Each month we bring you e-commerce trends, analysis, and resources so you can pilot your business to success.
This month we are tracking trends of the heavy-hitters in the e-commerce industry. Below we discuss what you can learn from these companies’ performances in Q1 and how you can optimize your advertising budgets.
Amazon Posts First Quarterly Loss Since 2015
Many were quick to blame the loss on Amazon’s investment in Rivian, which lost $5 billion in just 6 weeks. However, we believe the pullback was inevitable after Amazon benefited so greatly from lockdown spending.
Amazon relies on a huge fleet of trucks and planes to meet demand. Given the rampant increase in fuel costs and inflation, it is no surprise that Amazon was negatively impacted.
It is currently estimated that Amazon employs 1.6 million people to run its massive operation. Also Amazon recently admitted to hiring too many people too quickly.
Our Outlook
- With the increase in inflation, it might be time to start slowly increases the prices at your store.
- Consider having the customer pay for shipping, if not already.
- Be careful when hiring employees in an upswing. It never feels good to let someone go. Instead, hire contractors and part-time employees. Only hire when your cash flow is steady enough to keep paying your employees in a down-turn.
Meta's Ad Revenue Declines
Meta’s Q1 earnings beat expectations, but their ad revenue declined. Meta blamed the recent iPhone update as the reason. However, it may have something to do with a decrease in active users.
Our Outlook
- It appears that Facebook’s ability to track users for targeted ads is not as effective as it once was.
- Don’t blindly post ads on Facebook hoping for conversions. Make sure your targeted demographic is still active on the platform.
- If you’re targeting younger people, look to Instagram or TikTok instead.
YouTube Misses Ad Revenue Target
YouTube also missed their ad revenue targets in Q1. They are blaming the loss on European companies pulling back ad spending after the war in Ukraine started.
Our Outlook
- Video ads are still some of the most effective forms advertising available
- However, to increase conversions, it is best to consider partnering with a content creator on the platform relevant to your niche instead. You are more likely to reach your targeted demographic and it is harder to skip through the ads.
TikTok Shines
TikTok continues to be on a roll. Time on the platform and number of daily users continues to increase, with the United States by far the largest user. It is estimated that in 2022, ad spend on TikTok will reach $11 billion, which is more than the estimated ad spend on Twitter and Snapchat combined.
Our Outlook
- Go where your market is. If your targeted market is young people, you need to be on TikTok
- Create short videos showcasing your product
- Partner with a content creator to show off your product
Buy Now Pay Later Users Surge
With inflation causing prices of basic necessities like gas and food to increase, more consumers are turning to buy now pay later services like Afterpay to finance their purchases. Affirm has already increased its financial outlook for 2022. Klarna shared similar results and reported that 147 million consumers have used their service
Our Outlook
- Integrate some buy now pay later services into your store, if not already
- You are paid upfront, so you are not at risk if the customer defaults
Smart Speakers See Big Gain in Users
Over the past year, orders for smart speakers have increased 35%. Smart speakers are currently the third most popular way to order products online behind Amazon and the brand’s website. Groceries, toiletries/beauty supplies, and home essentials are the most popular products ordered through smart speakers.
Our Outlook
- Optimize your Voice SEO
- With longer tailed keywords and more natural language on your website, you can ensure that your brand is optimized for Voice.
