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The firm’s analysis focused on grocery, pet, and health & beauty. The data showed Amazon’s shares of consumable “trips” was up +40 bps y/y through April. In addition, the percentage of Amazon trips that include consumables also increased +1% y/y in April to ~34% of total trips after declining y/y for most of last year. Further, purchase frequency is accelerating again off of a very elevated level.
“We have confirmed with a number of suppliers and 3P sellers that trends have improved over the last couple of months,” Sigman commented.
“It’s not clear that Amazon has truly cracked the code on grocery/related (e.g., we still see a wide range in market share within categories when dissecting sales down to a deeper level),” he added. “But our main take is that AMZN is back on trend.”
Sigman notes there is some stabilization in out-of-stock rates, along with faster fulfillment times. They are also seeing retail traffic start to normalize/level off for consumable retailers. Historically, there has been an inverse relationship versus consumable units growth, the analyst adds.
Further, the firm’s analysis shows that both direct engagement and app sessions monthly users are increasing at their highest rates in over a year. In addition, there is evidence that Amazon continues to invest in marketing as competitors seem to have backed off.
Overall, Sigman said implications are positive, potentially addressing two major overhangs on this stock – 1) Worries about Amazon’s ability to gain as much market share as it did in the past, 2) Weakening retail profitability given that volume could offset the cost pressure problems.
