in the form below.
This site uses functional cookies and external scripts to improve your experience.
You may change your settings at any time. Your choices will not impact your visit.
