Amazon Brick-and-Mortar Sales Drop 3 Percent Year-Over-Year
Don’t get me wrong, Amazon’s most recent quarterly earnings report, published Thursday evening, had a lot of great news for the company. Their sales were up 20 percent year-over-year, ending at $72.4 billion for the quarter. And the company’s operating cash flow ballooned 67 percent year-over-year to $30.7 billion.
But there was one piece of data that the company reported on that, when you read it, ought to make you give at least a half smile. Buried in its line items, down on page 14 of the 16-page report, Amazon notes that its Physical stores sales reached $4.4 billion during the fourth quarter, a 3 percent decline from the $4.52 billion they did last year during the same period. That figure includes sales at the company’s Whole Foods locations as well as its other physical stores like Amazon Go and the Amazon Bookstore locations that have been popping up around the country. This was the first year-over report that Amazon could give for its physical locations since acquiring Whole Foods in 2017.
For what it’s worth, physical stores represent a tiny segment of the business that Amazon does as a whole. But the blemish they left on what was otherwise a pretty solid quarterly earnings report shows that even big, bad Amazon is at least somewhat struggling to find a way to make brick-and-mortar work for them. And while they’ve been busy expanding their physical retail presence, competitors are quickly catching up on the ecommerce side of the business.
"Retailers like Target and Walmart have invested heavily in their online operations and pulled out all the stops this holiday season," GlobalData Retail Managing Director Neil Saunders told Retail Dive in an interview. "Our data show that they made solid customer gains, and some of that dinted Amazon's growth. In our view, the gap between Amazon and the rest is now narrowing."
Though this feels like something of an “I told you so” moment for Amazon, what it really means is that the jury is still out for brick and mortar. There is no one-size-fits-all kind of solution for the industry, and it’s really up to the individual retailer—independent retailers in particular—to find the business strategy that works best in their market and for their customers.