I hold a pessimistic viewpoint because it's a lot more insightful to look at losses than it is gains.
With so much brick-and-mortar retail shut-down, retail has to happen somewhere, so it's going to happen online. Increases in product sales online could result in net declines for the product group when you factor in the loss of B&M sales.
I think the logical result here is pretty well-represented in how some public companies in this space's stocks prices are playing out. Distribution companies are likely to prosper because their competition has decreased substantially:
* Amazon is at an all-time high
* Overstock has recovered their dip
* Wayfair is recovering their dip
* Chewy is at an all-time high
None of this means the manufacturers who these distributors are selling are doing well, though.
On the flip side, the product categories that are down substantially online are likely facing devastating loses. They already aren't selling in retail so if ecomm is it and they're down there, it's really bad.
Outside of distributors, I think the D2C ecomm space is a huge mixed bag but likely net negative for a few reasons:
1. A lot of DTC companies play in the product categories that are seeing lower online sales
2. Most DTC companies are positioned as being accessible, but still premium. There are cheaper alternatives people may be more inclined to go with, given the economic uncertainty.
Given that, layoffs at Away, Everlane, Third Love, Stitch Fix, Casper, etc. make sense, even if online sales as a whole are up. Some of them may even need to start paying attention to unit economics now! I'd guess a lot are scaling back advertising and trying to focus on lower-cost acquisition channels to keep a tighter grip on cash flow.
Amazon not only recovered their dip, but renewed their 52 week max several times already. And they don't even make much from online retail. To make matters more interesting, AWS seems to be _much_ busier than usual, and spot capacity is all but gone, at least at the price we were paying before. I'm not even sure why that is.
> To make matters more interesting, AWS seems to be _much_ busier than usual, and spot capacity is all but gone, at least at the price we were paying before. I'm not even sure why that is.
Because a lot of the online services that are seeing higher use (whether it's telework support, e-commerce, or otherwise) are, in whole or in part, hosted on AWS.
Amazon makes almost 50% of their annual revenue from online retail. Many billions of dollars. It's by far their biggest product category.
Yes, through accounting magic, they're making the majority of their profits via AWS, but that's part of Bezos's long-term strategy and could be changed on a dime (at the potential expense of the long-term growth he's targeting).
Top line, most of their business is from online retail, not AWS.
(edited because my original was a bit of a flame, and didn't clarify profit vs revenue distinction)
Amazon makes substantially more from AWS than its retail segment. Retail revenue is higher but revenue does not equal profit. For instance last quarter AWS revenue was 13% compares to retail but it contributed 52% of operating income.
Tomorrow they could decide to use the AWS profits for growth, and reduce the growth spending on Amazon by the same amount, and suddenly the sense of your sentence is reversed.
If AWS wasn't profitable, AMZN would not be able to grow, and its share price would immediately fly off a cliff. But you know this already. You just want to argue.
> If AWS wasn't profitable, AMZN would not be able to grow
Amazon wasn't even profitable until 10 years after its founding. So that's demonstrably incorrect.
BTW, the thesis that "if a business isn't profitable, it wouldn't be able to grow" flies in the face of hundreds of successful venture capital businesses funded by the yCombinator (founder of Hacker News) and many other venture capitals funds. Profitability is one variable in a very complex mix.
I personally like the idea of bootstrapping, which does require profitability, but that's not the only way to successfully grow a business. You can also grow a business using debt, or by using equity.
> AWS seems to be _much_ busier than usual, and spot capacity is all but gone, at least at the price we were paying before. I'm not even sure why that is.
With so many people inside everyone is using online services: streaming, shopping, chatting, video, audio, gaming.
Almost anything "online" is very likely to run at least something on AWS these days.
With so much brick-and-mortar retail shut-down, retail has to happen somewhere, so it's going to happen online. Increases in product sales online could result in net declines for the product group when you factor in the loss of B&M sales.
I think the logical result here is pretty well-represented in how some public companies in this space's stocks prices are playing out. Distribution companies are likely to prosper because their competition has decreased substantially:
* Amazon is at an all-time high * Overstock has recovered their dip * Wayfair is recovering their dip * Chewy is at an all-time high
None of this means the manufacturers who these distributors are selling are doing well, though.
On the flip side, the product categories that are down substantially online are likely facing devastating loses. They already aren't selling in retail so if ecomm is it and they're down there, it's really bad.
Outside of distributors, I think the D2C ecomm space is a huge mixed bag but likely net negative for a few reasons:
1. A lot of DTC companies play in the product categories that are seeing lower online sales
2. Most DTC companies are positioned as being accessible, but still premium. There are cheaper alternatives people may be more inclined to go with, given the economic uncertainty.
Given that, layoffs at Away, Everlane, Third Love, Stitch Fix, Casper, etc. make sense, even if online sales as a whole are up. Some of them may even need to start paying attention to unit economics now! I'd guess a lot are scaling back advertising and trying to focus on lower-cost acquisition channels to keep a tighter grip on cash flow.