Amazon’s Q4 2024 earnings call recently took place, revealing insights into the shifting retail landscape that directly impact brands selling on marketplace. Analyzing the data uncovers strategies for brands to leverage in their approach to marketplace. Brands navigating the ever-changing Amazon landscape need to understand the results and trends uncovered from the report’s data to plan for smarter ecommerce decisions this year.
Analyzing Amazon’s Q4 2024 Earnings Call
Amazon’s fourth-quarter results for 2024 reveal significant growth, with some interesting shifts in its revenue streams. Here’s a closer look at the key highlights from the report.
Record Net Sales
Amazon’s Q4 2024 performance demonstrates the platform’s continued dominance in ecommerce, with net sales reaching $187.8 billion—a 10% increase year-over-year. This growth, which jumps to 11% when excluding foreign exchange impacts, reinforces Amazon’s position as a critical channel for brand growth and customer acquisition. For the full year, net sales hit $638.0 billion, marking an 11% increase from 2023’s $574.8 billion.
Segment Performance
- International: The International segment saw an 8% increase in sales reaching $43.4 billion. (excluding foreign exchange impacts, international sales grew 9%). Full year 2024 sales for the international segment were $142.9 billion, a 9% increase from the prior year (10% if excluding foreign exchange rate changes).
- North America: sales increased by 10% year-over-year to $115.6 billion. Full year 2024 sales for North America were $387.5 billion, up 10% from 2023.
- Amazon Web Services (AWS): sales jumped 19% year-over-year to $28.8 billion. Although the smallest segment in overall sales, AWS saw the most significant year-over-year growth highlighting its growing impact in Amazon’s overall revenue success. AWS full year 2024 sales were $107.6 billion, also a 19% increase from 2023.
Operating Income
Amazon’s operating income saw significant gains reaching $21.2 billion in Q4 2024, up from $13.2 billion year-over-year. Here’s how it divided:
- International: This segment turned an operating loss of $0.4 billion in Q4 2023 into an operating income of $1.3 billion one year later, in Q4 2024. Over the full year, operating income was $3.8 billion – a promising increase after experiencing a $2.7 billion operating loss in 2023.
- North America: operating income increased to $9.3 billion, up from $6.5 billion in Q4 2023. For the full year, operating income was $25.0 billion, up from $14.9 billion in 2023.
- Amazon Web Services (AWS): operating income rose to $10.6 billion from $7.2 billion in Q4 2023. AWS operating income increased to $39.8 billion over the full year, up from $24.6 billion from the year prior.
Net Income
Amazon’s dramatic increase in profitability points to a maturing marketplace ecosystem for brand growth. Net income nearly doubled to $20.0 billion in Q4 2024 ($1.86 per share), up from $10.6 billion ($1.00 per share) in Q4 2023. The full-year performance was even more striking, with net income reaching $59.2 billion ($5.53 per share)—a 95% increase from 2023’s $30.4 billion ($2.90 per share). Implications for brands:
- Amazon’s increased profitability suggests continued investment in marketplace infrastructure and tools
- Strong financial performance indicates stable platform for long-term brand building
- Higher profits likely mean new features
- Growing marketplace maturity creates environment for sophisticated brand strategies
Key Takeaways for Marketplace Sellers
Driving Growth with Advertising
While Amazon’s overall growth is strong, a closer look reveals that advertising and AWS services are driving growth more than retail sales. Advertising revenue grew by 18% year-over-year in Q4 while retail sales only grew 6% during the same period. This being said, Amazon’s overall growth is primarily driven by marketing and other sources rather than increased retail sales – a surprising and possibly uncomfortable fact for brands selling on the platform’s marketplace. However, this data does reveal an upside: with advertising revenue growing at a faster rate than retail sales, investing in Amazon’s advertising can be a opportunity for capitalize on the shift. Brands looking to grow and leverage this momentum should focus on full-funnel tactics and optimizing product listings to increase visibility in 2025.
AI Innovation Transforms the Customer Experience
Amazon’s substantial AI investments are changing how brands connect with customers on its marketplace. The launch of Rufus, Amazon’s AI shopping assistant and enhanced product discovery tool, signals a shift in how Amazon customers discover, interact, and learn about products on the platform. AI tools are now analyzing product listings, reviews, Q&As, and technical specifications. This impacts searching behavior and purchasing decisions—creating additional opportunities for brands. To maximize visibility in this AI-driven environment, brands must optimize their digital presence across all customer touchpoints.
An adapting marketplace strategy should include new opportunities for customer experiences, considering the AI-powered recommendations that Rufus gives to customers. The best way to optimize for this is with optimized product content, such as:
- Product titles and descriptions that contain detailed and accurate specifications
- Benefit-focused bullet points that address common customer pain points
- Consistent brand messaging
- Monitoring and responding to customer inquiries and reviews
For brands to succeed on the evolving marketplace platform, their Amazon strategies must adapt to embrace these AI-driven changes. Aim to stay ahead of the curve and capture increased visibility as AI capabilities are expected to continue to evolve and further impact the retail landscape.
Improving Delivery Speed
Amazon continues to invest heavily in improving delivery speeds, especially for Prime members as its a key factor to Prime membership growth. Brands should explore different fulfillment methods to increase opportunities for faster inventory replenishment, delivery speeds, and increases in margin. Some areas to explore are:
Looking to 2025 and Beyond
In addition to sharing Q4 2024 results on the earnings call, Amazon also shared its forecast for Q1 2025 – unfortunately planning for slower growth. Amazon’s forecasting net sales between $151.0-155.5 billion, or to grow between 5% and 9% compared with Q1 last year. This guidance anticipates a $2.1 billion unfavorable impact from foreign exchange rates. Operating income is projected to be between $14.0-18.0 billion compared with $15.3 billion last year (roughly more or less the same). The company’s stock price has fallen 4.5% since the earnings report was released, reflecting investor concerns in this potentially stagnant Q1 2025.
There are also uncertainties in retail 2025 due to tariffs and other economic uncertainties. However, with Amazon’s commitment to AI, this could also easily accelerate changes in the marketplace, making certain areas of online selling difficult to forecast. Regardless, as Amazon’s customer base continues to grow, there becomes a greater opportunity to capture market share with differentiated brand and product positioning. Additionally, leverage opportunities to expand presence, such as international expansion, to reach an even wider customer base. As always, brands should keep an eye on the ongoing shifts taking place throughout the market and focus on optimizing their product and campaign performance.