© Reuters. Amazon (AMZN) Makes Consumable Space Share Again – Guggenheim
Amazon’s (NASDAQ:) market share in consumables categories appears to be improving again after falling last year, Guggenheim analyst Seth Sigman wrote in a note to clients on Monday citing their channel checks. and data from Numerator.
The company’s analysis focused on groceries, pets, health and beauty. The data showed Amazon’s share of consumable “travel” was up +40 bps year-over-year through April. Additionally, the percentage of Amazon trips that include consumables also increased by +1% YoY in April to approximately 34% of total trips after declining YOY for most of last year. . In addition, the frequency of purchase accelerates again from a very high level.
“We have confirmed with a number of 3P vendors and vendors that trends have improved over the past two 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 of market share within categories when dissecting sales at a deeper level )”, he added. “But our main view is that AMZN is back on trend.”
Sigman notes that there is some stabilization in out-of-stock rates, as well as faster turnaround times. They also see retail traffic starting to normalize/stabilize for consumables retailers. Historically, there has been an inverse relationship to consumable unit growth, the analyst adds.
Additionally, the company’s analysis shows that monthly users of direct engagement and app sessions are growing at their highest rate in over a year. Also, there is evidence that Amazon continues to invest in marketing as competitors seem to have backed down.
Overall, Sigman said the implications are positive, potentially addressing two major overhangs on this stock – 1) Concerns about Amazon’s ability to gain as much market share as it has in the past, 2) The weakening retail profitability as volume may offset cost pressure issues.