E-commerce companies reported their second quarter
Shopify, Wish, and Amazon recently reported their second-quarter earnings. One is the leader of an independent website that grew up during the Covid-19, and the other focuses on the sinking market, and Amazon is the famous e-commerce company. The three represent different e-commerce companies, and people can analyze the industry from the performance of the three giants.
Performance is not similar from platform to platform. The first is Shopify. In the first quarter of 2023, its revenue was $1.69 billion, a year-on-year increase of 31%. GMV increased by $8.2 billion from the same period last year to $55 billion, the highest growth rate in history at 17%. Although Shopify’s Q2 profitability beat expectations, its net loss widened to $1.31 billion from $1.2 billion a year earlier. The stock price that fell after the announcement of this financial report also showed investors’ hidden concerns about its ability to continue to grow.
Wish, by contrast, is different. The financial report shows that Wish’s total revenue in the second quarter was $78 million, a year-on-year decrease of 42%. In the case of a net loss of $80 million, its free cash flow is quite stretched, only negative $91 million. Wish has been losing money for seven consecutive years so far.
In the end, Amazon fared best. Amazon achieved revenue of $134.38 billion in the second quarter, an increase of 11% year-on-year, and its net profit soared 433% from the same period last year to $6.75 billion. For this reason, Amazon is full of confidence in the performance of the next quarter.
All three were stuck in the same growth bottleneck in 2021. By 2022, cost reduction and efficiency increase became the main way for e-commerce giants. Shopify cut thousands of jobs. Amazon also had tens of thousands of layoff plans. Wish’s multiple rounds of layoffs have continued to this year, significantly reducing marketing costs. One is that the entire international economy has not been very optimistic in recent years, and the other is that the competition in the entire e-commerce market is very fierce, and the pressure on each platform is particularly high. But now the performance trends of the three are completely different. This is not only because of differences in route adjustments, but also determined by their own foundations.
Shopify’s plan is to build its own logistics and move closer to the platform. Facts have proved that Shopify’s choice is correct. After selling off its multibillion-dollar logistics unit, Shopify has returned positive results for two consecutive quarters this year. Today’s Shopify has finally found its way in the competition. It focuses on the main business of e-commerce, and gradually finds a balance between user acquisition and retention, marketing investment and cost management.
The case of Wish is more special. Wish, which has entered the sinking market, is more like a pure selling platform, lacking the soil to nourish the growth of the brand, and eventually being backlashed by the consequences of low prices, inferior products, and vicious competition. Not only are consumers gradually losing patience with it, but businesses are also losing money due to shrinking profit margins. Wish’s solution to this is to optimize the business environment and consumer experience, and invest in mid-to-high-end brand transformation. However, it is still difficult for Wish to get rid of the disadvantage of low price and low quality in a short period of time.
In contrast to Amazon, layoffs and recruitment reduction, closing marginal businesses, subletting redundant warehouses, and shifting cost pressures are key solutions. What is not the same is that Amazon is also constantly improving its own logistics and warehouses, and improving the FBA transportation system.
It can be said that the business models and paths chosen by the three companies are different, and they also determine completely different fates. All sellers should analyze the advantages and disadvantages of each platform, choose different platforms according to their own products, and don’t blindly follow platforms that they don’t understand.
