While Sales Growth Rate Slows, Amazon Marketplace, Cloud, and Ad Businesses Point to Long-Term Prosperity

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Amazon reported earnings on Thursday, announcing profits of $3 billion on quarterly YOY revenue growth of 17%. While indicative of an overall successful holiday season, the numbers indicate a slowdown from the previous year, when the rate of sales growth was 38%.

As Amazon’s observers would have expected, this deceleration in growth for its primary e-commerce business will likely be offset in years to come by Amazon’s dominant position in cloud infrastructure (Amazon Web Services) and growing role in the digital advertising ecosystem, where it is emerging as a third party to Google and Facebook‘s duopolistic dominance.

For brands hoping to compete with Amazon (and potentially looking on with relief at a sign of fallibility from their digital rival), the earnings report also brings the news that Amazon Marketplace, where third-party sellers can reach customers, is doing more than twice as much in sales as Amazon’s first-party retail platform. Marketplace is troubled by bad practices and fake reviews, and its prosperity suggests the growing challenge for brands to get customers to even go to their sites at a time when Amazon is essentially the homepage of the commerce-oriented Internet.

The report also confirmed Amazon’s leadership position in the voice market, where 63% of users of smart-home devices will be speaking to Alexa.

Joe Zappa is Street Fight’s managing editor.

Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018. Joe is an ad/martech veteran who has covered the space since 2015. You can contact him at [email protected]