Amazon's Growth Was 'Nearly Flat' in 2022, a First

Amazon's Growth Was 'Nearly Flat' in 2022, a First
Marketplace Pulse

Trying to keep track of Amazon's many ventures is like trying to count pollen in springtime but one simple fact emerged as 2022 drew to a close: the company's growth was nearly flat for the year.

That's a first for the giant online retailer, which has shown consistent growth in its quarter century of existence. Amazon's sales in 2022 were $220 billion, down 0.9% from 2021.

The results don't really indicate poor performance by Amazon but rather "macro movements in online shopping," according to Marketplace Pulse, which tracks the company's performance.

Some of the slowdown can be traced to the pandemic's easing, which lured shoppers back into stores, while a slowing economy caused many consumers to tighten their budgets.

Things aren't looking much better for 2023, according to Juozas Kaziukėnas, the founder of Marketplace Pulse. "More advertising spending and higher fulfillment fees while struggling to find growth is the headwind of 2023," he said in a recent blog post.

Amazon moves to stay current

Amazon's not taking all of this lightly. Recent months have seen a blizzard of changes as its various initiatives are adjusted, scaled baack and even scrapped in some cases. A few highlights:

Amazon Fresh Cutbacks  Amazon said that it plans to close a number of Amazon Fresh grocery and Amazon Go convenience stores and pause new openings, as it backs off its attempt to disrupt the grocery business. Critics say Amazon is acting too much like a tech company, hoping that such gimmicks as no-checkout shopping will lure customers.

Amazon Fresh Delivery is also tightening its belt. Previously, the grocery delivery service was free for Prime members whose order was $35 or more in most markets. Now, Amazon will start adding delivery charges of $3.95 for orders between $100-$150, $6.95 for orders between $50-$100, and $9.95 for orders under $50. These fees will be tacked on in addition to the $139 annual membership fee that Prime members already pay.

RxPass In January, Amazon announced RxPass, a new Prime membership benefit that offers patients affordable access to commonly prescribed generic medications that treat more than 80 common health conditions. With RxPass, Prime members can receive all of their eligible medications for one flat, low monthly fee of $5, and have them delivered free of charge. There are no hidden fees and no markups to the $5 per month subscription. More information about available drugs

Smile Program Axed Claiming that it had limited impact, Amazon shut down its AmazonSmile program, which contributed a small amount of participating members' purchases to a charity of their choice. The program was 10 years old and had provided thousands of dollars annually to small charities, includig animal rescues, youth groups and homeless shelters. It distributed about half a billion dollars but came under fire when it was learned that some recipients were hate groups.

Not everyone mourned the demise of AmazonSmile. Writing in Nonprofit Chronicles, Marc Gunther said:

Two questions need to be asked about AmazonSmile.
First, what has it done to increase the quantity of charitable giving?
Second, what has it done to increase the quality of charitable giving?
The answer to both: Not much.

Gunther noted that most consumers never bothered to sign up for the program and those who did sometimes failed to log in through the Smile portal. The result was "$1.20 in donations for every $10,000 of sales," he said.

Now what?

What's next for Amazon is unclear but what's next for 18,000 of its former employees is a job search. Amazon greeted the new year with the announcement that it would trim its payroll by 18,000 workers, many of them higher-paid executive and administrative employees.