<\/a><\/p>\n<\/p>\n\nA weekly podcast with the latest e-commerce news and events. Episode 329 is an evaluation of Amazon Q2 2025 earnings report.<\/p>\n <\/p>\nSubscribe<\/strong>:<\/p>\n<span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><\/iframe><\/figure>\n<div class=\"\">\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">0:38\u00a0 <\/span>Welcome to the Jason and Scott Show<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">12:57\u00a0 <\/span>Amazon\u2019s Mixed Earnings Report<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">18:07\u00a0 <\/span>The Impact of AWS on Retail<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">21:18\u00a0 <\/span>AWS Performance and AI Concerns<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">28:55\u00a0 <\/span>Amazon\u2019s Advertising Strategy<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">33:33\u00a0 <\/span>Amazon\u2019s Relationship with Google<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">35:24 <\/span>The Future of AI Investments<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">39:44\u00a0 <\/span>User Experience and Advertising<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">42:42\u00a0 <\/span>Economic Uncertainty and Consumer Behavior<\/div>\n<\/div>\n<p>Welcome back to the Jason & Scot Show! In episode 329, recorded on August 1st, 2025, we dive into the highly anticipated Amazon Q2 earnings report alongside other critical tech giants\u2019 earnings results. Your hosts, Jason Goldberg (the retail geek) and Scott Wingo, bring their expert insights and analysis of a rollercoaster earnings season that saw mixed results across the board.<\/p>\n<p>Kicking off the episode, Scot sets the stage with a review of Google\u2019s recent earnings results, which painted a mixed picture. While search revenue indicated a solid 12% growth, concerns about the impact of AI on search operations raised eyebrows. Google Cloud did not exhibit the explosive growth anticipated, leading investors to remain cautious. Following this, we turn our focus to the simultaneous announcements from Microsoft and Meta. Each company churned impressive earnings and strategic maneuvers, surpassing expectations and highlighting strong growth driven largely by their AI advancements.<\/p>\n<p>Transitioning to Amazon, the top story emerges: the company reported Q2 earnings that, unfortunately, mirrored Google\u2019s mixed performance rather than the triumphs seen with Microsoft and Meta. Despite a revenue growth of 12% and operating income surpassing expectations, investors reacted negatively to AWS\u2019s performance, which failed to keep pace with its competitors. Jason and Scott dissect the factors leading to Amazon\u2019s stock drop post-earnings call and the implications for its sprawling empire.<\/p>\n<p>Amazon\u2019s retail performance, particularly in North American and international markets, sparks a lively discussion. Notably, the North American retail business beat expectations by 2%, and international retail excelled by 7%. The hosts clarify that while the overall performance was commendable, it left much to be desired when juxtaposed against AWS\u2019s stunted growth and other tech players\u2019 successes.<\/p>\n<p>Delving deeper, Jason emphasizes the company\u2019s continued enhancements to its supply chain, signalling improvements that strengthen their retail operations, crucial for maintaining growth amidst increasing competition. He also highlights an interesting trend: for the first time, first-party sales outpaced third-party sales, reflecting a noteworthy shift in Amazon\u2019s marketplace dynamics as consumer spending leans towards everyday essentials.<\/p>\n<p>As the discussion progresses, Scott raises a critical point about the evolving landscape of online advertising and the pivotal role it plays in driving Amazon\u2019s growth. Despite a slight deceleration in year-over-year growth for the ads business, it remains a bright spot for Amazon, contrasting starkly with AWS\u2019s performance and hinting at the challenges faced in balancing user experience against monetization strategies.<\/p>\n<p>The conversation pivots towards AWS, where the hosts dissect the figures that fell below investor expectations\u2014the margins declining for the first time since the previous year, raising questions about structural issues. The ambiguity surrounding Amazon\u2019s ability to capture AI growth is a focal point, with analysts expressing concerns about lagging behind competitors.<\/p>\n<p>Nearing the end of the episode, a fascinating turn occurs when Scott sheds light on Amazon\u2019s recent decision to withdraw its shopping ads from Google. This pivotal move sends ripples across both platforms, provoking various theories about strategic shifts and implications for competitors. The duo shares intriguing insights into how this action marks a significant stake in the ground regarding data ownership and market positioning.<\/p>\n<p>As the episode wraps up, Jason and Scott reflect on the broader landscape of AI, retail, and shifting consumer behaviors, suggesting that while Amazon remains a dominant player, its approach and evolution will be crucial in navigating future market dynamics.<\/p>\n<p>Be sure to listen in for their final takeaways from the earnings calls and nuanced observations regarding the tech landscape. If you enjoyed this episode, please give us a five-star review on iTunes, and stay tuned for next week\u2019s insights!<\/p>\n<p>**Episode 328 of the Jason & Scot Show was recorded on Thursday, July 23rd, 2025.**<\/p>\n<p>Join your hosts Jason \u201cRetailgeek\u201d Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.<\/p>\n<p><strong>Transcript<\/strong><\/p>\n<p>Jason:<br \/>[0:23] Welcome to the Json and Scott show this is episode 329 being recorded on Friday August 1st,<\/p>\n<p>Jason:<br \/>[0:30] 2025 I\u2019m your host Jason retail geek Goldberg and as usual I\u2019m here with your co-host Scott Wingo.<\/p>\n<p>Scot:<br \/>[0:38] Hey Jason and welcome back Json and Scott showed listeners. Well today we are going to go over Amazon earnings it was a very eventful earnings season so let\u2019s set it up before we jump into Amazon. So back on July 23rd so about a week ago Google announced their results and they were what I would call mixed. Search grew 12% which was good. But there were some concerns and management kind of dodged some tricky questions about what\u2019s going on with AI overviews and how that\u2019s impacting search Google Cloud did very well but not what I would say crushing it. So then their stock did not reactgreat or bad to that so it\u2019s been kind of flat to down slightly since thenso then that was the setup last week. And then on Wednesday of July 30th we came in and had Microsoft and meta announced on the same day which is really hard for our internet analyst friends out there to have 2 Big E\u2019s announcing at the same time but they they survived.<\/p>\n<p>Scot:<br \/>[1:44] Came out I just uh did this alphabetically and. Meta came out first and it was a a Whopper so it was a the best thing you can do in Wall Street is, to not only meet expectations but meet them and then raise next quarter\u2019s expectations and that\u2019s what meta did so it was a what we call a classic beaten rays which is a. It\u2019s kind of the the Holy Grail the upper right quadrant the place to be if you\u2019re a public company. So they beat the Topline estimates by 6% which is good but then they just crush the bottom line coming in about 21% more profitable than Wall Street, expected and then the icing on the cake if it as if it couldn\u2019t get any better it did is they their growth is accelerating so in the first quarter they grew 16% year-over-year and then in second quarter they grew 22% year-over-year, so that\u2019s a really material quarter on quarter roll acceleration to their business. And they they attribute a lot of that to the use of AI internally at meta to run their advertising systems and automate the whole. Supply chain of advertising from you know bid management which is where they they\u2019ve been working at, probably the most and then now add creation that type of stuff and Wall Street rejoiced and the stock was up 8% which these are Big market cap companies and that\u2019s a really big move.<\/p>\n<p>Scot:<br \/>[3:11] Jason anything on meta before we move on to Microsoft.<\/p>\n<p>Jason:<br \/>[3:14] No I mean I think you you covered it interestingly, I would just point out I found it interesting it was so much about the future and Ai and kind of meta as a technology company and you know historically all the revenue at meta comes from. Advertising and you know there are all these macroeconomic uh interesting conversations that at the moment that are a play about the future of that advertising business and all these Chinese advertisers that are on again off again on on The Meta platform I was, somewhat struck by how little conversation like how little any of that seem to matter like their current. Predominant source of Revenue seem somewhat Irrelevant in the whole dialogue am I do you feel like I missed that or do you think it\u2019s.<\/p>\n<p>Scot:<br \/>[3:57] No I think that\u2019s right yeah yeah because they\u2019re they basically give away Ai No 1 really cares other than it it\u2019s impact on the business. The and then Microsoft came up and they said hold my beer so they also did a beat and raise and both on the top and bottom line. And then they\u2019re they\u2019re really confusing because they talk about AI overall which is includes a bunch of stuff, and that grew 157% which is just Bonkers but I. Parsed what that means some of its tokens and it\u2019s just really hard but then the other thing that Wall Street was really pleased with, and you\u2019ll remember for the longest time Amazon wouldn\u2019t break out the ads business and everyone was really frustrated and then for the longest time they wouldn\u2019t break out the AWS business and everyone was frustrated, and same at Microsoft they have not broken out their Azure platform which is their cloud computing separately uh and then they finally for the first time made a disclosure on that, uh Wall Street just really liked that and they always take it as a signal when companies disclose things that the company\u2019s feeling really great about that long term and, and is opening up new disclosures because they feel like they\u2019re all going to go up into the right.<\/p>\n<p>Jason:<br \/>[5:09] And isn\u2019t it always a coincidence that they decide to do that on a quarter that\u2019s quite favorable.<\/p>\n<p>Scot:<br \/>[5:14] They yes it is because if you did it when you were not doing well no 1 would care so like why why do that and then the, yeah so wall Street\u2019s weird like that lots of it\u2019s a psych it\u2019s 80% psychology in ways and 20% reality but that\u2019s that\u2019s kind of. How the world Works anywayso I think the most Germaine part to our discussion in there is that the, Ai and it\u2019s not Azure in this disclosure grew 39% and so that was good and analysts had they kind of pick apart at it and get to a number and their their guesstimate was 34%. That stock went up about 8% at at the peak and is down now a little bit.<\/p>\n<p>Scot:<br \/>[5:55] But for a while there Microsoft was the second company to get the the 4 trillion dollar market cap which Nvidia passed a while ago, so that was the setup coming into this so you had Google mid Microsoft and meta crushed it, and then within within Google and Microsoft their cloud computing is accelerated quarter-on-quarter so, I think expectations really started to rise going into the Amazon report that AWS would see something similar because you kind of think well there\u2019s this AI tide lifting all the boats certainly we will see it in AWS and that brings us toAmazon newsyour margin is z opportunity.<\/p>\n<p>Jason:<br \/>[6:44] So unfortunately Amazon\u2019s results were probably more similar to Google\u2019s than than meta in Microsoft in in your setup Scott it was sort of mixed but but in you know a a pretty bad way of your Amazon investor probably so predominantly that\u2019s because AWS didn\u2019t expectations relative to to the other big cloud platform businesses and you know given all that that favorable traction that meta Microsoft got like that we\u2019re already starting to see their their stock get punished I think, after hours trading started like in the middle of their earnings call and the last time I checked Shares are down like like 6% which is. Kind of put you at that 2.5 trillion dollar market capyou know which means they they, was something like 150 billion dollars since the earnings call which you know a few billion here billion there it adds up.<\/p>\n<p>Jason:<br \/>[7:36] What\u2019s I guess slightly weird or lost in all that conversation is like the top line was pretty good like like they were beats like Revenue was up 12%, which was a beat versus expectations operating uh margin was was up which like like. I think they came in for the quarter like nearly 20 billion write 19.2 billion good job intern which which was a Beat, and so the overall business performed well and there is we\u2019ll we\u2019ll break it up of course all down and we\u2019ll we\u2019ll highlight a lot of things that are going well but big picture. AWS is still a fast growing business for them and grew fast it didn\u2019t grow as fast as their competitors, and as we\u2019ll dive deeper into it the the narratives surrounding that was not completely fulfilling and so the the stock is is taking a hit at the minute at the moment but.<\/p>\n<p>Jason:<br \/>[8:27] Kind of going back to the to the top level there were a lot of interesting things that came up in in the earnings call in a few things that were interesting that didn\u2019t come up for those of us that care mostly about retail I would I would say like. The supply chain discussion you know continues to Roll Along that you know the people are forgetting about 18 months ago they made this major transformation from from a national distribution system to a regional Hub and spoke system and they\u2019ve been, claiming wild successes both, improving their service level by having faster delivery and more products available for faster delivery and improving their profit profitability and the cost to serve going way down and all of those Trends continued this quarter, they\u2019re improving their service levels Nationwide for delivery and they\u2019re improving their cost to serve which is, beneficial to their margins the the North American retail business which you know the way they measure it because their Marketplace and and have this big ads business is slightly problematic but but kind of just base it on Gap. North American retail was a Beat by 2% potentially more importantly International retail was a Beat by 7% the US is Amazon\u2019s most mature market and so, in a lot of ways.<\/p>\n<p>Jason:<br \/>[9:42] You know it\u2019s it\u2019s slowed down because of the law of large numbers and so the analysts really pay attention to how Amazon\u2019s growing in these more emerging markets and and seems like there\u2019s still gas in the in the international growth for Amazon, the I saw 1 Tibet in their earnings that that online Revenue increased by 11% I\u2019m sorry 10%, I have seen some analysts that are saying that like the US Quarter over quarter gmv growth was probably 11%. And they\u2019re now predicting that the annual gmv growth is going to be in the area of 8.7% so those are all good numbers, if you consider the US retail industry is growing right now at 3.8%.<\/p>\n<p>Jason:<br \/>[10:24] And even e-commerce at the moment across the US is only growing about 7% and so you know talking about Amazon growing between 9 and 11%. As big as they are is is super impressive physical stores grew this is a relatively small number in the overall scheme of things that Amazon and of course it\u2019s it\u2019s it\u2019s almost exclusively Whole Foods at this point but Whole Foods has been kind of a.<\/p>\n<p>Jason:<br \/>[10:48] A mixed story for Amazon so growth there is interesting physical stores grew 7.5% year-over-year so that\u2019s now up 5. 6. 1 interesting thing third-party seller growth for the first time that I can remember in a long time they had good third-party seller growth I think it was like 10% but it was actually slower than their first-party sales growth so, I mean I would argue that transcends the day they invented the marketplace has been that the 3p has grown faster than than 1 P with a few exceptions this quarter they saw 1 p, drove faster and partly that\u2019s back to the supply chain story because there\u2019s always been a lot of demand for these low-cost everyday essentials that, in the old Amazon supply chain we\u2019re not very efficient to deliver an Amazon wasn\u2019t as competitive on but as they\u2019ve improved their supply chain there are a lot better at selling these like you know I just need a pack of paper towels I just need a pack of of razor blades and in a macroeconomics world where, a lot more consumer spending is going to those everyday essentials the fact that Amazon is competing more successfully in that space and selling more 1 P every day Essentials because the.<\/p>\n<p>Jason:<br \/>[11:59] Party Marketplace is not a an awesome offering for those everyday essentials at the moment so that was all super interesting subscription Revenue was up unit sales were up. The I still think they\u2019re they\u2019re hovering around 62% of all their their Market retail sales are Marketplaceand I think they they had a stat in the. In the discussion that every day Essentials are now 1-3 of their their total sales which is. Another unsung story of kind of Amazon successfully Reinventing their business while No 1 notyeah let me take a breath Scott do you.<\/p>\n<p>Scot:<br \/>[12:36] Yeah I thought I thought that\u2019s a good recap I thought it was interesting it, you know we\u2019re in like the summer movies Zone and I just saw Superman I\u2019m gonna see Fantastic 4 and I know there\u2019s going to be there\u2019s always these multiverses I almost wonder like if there was a universe where.<\/p>\n<p>Scot:<br \/>[12:50] All of retail missed but AWS did better I I think the stock would have been up 10 so so we\u2019re in this really weird phase.<\/p>\n<p>Jason:<br \/>[12:58] That Tobey Maguire Spider-Man version of okay sorry.<\/p>\n<p>Scot:<br \/>[13:16] But in a way AWS is bringing down the retail part of the business which is kind of crazy for because for the longest time it was the other way around.<\/p>\n<p>Jason:<br \/>[13:23] I was going to say the retail business owes.<\/p>\n<p>Scot:<br \/>[13:24] It\u2019s a weird Bizarro world world.<\/p>\n<p>Jason:<br \/>[13:26] Owes AWS carrying that water for some quarters.<\/p>\n<p>Scot:<br \/>[13:29] It does yeah yeah but as as we\u2019ll get to you here\u2019s a tip for you there is another piece that\u2019s carrying the retail part what do you think that is Jason.<\/p>\n<p>Jason:<br \/>[13:38] Oh my gosh you know what would be interesting is if you had the world\u2019s attention and you you you rent it or sold that attention in the form of like some kind of advertisement.<\/p>\n<p>Scot:<br \/>[13:48] Yeah how did dads do.<\/p>\n<p>Jason:<br \/>[13:50] Well obviously this has been. A big story to Amazon for a long time and it continues to to be 1 of the bright stars in Amazon growing much faster than the overall business and so you know we\u2019ve we broken down the math the number of times the the annual run rate on their ads business is well over 60 billion dollars a year this quarter, they they did 15.7 billion which was a beat versus analyst expectations and so the the year-over-year growth was like 23% 22.9 percent, so that that is actually a slight deceleration of the ad growth because it\u2019s been growing so fast but obviously compared to the overall Amazon business. This is a 60 billion dollar business that\u2019s that\u2019s still growing. You know super fast and and well in excess of of wall Street\u2019s expectations which were like 17%.<\/p>\n<p>Jason:<br \/>[14:42] So so the ad business continues to be a bright star sparked side note that\u2019s the bane of my existence because every other retailer on the planet sees that and they want to replicate that and for variety of reasons most retailers. Can\u2019t and shouldn\u2019t try. My whole industry spends a lot of time whipping up the the lather around retail media networks and and as we\u2019ve covered in the past on this show, if you\u2019re not Amazon or Walmart retail media networks are kind of mehso I\u2019ll just shout out to to Carrie in case you\u2019re listening. The but again good quarter for Amazon the ads are going up there\u2019s some big news in ads that will will talk about later.<\/p>\n<p>Jason:<br \/>[15:22] The thing I\u2019m always watching in their ad business is is I would actually argue, there\u2019s 2 add businesses at Amazon and they kind of off off skate each other there\u2019s sponsored product listings on a third-party Marketplace which is. All the high volume stuff and it\u2019s it\u2019s you know that that\u2019s true the true retail media network but increasingly. Amazon is a darn successful Media company with sports franchises and unique programming and so you know you you\u2019d want to hear them talking about their ad success for all of that content and how that compares with, Disney and HBO or whatever they want to call themselves this month and and the you know the the old school television networks and you\u2019d want to see how their growth rate there is comparing with those other content providers uh and talk about that separate from how their retail media is competing with Walmart but we can\u2019t because they they bundle all these 2 wildly different things together and call it adds, but and and we didn\u2019t get a very good hint about how much traction they\u2019re getting on on the content ads they are continuing to increase the, the inventory of type of ads and so that\u2019s somewhat interesting and of course you know I\u2019m always listening for tidbits about those 2 Worlds colliding and how you might introduce shoppable ads you know or or more ads with a direct call to action in all that content and and this quarter there wasn\u2019t much discussion of any of that becausethe, Ai and AWS stole all the all the attention.<\/p>\n<p>Scot:<br \/>[16:50] Yeah on on the add topic everyone I talked to about prime day said Amazon was pushing ads so incredibly hard that it was almost a gate for you had to buy make commit to a big ad Buy before you could even get into the programs and stuff, so so I suspect we may actually see this 1 accelerate again into Q3 because, the Amazons really leaning in and and you know but at some we we\u2019ll talk about this in a minute but I have some theories on this ad thing that.<\/p>\n<p>Jason:<br \/>[17:20] Yeah I mean I I would just say like whether Amazon\u2019s trying to lean in or not like it\u2019s almost inevitable because of their assortment right like you\u2019re you\u2019re a billion items now no 1\u2019s ever going to organically find any of your items and so ads are the only path to Discovery for all all of the sellers on the platform and a smaller version of that same thing is playing out for Prime day like there there used to be 3,000 items for sale on Prime day and 100 lighting deals right and and you could browse all those in the same way that people used to browse the internet on Yahoo but you know now, there\u2019s no way to to browse any of those things so unless you have an ad promoting your,<\/p>\n<p>Jason:<br \/>[17:59] Prime Day deals or promoting your Lightning Deals nobody\u2019s ever going to see them and so even if Amazon wasn\u2019t putting the screws to people which they are. You would still like advertising is now the the most important and necessary path to any kind of success on on Amazon\u2019s platform and obviously Amazon\u2019s not overly disappointed about that.<\/p>\n<p>Scot:<br \/>[18:22] So this brings us to AWS so as mentioned the top line was in line to a slight beat but the bottom line missed so Wall Street was expecting 10.9 billion on the bottom and it was 10.2. So that\u2019s a that\u2019s a pretty good miss their or bad Miss. It grew the AWS grew 17.5% year-over-year which is good but it was not an acceleration which again the comps of gcp and Azure did accelerate, this is the first time the margins of actually declined since the second quarter of 2023, on the call and we\u2019ll talk about this a little bit more but specifically they talked about they are very capacity constrained. And they they called out power a lot of these data centers that are trying to be built are are really having a hard time getting to enough power to build out things so that\u2019s an area but I think. They\u2019re actually kind of low on the the king of all this is NVIDIA they make the the biggest gpus that these centers need Amazon has its own chipset I don\u2019t think it\u2019s nearly as good as Nvidia and it\u2019s cheaper which is great. But they\u2019re not adding enough of those and they\u2019re not adding enough Nvidia. So that\u2019s a huge problem they also called out part of the part of the margin decrease was some just structural things around how you calculate stock based comp and some depreciation things so a lot of it wasn\u2019t really a change in the business model.<\/p>\n<p>Scot:<br \/>[19:51] The the so that that\u2019s kind of like what\u2019s in writing and then what happened is in the conference call and that I think you got a chance to listen to this, the Jassie just seemed off is kind of like how people described it and especially when it came to this AI topic and let me just read like a little note I thought was interesting. RBC has an analyst Brad Erickson and he said the title of his report for the whole quarter was is this a structural issue or just an off night and here\u2019s a little excerpt, on the other for AWS growth didn\u2019t accelerate like its peers margin missed and Management\u2019s commentary on the call did little to attenuate investor fears that AWS may have a bigger structural issue in capturing its fair share of the growth from AI. The retail strength pushes our estimates higher and Target Target moves up modestly but admittedly the Optics of AWS underperformance in isolation and Management\u2019s commentary make it hard to defend Amazon so. You know there was this really long rambling answer that jasse gave where this the question was specifically like are you doing enough to capture. AI share and he answered it a little bit in this like 8 Minute answer but then he kept talking about how they\u2019re using it internally and it\u2019s helping the retail business it felt like a big. Hey not a very great answer because it kind of went.<\/p>\n<p>Scot:<br \/>[21:07] All over the place but then it felt like a hard diversion from answering the question which people were kind of he didn\u2019t lean in and say we\u2019re crushing it in AI we\u2019re going to dominate and I think that\u2019s what they wanted to hear.<\/p>\n<p>Jason:<br \/>[21:18] Yeah it should have been a 1 cent, yeah well so a like I I want to say the analysts that actually asked the question was the Morgan Stanley Guy Brian Nook and I I when I was listening it was awesome because he he, pre-war in the question I think it started something like hey I have 2 questions for you about AWS they\u2019re a little tough but I\u2019m going to throw them at youwith with.<\/p>\n<p>Scot:<br \/>[21:39] Please don\u2019t penalize me for asking a hard question.<\/p>\n<p>Jason:<br \/>[21:41] Yeah which is literally like the the setup right and then he goes into this there\u2019s a Wall Street you know Finance person narrative right now that AWS is falling behind in generative AI and that you\u2019re losing share to your peers what\u2019s your rebuttal to that right and. You know again you would expect a a polished CEO like Andy who had generally kills it in these in these settings to have a. Short crisp answer about why oh we\u2019re actually killing both of those but since we\u2019re so far ahead of them, like it\u2019s harder for us to earn the growth right that would have been the easy 1 sentence answer right like we\u2019re we\u2019re 3 times larger than them so we we we grew a little bit slower than them. And there are all these endemic constraints on all of us the world doesn\u2019t have enough electricity the world doesn\u2019t have enough chips right like you could have come up with some. Some kind of conversation like that but you for your point like he went on a 8 Minute narrative that like I I think included a couple visits to his own shopping behaviors and thingsand it it was just unclear like. Did he just miss the importance of the question and he gave a bad answer or was he literally like trying to dodge the question and and distract people. I tend to think it was the first that it just it wasn\u2019t wasn\u2019t hishis most Stellar answer but.<\/p>\n<p>Scot:<br \/>[22:57] Yeah the the problem isthey don\u2019t have a model right so so Microsoft is married open AI they are an investor.<\/p>\n<p>Jason:<br \/>[23:05] Side note did you see that openai is now buying capacity from G gcp too.<\/p>\n<p>Scot:<br \/>[23:10] Yeah yeah yeah they\u2019re the rumor is they\u2019re building their own tpus they\u2019re going to use that to kind of start coding against TPS and they\u2019re going to build their own their own inference. The they do have a relationship with anthropic. But anthropics kind of taking a hard left turn into the coding vertical which is great but you know the workloads Amazon is looking to help people with their probably more corporate and so they they\u2019re kind of, I do think they\u2019re in a little bit of a hard position with AWS and I don\u2019t think they\u2019ve leaned in enough on building against this I think I think it\u2019s probably because they\u2019re a little bit more conservative with their retail background, I don\u2019t think they\u2019re going like all suck on this and paying people billions of dollars and building, you know as much infrastructure as they probably could have so so I think there is a there is an argument that there\u2019s a structural issue here. Yeah Amazon\u2019s good and they have all the resources to be able to get out of this I don\u2019t feel like it\u2019s un unfixable.<\/p>\n<p>Jason:<br \/>[24:07] No and I but I would say just in general Amazon is used to inventing a darn good moat that gives them some kind of endemic competitive advantage and you know at the moment like everybody\u2019s in the same boat on electricity right like there\u2019s so many so you know so many, sides to build data centers next to hydro electric dams and whatnot and and you know the, the market for energy is pretty efficient and Amazon has some cool IP they I think they would argue stronger than you would that the their IP for for chips is, is competitive but they don\u2019t have their own Fab so like they don\u2019t they don\u2019t have a way to Seoul to solve their capacity problems so they\u2019re kind of in the. Level Playing Field which they\u2019re not used to.<\/p>\n<p>Scot:<br \/>[24:50] Mhm, yeah absolutelyand then that brings us to guidance which was also mixed so the midpoint of Revenue was a bit up from consensus which is viewed as positive but margin was light. And you know everyone\u2019s parsing through that given this kind of psychological fear around AWS and kind of reading through it that. There\u2019s no no anticipated fix in AWS in this guidance. So so there\u2019s a little bit of a wall of worry around Amazon right now and you know just a a we\u2019re doing this actually we usually record at night we\u2019re doing it during the day oddly today but you know it\u2019s down 8% now. So a couple other interesting tidbits I I I did think it was interesting, that they specifically called out that tariffs have not impacted demand or margins or, cause ASP or average order value or or the ticket price to go up so so they they basically said so far they\u2019re not seeing anything from these tariff changes which there was a lot of worry around that on the retail side of the business. And then. I thought you had teased this earlier but what did you you know another interesting tidbit is what\u2019s going on between them and Google right now what what are you seeing there.<\/p>\n<p>Jason:<br \/>[26:03] Yeah well so there was there was big news last week while we were recording our last episode Scott that Amazon essentially took all of their shopping search ads off of Google and you know for those that don\u2019t know Amazon is the largest Advertiser on Google and they spend something in the order of 17 billion dollars a year on on ads and I\u2019ve always argued like this is the greatest unsung story in the history of business that Amazon essentially buys 17 billion dollars worth of eyeballs from Google every year. And then they they sell some paper towels to those eyeballs and make money on those paper towels but then, they once that eyeball has bought a paper towel from Amazon Amazon shows them an ad for a third party Marketplace seller and they sell the ads that they show for 60 billion dollars. Um so it\u2019s it\u2019s awesome eyeball Arbitrage they buy 17 billion dollars of ads from Google that that by the way means Amazon has the largest share of products search results on Google they\u2019re about 60% of all, product tiles that pop up on Google are send you straight to Amazon and so it seems like these 2 have this. Very synergistic relationship that seemed like it was working done well for both of them and so then overnight Amazon goes.<\/p>\n<p>Jason:<br \/>[27:24] Yeah we\u2019re turning that down to zero and and when it first happened everyone\u2019s like oh this something weird is happening here and we\u2019ve seen them, reset before where like maybe they over spent slightly and they pulled back for a short period of time or they did a test in some some Geo and so I kept like.<\/p>\n<p>Jason:<br \/>[27:42] Pulling more data at waking teams up in the middle of the night like hey let\u2019s figure out what the scope of this is is it really as big as it seems is it a blip, is it some kind of test what you know is there some are they under some negotiation and this is a negotiating tactic like there are all these hypotheses. You know now it\u2019s been a week later the ads are all still offand you can imagine that.<\/p>\n<p>Jason:<br \/>[28:06] Google has a bunch of salespeople they just lost 60% of the revenue that are now knocking on every other Retailer\u2019s door in the world saying hey you\u2019ve got an unprecedented chance to buy more share of voice like, you know and they\u2019re they\u2019re trying to get all the other retailers to step up and and. Take over Those ads it\u2019s a a reverse auction For Those ads so when the the biggest spend or leaves obviously the the cost of those ads goes down nominally and so that\u2019s, that\u2019s been interesting and you know they\u2019re all we like to talk about all these new AI shopping things a lot of the AI shopping things at the end of the day result in a, product tile that you can click on to buy something and now all those ones that are being fed by Google don\u2019t have Amazon product tiles in them so.<\/p>\n<p>Jason:<br \/>[28:53] So this was a super interesting thing. The number 1 topic I\u2019ve I\u2019ve had with any of my retail clients over the last week has been related to this all you know the internal teams that in my big giant Ad Agency are spun up around this I\u2019ve got, Limitless hypotheticals about what could be going on but we all frankly were eagerly waiting last night for some, mention or explanation to answer all this this conjecture and I with some pretty carefully and as far as I can tell there was Zero mention Amazon, did not bring it up in any way and someone surprisingly none of the analysts or reporters on their 2 calls like nobody nobody asked them.<\/p>\n<p>Scot:<br \/>[29:34] The at the same time yesterday they added code to robots text and also to their their, you know it\u2019s very clear there now blocking Google\u2019s not their web crawler but their AI crawler that they have perplexity anthropic and open AI are now being blocked by by Amazon, so Amazon is and then they\u2019ve also blocked operator for a while and which is now called Agent at openai. So Amazon\u2019s taking this we are going to put a Walled Garden around our data and we\u2019ll we\u2019ll AI out which is what they\u2019re buy for me project does is like when you\u2019re on Amazon you can send an AI agent out of Amazon to buy within their ecosystem, but they are not they\u2019re they\u2019re they\u2019re allowing you to shop from Amazon out but not out into Amazonnow my.<\/p>\n<p>Scot:<br \/>[30:22] My thesis is Google shopping is data they realize they\u2019ve made some internal decision where they\u2019re like here\u2019s the benefit we get from advertising on Google shopping and here\u2019s the cost and those inverted and I think on the cost side. If you think about what is what is Google shopping get they get a data feed of product data and I think Amazon is increasingly believing that is valuable in in their world, I think that\u2019s I think that\u2019s wrong but that\u2019s the theology so it\u2019s hard to you know there\u2019s no right or wrong I guess is what you believe but then also, it may not just be the product catalog I think it\u2019s probably actually more about the Google can use that for signals right so if you have. 100 million skus from Amazon and Google shopping you can they don\u2019t see the transaction data but they see the click data so they they know what the most popular products are at Amazon and that may be, that\u2019s a little bit more gold Dusty to me than just product catalog data is starting to get some idea of the the, the sales rank of products and and whatnot and I think that\u2019s Amazon\u2019s kind of saying why don\u2019t we start like building a fortress of our data right now and then over time we can decide what we let back out, I think that\u2019s what\u2019s going on.<\/p>\n<p>Jason:<br \/>[31:37] Yeah I I generally agree there\u2019s you know this the there\u2019s a aam\u2019s razor which is the the likely answer is usually the the simplest I I think fundamentally. Amazon and Google are more direct competitors and they each see that each other aspires to to move into each other\u2019s things and so they, there the US need uh each other and they must want to share any helpful insight with each other and so I think this is just. A a move in that direction I\u2019m I\u2019m sort of with you like I don\u2019t personally value the product feed in and of itself that much but. All the most common economic model for all of these things is advertising in the old world of advertising advertisers sold reach like here\u2019s how many millions of people saw my ad over the last 20 years of digital, like I would argue unfortunately everybody\u2019s pivoted to the.<\/p>\n<p>Jason:<br \/>[32:30] The direct effectiveness of the ads did someone click on that ad and then immediately buy something and I actually think there\u2019s too much focus on that and it\u2019s it\u2019s not prudent. In that world what you most need in order to establish value for your ads is data about how many people bought something right and so for Google it\u2019s super valuable to know how how many of those ads resulted in someone on a product detail page and the product detail Pages people ends up on the most, is on Amazon so by taking that that that 17 billion dollars of Revenue away from Amazon they\u2019re taking away that\u2019s super important signal that from Google that that Google could have used to dramatically improve all its AI to become a better Marketplace and shopping engine itself any of the, if the 10 year future of all this AI stuff is that that that the best answer engines that win the glass and win the attention of the consumer are are actually the sellers then you know Amazon wants to be that and they don\u2019t want to help Google be that.<\/p>\n<p>Scot:<br \/>[33:34] Yeah I thinkI think it\u2019s interesting I wish someone had asked the question because I would like to hear the Meandering answer on.<\/p>\n<p>Jason:<br \/>[33:37] I I do too I\u2019m I\u2019m not surprised that they didn\u2019t bring it up but I it didn\u2019t occur to me when the night started that no analyst would bring that up.<\/p>\n<p>Scot:<br \/>[33:47] I think they\u2019re so worried about AWS they don\u2019t care about in their retail stuff at this point.<\/p>\n<p>Jason:<br \/>[33:52] Yes and this is why it\u2019s annoying when when obviously people should only be talking about retail all these other silly distractions are really annoying.<\/p>\n<p>Scot:<br \/>[33:59] I have a 2 a mini soap box and then a bigger soap box so my first soap box it\u2019s not. My first 1 is it\u2019s just like mind-blowing to me so so I went through and now that we\u2019ve had this cycle Google Google\u2019s capex for 2025. Is going to be 85 billion so they it was 75 and then they bumped it up 10 and almost all of this is going towards Data Center and AI meta is at 72. Microsoft 80 and Amazon 118. If you swirl all that together you get 355 billion for 2025 in investment in basically gpus and data centers to support this AI buildout. That doesn\u2019t include what open AI is doing themselves they have a partnership with Oracle and then also Elon at X and and then also Tesla is building a huge AI data center that there\u2019s there\u2019s probably another hundred billion out there so let\u2019s call it. 500 let\u2019s round it to what you know what\u2019s 100 billion between friends so it\u2019s half a trillion dollars in capex in a year.<\/p>\n<p>Scot:<br \/>[35:06] To put that inspect in perspective over the last 10 years Amazon has spent 115 billion in fulfillment centers so think about that so so in 1 year,<\/p>\n<p>Scot:<br \/>[35:16] we are spending on AI investment 5 times what Amazon spent for their whole fulfillment network over the last 10 years so. It\u2019s just it\u2019s just nuts to me that this is such a big you and I have been at this a long time we\u2019ve never seen anything on this scale, of build out and there it\u2019s not speculative the every 1 of these companies is seeing their revenue surged from usage of these things these are not they\u2019re out of the experimental phase and they\u2019re into having dramatic business impact phase, it\u2019s like the weirdestit\u2019s a it\u2019s an exciting time becauseit\u2019s gonna change things in ways we can\u2019t predict but it\u2019s also scary so that\u2019s.<\/p>\n<p>Jason:<br \/>[35:56] I I think there was a specific narrative in it might have been in the middle of Andy\u2019s 8 Minute rant but where he basically said like, we\u2019re we\u2019re probably not even in the first inning of this game yet and it\u2019s already 123 billion marked into run rate right like, like how often do we talked about you know the that scale of numbers when like it hasn\u2019t even scaled yet like it\u2019s crazy.<\/p>\n<p>Scot:<br \/>[36:22] And then the other 1 is if we if we so now let\u2019s narrow the feature back to Amazon the the lens and if we if we look at the internals of Amazon there\u2019s, the fastest growing component is ADS at 23% and then you have AWS at at 17.5. There\u2019s just something wrong with that and then overall they\u2019re going 12% in the retail business is growing kind of smaller than that so the.<\/p>\n<p>Scot:<br \/>[36:46] I really worry about this ad component I I think. I think a year ago or so the user experience at Amazon jumped the sharkit\u2019s not getting better it\u2019s getting worse this ad load is crazy and they\u2019re clearly pushing it. You know even further that we\u2019re going to see it accelerate more. And I think it\u2019s this Canary in the coal mine that they\u2019re covering up for you know a degradation of something and it it just feels like. In my heart of hearts you cannot have a deteriorating user experience for very long in this world because people will start to go other places and I I feel like they\u2019ve opened up a strategic error here, where the agentic shopping folks are going to drive a huge wedge into it now they can try to block it and everything, but I also think these agentic browsers are unblockable and I don\u2019t. I think all that effort they\u2019re doing on that is going to end up being for not and it\u2019s going to be really interesting to see. Hey if I\u2019m right and when this starts to be a problem for us at all and what it all looks like when it you know if it does. It\u2019s probably the biggest strategic opening I\u2019ve ever seen anyone have against Amazon since I\u2019ve been following them for 20 years and I\u2019m going to be really interested to see if openai or you know 1 of these companies can drive a wedge in there.<\/p>\n<p>Jason:<br \/>[38:04] Yeah no I I generally agree the worst sentence I heard in the whole earnings report last night by the way Scott was there I can\u2019t remember if it was a response to a question or it was part of some other answer but Andy says that oh when he was bragging about how much better Alexa plus is than than previous things and we we you and I talked about this in the last podcast it it is excellent in a lot of ways. And he mentioned that that he could well imagine you know a version of ads being in that at some pointwhich, a was from a user experience standpoint was pretty disappointing for me to hear like I I think there\u2019s a bunch of things that are problematic about voices a user interface for a lot of things and then once, once you add more Interruption to the voice like I think it\u2019s potentially awful right and the I I agree like if other people invent. Alternative versions of this that are less dependent on ads than Amazon\u2019s is they\u2019re just going to be at a fundamental, customer experience disadvantage and in the past they\u2019ve had, such a huge moat because of their supply chain advantages that they could kind of get away with it for a short term but I\u2019m with you I don\u2019t think they can get away with it in the long run.<\/p>\n<p>Scot:<br \/>[39:17] Yeah yeah so it\u2019s going to be interesting to watch that I noticed they do have ads and Rufus now so Rufus is already not very good and it already is like down a notch in my book because. Uh I\u2019ve been a really good example is to take some of these everyday essentials and that\u2019s where the ads are really just kind of at this fever pitch cpg type stuff.<\/p>\n<p>Scot:<br \/>[39:36] Like I was getting these dog Dental things and I asked ruthless about it and it did everything it could to sell me something else and not give me the thing I wanted.<\/p>\n<p>Jason:<br \/>[39:45] Yeah and you know again we\u2019ll probably have to do a new an episode about this but I I actually think there\u2019s a vast overdependence on ads as an economic model and it it has worked great for the last 20 years I don\u2019t see it working as well going forward compared to some of these other businesses there there\u2019s a lot more ambiguity about how effective ads actually are right and the all the math that we all use is is horrible the Hocus Pocus and and doesn\u2019t doesn\u2019t measure very well but here\u2019s the biggest thing if if the world goes from 1 quick to zero click if if there\u2019s a bunch of these every day Essentials if we turn over shopping responsibility for those to the Bots then. Ads don\u2019t matter anymore in in any of those categories like the AI like the ad was to help a human do something that was hard for the human is the most generous version. And when the human isn\u2019t doing that there\u2019s no purpose for the ads and so all the businesses that are based on the revenue from Those ads. Are going to have to reinvent themselves so I I think it\u2019s um, it\u2019s going to be a super interesting time I can\u2019t wait to be a retired senior citizen talking to the smart people that are running these businesses down the road and hearing how it all played out because I. I don\u2019t think I\u2019ll make it that farbut Scott I wanted to touch I know we\u2019re running up on time you did mention 1 other thing you talked about.<\/p>\n<p>Jason:<br \/>[41:07] Amazon said we see we\u2019ve seen no sign of effective tariffs on the on the business so far which is certainly accurate from what I I heard them talk about. I did just want to point out Terrace is super interesting in the macroeconomics because it arguably has 2 effects like, people lose consumer confidence in their their worried about their their own economic situation and they spend less so it can have a detriment effect on spending but it also, we\u2019re not living through the the worst of the tariffs like the it\u2019s mostly a fear of future tariffs and so that actually has a positive effect people rush out to spend money, before the the tariffs come into full effect and so the the most.<\/p>\n<p>Jason:<br \/>[41:49] Obvious example I\u2019ve seen of that this week was UPS also reported yesterday and they had the a pretty crazy earnings report they specifically said, we\u2019ve seen consumer demand fall off a cliff like we\u2019ve seen like consumers are super worried about these terrorists and they\u2019re not spending on anything and then in the next breath they\u2019re like, but consumers are so depressed about the doomed economic situation that they\u2019re like indiscriminately spending to make themselves feel better right so they, UPS kind of put every theory of of what impact terrorists were having out there all all in the same earnings call uh so I\u2019m going to Discount all of that but I\u2019m just going to tell you the. The mic drop moment in the UPS call was and so stuff is so uncertain and so confusing that we\u2019re not going to issue a go forward guidance.<\/p>\n<p>Jason:<br \/>[42:35] And I I do think that\u2019s an interesting note for for all of us that you know the next 6 months of this year. Have a lot more uncertainty than I think some of us us realize and you know it could go in a bunch of different directions it\u2019s going to be really interesting.<\/p>\n<p>Scot:<br \/>[42:50] Yeah so we will be here reporting on it at the Jason\u2019s gotcha.<\/p>\n<p>Jason:<br \/>[42:55] And hopefully that added some value for you and if it did we sure would appreciate it if you jump on iTunes and leave us that 5-star review regular listeners will know, that the Amazon earnings calls are Scott\u2019s second favorite episode of the Year second only to May 4th episode. But that is all the time we have for today we finished a little early so you\u2019re all welcome and until next time happy commercing!<\/p>\n<\/div>\n<p><p><a href=\"https:\/\/dmsretail.com\/online-workshops-list\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-496\" src=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\" alt=\"Retail Online Training\" width=\"729\" height=\"91\" srcset=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png 729w, https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90-300x37.png 300w\" sizes=\"auto, (max-width: 729px) 100vw, 729px\" \/><\/a><\/p><br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A weekly podcast with the latest e-commerce news and events. Episode 329 is an evaluation of Amazon Q2 2025 earnings report. Subscribe: ????? 0:38\u00a0 Welcome […]<\/p>\n","protected":false},"author":1,"featured_media":1121,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-15769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcasts"],"_links":{"self":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/comments?post=15769"}],"version-history":[{"count":0,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media\/1121"}],"wp:attachment":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media?parent=15769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/categories?post=15769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/tags?post=15769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
A weekly podcast with the latest e-commerce news and events. Episode 329 is an evaluation of Amazon Q2 2025 earnings report.<\/p>\n
<\/p>\nSubscribe<\/strong>:<\/p>\n<span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><\/iframe><\/figure>\n<div class=\"\">\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">0:38\u00a0 <\/span>Welcome to the Jason and Scott Show<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">12:57\u00a0 <\/span>Amazon\u2019s Mixed Earnings Report<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">18:07\u00a0 <\/span>The Impact of AWS on Retail<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">21:18\u00a0 <\/span>AWS Performance and AI Concerns<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">28:55\u00a0 <\/span>Amazon\u2019s Advertising Strategy<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">33:33\u00a0 <\/span>Amazon\u2019s Relationship with Google<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">35:24 <\/span>The Future of AI Investments<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">39:44\u00a0 <\/span>User Experience and Advertising<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">42:42\u00a0 <\/span>Economic Uncertainty and Consumer Behavior<\/div>\n<\/div>\n<p>Welcome back to the Jason & Scot Show! In episode 329, recorded on August 1st, 2025, we dive into the highly anticipated Amazon Q2 earnings report alongside other critical tech giants\u2019 earnings results. Your hosts, Jason Goldberg (the retail geek) and Scott Wingo, bring their expert insights and analysis of a rollercoaster earnings season that saw mixed results across the board.<\/p>\n<p>Kicking off the episode, Scot sets the stage with a review of Google\u2019s recent earnings results, which painted a mixed picture. While search revenue indicated a solid 12% growth, concerns about the impact of AI on search operations raised eyebrows. Google Cloud did not exhibit the explosive growth anticipated, leading investors to remain cautious. Following this, we turn our focus to the simultaneous announcements from Microsoft and Meta. Each company churned impressive earnings and strategic maneuvers, surpassing expectations and highlighting strong growth driven largely by their AI advancements.<\/p>\n<p>Transitioning to Amazon, the top story emerges: the company reported Q2 earnings that, unfortunately, mirrored Google\u2019s mixed performance rather than the triumphs seen with Microsoft and Meta. Despite a revenue growth of 12% and operating income surpassing expectations, investors reacted negatively to AWS\u2019s performance, which failed to keep pace with its competitors. Jason and Scott dissect the factors leading to Amazon\u2019s stock drop post-earnings call and the implications for its sprawling empire.<\/p>\n<p>Amazon\u2019s retail performance, particularly in North American and international markets, sparks a lively discussion. Notably, the North American retail business beat expectations by 2%, and international retail excelled by 7%. The hosts clarify that while the overall performance was commendable, it left much to be desired when juxtaposed against AWS\u2019s stunted growth and other tech players\u2019 successes.<\/p>\n<p>Delving deeper, Jason emphasizes the company\u2019s continued enhancements to its supply chain, signalling improvements that strengthen their retail operations, crucial for maintaining growth amidst increasing competition. He also highlights an interesting trend: for the first time, first-party sales outpaced third-party sales, reflecting a noteworthy shift in Amazon\u2019s marketplace dynamics as consumer spending leans towards everyday essentials.<\/p>\n<p>As the discussion progresses, Scott raises a critical point about the evolving landscape of online advertising and the pivotal role it plays in driving Amazon\u2019s growth. Despite a slight deceleration in year-over-year growth for the ads business, it remains a bright spot for Amazon, contrasting starkly with AWS\u2019s performance and hinting at the challenges faced in balancing user experience against monetization strategies.<\/p>\n<p>The conversation pivots towards AWS, where the hosts dissect the figures that fell below investor expectations\u2014the margins declining for the first time since the previous year, raising questions about structural issues. The ambiguity surrounding Amazon\u2019s ability to capture AI growth is a focal point, with analysts expressing concerns about lagging behind competitors.<\/p>\n<p>Nearing the end of the episode, a fascinating turn occurs when Scott sheds light on Amazon\u2019s recent decision to withdraw its shopping ads from Google. This pivotal move sends ripples across both platforms, provoking various theories about strategic shifts and implications for competitors. The duo shares intriguing insights into how this action marks a significant stake in the ground regarding data ownership and market positioning.<\/p>\n<p>As the episode wraps up, Jason and Scott reflect on the broader landscape of AI, retail, and shifting consumer behaviors, suggesting that while Amazon remains a dominant player, its approach and evolution will be crucial in navigating future market dynamics.<\/p>\n<p>Be sure to listen in for their final takeaways from the earnings calls and nuanced observations regarding the tech landscape. If you enjoyed this episode, please give us a five-star review on iTunes, and stay tuned for next week\u2019s insights!<\/p>\n<p>**Episode 328 of the Jason & Scot Show was recorded on Thursday, July 23rd, 2025.**<\/p>\n<p>Join your hosts Jason \u201cRetailgeek\u201d Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.<\/p>\n<p><strong>Transcript<\/strong><\/p>\n<p>Jason:<br \/>[0:23] Welcome to the Json and Scott show this is episode 329 being recorded on Friday August 1st,<\/p>\n<p>Jason:<br \/>[0:30] 2025 I\u2019m your host Jason retail geek Goldberg and as usual I\u2019m here with your co-host Scott Wingo.<\/p>\n<p>Scot:<br \/>[0:38] Hey Jason and welcome back Json and Scott showed listeners. Well today we are going to go over Amazon earnings it was a very eventful earnings season so let\u2019s set it up before we jump into Amazon. So back on July 23rd so about a week ago Google announced their results and they were what I would call mixed. Search grew 12% which was good. But there were some concerns and management kind of dodged some tricky questions about what\u2019s going on with AI overviews and how that\u2019s impacting search Google Cloud did very well but not what I would say crushing it. So then their stock did not reactgreat or bad to that so it\u2019s been kind of flat to down slightly since thenso then that was the setup last week. And then on Wednesday of July 30th we came in and had Microsoft and meta announced on the same day which is really hard for our internet analyst friends out there to have 2 Big E\u2019s announcing at the same time but they they survived.<\/p>\n<p>Scot:<br \/>[1:44] Came out I just uh did this alphabetically and. Meta came out first and it was a a Whopper so it was a the best thing you can do in Wall Street is, to not only meet expectations but meet them and then raise next quarter\u2019s expectations and that\u2019s what meta did so it was a what we call a classic beaten rays which is a. It\u2019s kind of the the Holy Grail the upper right quadrant the place to be if you\u2019re a public company. So they beat the Topline estimates by 6% which is good but then they just crush the bottom line coming in about 21% more profitable than Wall Street, expected and then the icing on the cake if it as if it couldn\u2019t get any better it did is they their growth is accelerating so in the first quarter they grew 16% year-over-year and then in second quarter they grew 22% year-over-year, so that\u2019s a really material quarter on quarter roll acceleration to their business. And they they attribute a lot of that to the use of AI internally at meta to run their advertising systems and automate the whole. Supply chain of advertising from you know bid management which is where they they\u2019ve been working at, probably the most and then now add creation that type of stuff and Wall Street rejoiced and the stock was up 8% which these are Big market cap companies and that\u2019s a really big move.<\/p>\n<p>Scot:<br \/>[3:11] Jason anything on meta before we move on to Microsoft.<\/p>\n<p>Jason:<br \/>[3:14] No I mean I think you you covered it interestingly, I would just point out I found it interesting it was so much about the future and Ai and kind of meta as a technology company and you know historically all the revenue at meta comes from. Advertising and you know there are all these macroeconomic uh interesting conversations that at the moment that are a play about the future of that advertising business and all these Chinese advertisers that are on again off again on on The Meta platform I was, somewhat struck by how little conversation like how little any of that seem to matter like their current. Predominant source of Revenue seem somewhat Irrelevant in the whole dialogue am I do you feel like I missed that or do you think it\u2019s.<\/p>\n<p>Scot:<br \/>[3:57] No I think that\u2019s right yeah yeah because they\u2019re they basically give away Ai No 1 really cares other than it it\u2019s impact on the business. The and then Microsoft came up and they said hold my beer so they also did a beat and raise and both on the top and bottom line. And then they\u2019re they\u2019re really confusing because they talk about AI overall which is includes a bunch of stuff, and that grew 157% which is just Bonkers but I. Parsed what that means some of its tokens and it\u2019s just really hard but then the other thing that Wall Street was really pleased with, and you\u2019ll remember for the longest time Amazon wouldn\u2019t break out the ads business and everyone was really frustrated and then for the longest time they wouldn\u2019t break out the AWS business and everyone was frustrated, and same at Microsoft they have not broken out their Azure platform which is their cloud computing separately uh and then they finally for the first time made a disclosure on that, uh Wall Street just really liked that and they always take it as a signal when companies disclose things that the company\u2019s feeling really great about that long term and, and is opening up new disclosures because they feel like they\u2019re all going to go up into the right.<\/p>\n<p>Jason:<br \/>[5:09] And isn\u2019t it always a coincidence that they decide to do that on a quarter that\u2019s quite favorable.<\/p>\n<p>Scot:<br \/>[5:14] They yes it is because if you did it when you were not doing well no 1 would care so like why why do that and then the, yeah so wall Street\u2019s weird like that lots of it\u2019s a psych it\u2019s 80% psychology in ways and 20% reality but that\u2019s that\u2019s kind of. How the world Works anywayso I think the most Germaine part to our discussion in there is that the, Ai and it\u2019s not Azure in this disclosure grew 39% and so that was good and analysts had they kind of pick apart at it and get to a number and their their guesstimate was 34%. That stock went up about 8% at at the peak and is down now a little bit.<\/p>\n<p>Scot:<br \/>[5:55] But for a while there Microsoft was the second company to get the the 4 trillion dollar market cap which Nvidia passed a while ago, so that was the setup coming into this so you had Google mid Microsoft and meta crushed it, and then within within Google and Microsoft their cloud computing is accelerated quarter-on-quarter so, I think expectations really started to rise going into the Amazon report that AWS would see something similar because you kind of think well there\u2019s this AI tide lifting all the boats certainly we will see it in AWS and that brings us toAmazon newsyour margin is z opportunity.<\/p>\n<p>Jason:<br \/>[6:44] So unfortunately Amazon\u2019s results were probably more similar to Google\u2019s than than meta in Microsoft in in your setup Scott it was sort of mixed but but in you know a a pretty bad way of your Amazon investor probably so predominantly that\u2019s because AWS didn\u2019t expectations relative to to the other big cloud platform businesses and you know given all that that favorable traction that meta Microsoft got like that we\u2019re already starting to see their their stock get punished I think, after hours trading started like in the middle of their earnings call and the last time I checked Shares are down like like 6% which is. Kind of put you at that 2.5 trillion dollar market capyou know which means they they, was something like 150 billion dollars since the earnings call which you know a few billion here billion there it adds up.<\/p>\n<p>Jason:<br \/>[7:36] What\u2019s I guess slightly weird or lost in all that conversation is like the top line was pretty good like like they were beats like Revenue was up 12%, which was a beat versus expectations operating uh margin was was up which like like. I think they came in for the quarter like nearly 20 billion write 19.2 billion good job intern which which was a Beat, and so the overall business performed well and there is we\u2019ll we\u2019ll break it up of course all down and we\u2019ll we\u2019ll highlight a lot of things that are going well but big picture. AWS is still a fast growing business for them and grew fast it didn\u2019t grow as fast as their competitors, and as we\u2019ll dive deeper into it the the narratives surrounding that was not completely fulfilling and so the the stock is is taking a hit at the minute at the moment but.<\/p>\n<p>Jason:<br \/>[8:27] Kind of going back to the to the top level there were a lot of interesting things that came up in in the earnings call in a few things that were interesting that didn\u2019t come up for those of us that care mostly about retail I would I would say like. The supply chain discussion you know continues to Roll Along that you know the people are forgetting about 18 months ago they made this major transformation from from a national distribution system to a regional Hub and spoke system and they\u2019ve been, claiming wild successes both, improving their service level by having faster delivery and more products available for faster delivery and improving their profit profitability and the cost to serve going way down and all of those Trends continued this quarter, they\u2019re improving their service levels Nationwide for delivery and they\u2019re improving their cost to serve which is, beneficial to their margins the the North American retail business which you know the way they measure it because their Marketplace and and have this big ads business is slightly problematic but but kind of just base it on Gap. North American retail was a Beat by 2% potentially more importantly International retail was a Beat by 7% the US is Amazon\u2019s most mature market and so, in a lot of ways.<\/p>\n<p>Jason:<br \/>[9:42] You know it\u2019s it\u2019s slowed down because of the law of large numbers and so the analysts really pay attention to how Amazon\u2019s growing in these more emerging markets and and seems like there\u2019s still gas in the in the international growth for Amazon, the I saw 1 Tibet in their earnings that that online Revenue increased by 11% I\u2019m sorry 10%, I have seen some analysts that are saying that like the US Quarter over quarter gmv growth was probably 11%. And they\u2019re now predicting that the annual gmv growth is going to be in the area of 8.7% so those are all good numbers, if you consider the US retail industry is growing right now at 3.8%.<\/p>\n<p>Jason:<br \/>[10:24] And even e-commerce at the moment across the US is only growing about 7% and so you know talking about Amazon growing between 9 and 11%. As big as they are is is super impressive physical stores grew this is a relatively small number in the overall scheme of things that Amazon and of course it\u2019s it\u2019s it\u2019s almost exclusively Whole Foods at this point but Whole Foods has been kind of a.<\/p>\n<p>Jason:<br \/>[10:48] A mixed story for Amazon so growth there is interesting physical stores grew 7.5% year-over-year so that\u2019s now up 5. 6. 1 interesting thing third-party seller growth for the first time that I can remember in a long time they had good third-party seller growth I think it was like 10% but it was actually slower than their first-party sales growth so, I mean I would argue that transcends the day they invented the marketplace has been that the 3p has grown faster than than 1 P with a few exceptions this quarter they saw 1 p, drove faster and partly that\u2019s back to the supply chain story because there\u2019s always been a lot of demand for these low-cost everyday essentials that, in the old Amazon supply chain we\u2019re not very efficient to deliver an Amazon wasn\u2019t as competitive on but as they\u2019ve improved their supply chain there are a lot better at selling these like you know I just need a pack of paper towels I just need a pack of of razor blades and in a macroeconomics world where, a lot more consumer spending is going to those everyday essentials the fact that Amazon is competing more successfully in that space and selling more 1 P every day Essentials because the.<\/p>\n<p>Jason:<br \/>[11:59] Party Marketplace is not a an awesome offering for those everyday essentials at the moment so that was all super interesting subscription Revenue was up unit sales were up. The I still think they\u2019re they\u2019re hovering around 62% of all their their Market retail sales are Marketplaceand I think they they had a stat in the. In the discussion that every day Essentials are now 1-3 of their their total sales which is. Another unsung story of kind of Amazon successfully Reinventing their business while No 1 notyeah let me take a breath Scott do you.<\/p>\n<p>Scot:<br \/>[12:36] Yeah I thought I thought that\u2019s a good recap I thought it was interesting it, you know we\u2019re in like the summer movies Zone and I just saw Superman I\u2019m gonna see Fantastic 4 and I know there\u2019s going to be there\u2019s always these multiverses I almost wonder like if there was a universe where.<\/p>\n<p>Scot:<br \/>[12:50] All of retail missed but AWS did better I I think the stock would have been up 10 so so we\u2019re in this really weird phase.<\/p>\n<p>Jason:<br \/>[12:58] That Tobey Maguire Spider-Man version of okay sorry.<\/p>\n<p>Scot:<br \/>[13:16] But in a way AWS is bringing down the retail part of the business which is kind of crazy for because for the longest time it was the other way around.<\/p>\n<p>Jason:<br \/>[13:23] I was going to say the retail business owes.<\/p>\n<p>Scot:<br \/>[13:24] It\u2019s a weird Bizarro world world.<\/p>\n<p>Jason:<br \/>[13:26] Owes AWS carrying that water for some quarters.<\/p>\n<p>Scot:<br \/>[13:29] It does yeah yeah but as as we\u2019ll get to you here\u2019s a tip for you there is another piece that\u2019s carrying the retail part what do you think that is Jason.<\/p>\n<p>Jason:<br \/>[13:38] Oh my gosh you know what would be interesting is if you had the world\u2019s attention and you you you rent it or sold that attention in the form of like some kind of advertisement.<\/p>\n<p>Scot:<br \/>[13:48] Yeah how did dads do.<\/p>\n<p>Jason:<br \/>[13:50] Well obviously this has been. A big story to Amazon for a long time and it continues to to be 1 of the bright stars in Amazon growing much faster than the overall business and so you know we\u2019ve we broken down the math the number of times the the annual run rate on their ads business is well over 60 billion dollars a year this quarter, they they did 15.7 billion which was a beat versus analyst expectations and so the the year-over-year growth was like 23% 22.9 percent, so that that is actually a slight deceleration of the ad growth because it\u2019s been growing so fast but obviously compared to the overall Amazon business. This is a 60 billion dollar business that\u2019s that\u2019s still growing. You know super fast and and well in excess of of wall Street\u2019s expectations which were like 17%.<\/p>\n<p>Jason:<br \/>[14:42] So so the ad business continues to be a bright star sparked side note that\u2019s the bane of my existence because every other retailer on the planet sees that and they want to replicate that and for variety of reasons most retailers. Can\u2019t and shouldn\u2019t try. My whole industry spends a lot of time whipping up the the lather around retail media networks and and as we\u2019ve covered in the past on this show, if you\u2019re not Amazon or Walmart retail media networks are kind of mehso I\u2019ll just shout out to to Carrie in case you\u2019re listening. The but again good quarter for Amazon the ads are going up there\u2019s some big news in ads that will will talk about later.<\/p>\n<p>Jason:<br \/>[15:22] The thing I\u2019m always watching in their ad business is is I would actually argue, there\u2019s 2 add businesses at Amazon and they kind of off off skate each other there\u2019s sponsored product listings on a third-party Marketplace which is. All the high volume stuff and it\u2019s it\u2019s you know that that\u2019s true the true retail media network but increasingly. Amazon is a darn successful Media company with sports franchises and unique programming and so you know you you\u2019d want to hear them talking about their ad success for all of that content and how that compares with, Disney and HBO or whatever they want to call themselves this month and and the you know the the old school television networks and you\u2019d want to see how their growth rate there is comparing with those other content providers uh and talk about that separate from how their retail media is competing with Walmart but we can\u2019t because they they bundle all these 2 wildly different things together and call it adds, but and and we didn\u2019t get a very good hint about how much traction they\u2019re getting on on the content ads they are continuing to increase the, the inventory of type of ads and so that\u2019s somewhat interesting and of course you know I\u2019m always listening for tidbits about those 2 Worlds colliding and how you might introduce shoppable ads you know or or more ads with a direct call to action in all that content and and this quarter there wasn\u2019t much discussion of any of that becausethe, Ai and AWS stole all the all the attention.<\/p>\n<p>Scot:<br \/>[16:50] Yeah on on the add topic everyone I talked to about prime day said Amazon was pushing ads so incredibly hard that it was almost a gate for you had to buy make commit to a big ad Buy before you could even get into the programs and stuff, so so I suspect we may actually see this 1 accelerate again into Q3 because, the Amazons really leaning in and and you know but at some we we\u2019ll talk about this in a minute but I have some theories on this ad thing that.<\/p>\n<p>Jason:<br \/>[17:20] Yeah I mean I I would just say like whether Amazon\u2019s trying to lean in or not like it\u2019s almost inevitable because of their assortment right like you\u2019re you\u2019re a billion items now no 1\u2019s ever going to organically find any of your items and so ads are the only path to Discovery for all all of the sellers on the platform and a smaller version of that same thing is playing out for Prime day like there there used to be 3,000 items for sale on Prime day and 100 lighting deals right and and you could browse all those in the same way that people used to browse the internet on Yahoo but you know now, there\u2019s no way to to browse any of those things so unless you have an ad promoting your,<\/p>\n<p>Jason:<br \/>[17:59] Prime Day deals or promoting your Lightning Deals nobody\u2019s ever going to see them and so even if Amazon wasn\u2019t putting the screws to people which they are. You would still like advertising is now the the most important and necessary path to any kind of success on on Amazon\u2019s platform and obviously Amazon\u2019s not overly disappointed about that.<\/p>\n<p>Scot:<br \/>[18:22] So this brings us to AWS so as mentioned the top line was in line to a slight beat but the bottom line missed so Wall Street was expecting 10.9 billion on the bottom and it was 10.2. So that\u2019s a that\u2019s a pretty good miss their or bad Miss. It grew the AWS grew 17.5% year-over-year which is good but it was not an acceleration which again the comps of gcp and Azure did accelerate, this is the first time the margins of actually declined since the second quarter of 2023, on the call and we\u2019ll talk about this a little bit more but specifically they talked about they are very capacity constrained. And they they called out power a lot of these data centers that are trying to be built are are really having a hard time getting to enough power to build out things so that\u2019s an area but I think. They\u2019re actually kind of low on the the king of all this is NVIDIA they make the the biggest gpus that these centers need Amazon has its own chipset I don\u2019t think it\u2019s nearly as good as Nvidia and it\u2019s cheaper which is great. But they\u2019re not adding enough of those and they\u2019re not adding enough Nvidia. So that\u2019s a huge problem they also called out part of the part of the margin decrease was some just structural things around how you calculate stock based comp and some depreciation things so a lot of it wasn\u2019t really a change in the business model.<\/p>\n<p>Scot:<br \/>[19:51] The the so that that\u2019s kind of like what\u2019s in writing and then what happened is in the conference call and that I think you got a chance to listen to this, the Jassie just seemed off is kind of like how people described it and especially when it came to this AI topic and let me just read like a little note I thought was interesting. RBC has an analyst Brad Erickson and he said the title of his report for the whole quarter was is this a structural issue or just an off night and here\u2019s a little excerpt, on the other for AWS growth didn\u2019t accelerate like its peers margin missed and Management\u2019s commentary on the call did little to attenuate investor fears that AWS may have a bigger structural issue in capturing its fair share of the growth from AI. The retail strength pushes our estimates higher and Target Target moves up modestly but admittedly the Optics of AWS underperformance in isolation and Management\u2019s commentary make it hard to defend Amazon so. You know there was this really long rambling answer that jasse gave where this the question was specifically like are you doing enough to capture. AI share and he answered it a little bit in this like 8 Minute answer but then he kept talking about how they\u2019re using it internally and it\u2019s helping the retail business it felt like a big. Hey not a very great answer because it kind of went.<\/p>\n<p>Scot:<br \/>[21:07] All over the place but then it felt like a hard diversion from answering the question which people were kind of he didn\u2019t lean in and say we\u2019re crushing it in AI we\u2019re going to dominate and I think that\u2019s what they wanted to hear.<\/p>\n<p>Jason:<br \/>[21:18] Yeah it should have been a 1 cent, yeah well so a like I I want to say the analysts that actually asked the question was the Morgan Stanley Guy Brian Nook and I I when I was listening it was awesome because he he, pre-war in the question I think it started something like hey I have 2 questions for you about AWS they\u2019re a little tough but I\u2019m going to throw them at youwith with.<\/p>\n<p>Scot:<br \/>[21:39] Please don\u2019t penalize me for asking a hard question.<\/p>\n<p>Jason:<br \/>[21:41] Yeah which is literally like the the setup right and then he goes into this there\u2019s a Wall Street you know Finance person narrative right now that AWS is falling behind in generative AI and that you\u2019re losing share to your peers what\u2019s your rebuttal to that right and. You know again you would expect a a polished CEO like Andy who had generally kills it in these in these settings to have a. Short crisp answer about why oh we\u2019re actually killing both of those but since we\u2019re so far ahead of them, like it\u2019s harder for us to earn the growth right that would have been the easy 1 sentence answer right like we\u2019re we\u2019re 3 times larger than them so we we we grew a little bit slower than them. And there are all these endemic constraints on all of us the world doesn\u2019t have enough electricity the world doesn\u2019t have enough chips right like you could have come up with some. Some kind of conversation like that but you for your point like he went on a 8 Minute narrative that like I I think included a couple visits to his own shopping behaviors and thingsand it it was just unclear like. Did he just miss the importance of the question and he gave a bad answer or was he literally like trying to dodge the question and and distract people. I tend to think it was the first that it just it wasn\u2019t wasn\u2019t hishis most Stellar answer but.<\/p>\n<p>Scot:<br \/>[22:57] Yeah the the problem isthey don\u2019t have a model right so so Microsoft is married open AI they are an investor.<\/p>\n<p>Jason:<br \/>[23:05] Side note did you see that openai is now buying capacity from G gcp too.<\/p>\n<p>Scot:<br \/>[23:10] Yeah yeah yeah they\u2019re the rumor is they\u2019re building their own tpus they\u2019re going to use that to kind of start coding against TPS and they\u2019re going to build their own their own inference. The they do have a relationship with anthropic. But anthropics kind of taking a hard left turn into the coding vertical which is great but you know the workloads Amazon is looking to help people with their probably more corporate and so they they\u2019re kind of, I do think they\u2019re in a little bit of a hard position with AWS and I don\u2019t think they\u2019ve leaned in enough on building against this I think I think it\u2019s probably because they\u2019re a little bit more conservative with their retail background, I don\u2019t think they\u2019re going like all suck on this and paying people billions of dollars and building, you know as much infrastructure as they probably could have so so I think there is a there is an argument that there\u2019s a structural issue here. Yeah Amazon\u2019s good and they have all the resources to be able to get out of this I don\u2019t feel like it\u2019s un unfixable.<\/p>\n<p>Jason:<br \/>[24:07] No and I but I would say just in general Amazon is used to inventing a darn good moat that gives them some kind of endemic competitive advantage and you know at the moment like everybody\u2019s in the same boat on electricity right like there\u2019s so many so you know so many, sides to build data centers next to hydro electric dams and whatnot and and you know the, the market for energy is pretty efficient and Amazon has some cool IP they I think they would argue stronger than you would that the their IP for for chips is, is competitive but they don\u2019t have their own Fab so like they don\u2019t they don\u2019t have a way to Seoul to solve their capacity problems so they\u2019re kind of in the. Level Playing Field which they\u2019re not used to.<\/p>\n<p>Scot:<br \/>[24:50] Mhm, yeah absolutelyand then that brings us to guidance which was also mixed so the midpoint of Revenue was a bit up from consensus which is viewed as positive but margin was light. And you know everyone\u2019s parsing through that given this kind of psychological fear around AWS and kind of reading through it that. There\u2019s no no anticipated fix in AWS in this guidance. So so there\u2019s a little bit of a wall of worry around Amazon right now and you know just a a we\u2019re doing this actually we usually record at night we\u2019re doing it during the day oddly today but you know it\u2019s down 8% now. So a couple other interesting tidbits I I I did think it was interesting, that they specifically called out that tariffs have not impacted demand or margins or, cause ASP or average order value or or the ticket price to go up so so they they basically said so far they\u2019re not seeing anything from these tariff changes which there was a lot of worry around that on the retail side of the business. And then. I thought you had teased this earlier but what did you you know another interesting tidbit is what\u2019s going on between them and Google right now what what are you seeing there.<\/p>\n<p>Jason:<br \/>[26:03] Yeah well so there was there was big news last week while we were recording our last episode Scott that Amazon essentially took all of their shopping search ads off of Google and you know for those that don\u2019t know Amazon is the largest Advertiser on Google and they spend something in the order of 17 billion dollars a year on on ads and I\u2019ve always argued like this is the greatest unsung story in the history of business that Amazon essentially buys 17 billion dollars worth of eyeballs from Google every year. And then they they sell some paper towels to those eyeballs and make money on those paper towels but then, they once that eyeball has bought a paper towel from Amazon Amazon shows them an ad for a third party Marketplace seller and they sell the ads that they show for 60 billion dollars. Um so it\u2019s it\u2019s awesome eyeball Arbitrage they buy 17 billion dollars of ads from Google that that by the way means Amazon has the largest share of products search results on Google they\u2019re about 60% of all, product tiles that pop up on Google are send you straight to Amazon and so it seems like these 2 have this. Very synergistic relationship that seemed like it was working done well for both of them and so then overnight Amazon goes.<\/p>\n<p>Jason:<br \/>[27:24] Yeah we\u2019re turning that down to zero and and when it first happened everyone\u2019s like oh this something weird is happening here and we\u2019ve seen them, reset before where like maybe they over spent slightly and they pulled back for a short period of time or they did a test in some some Geo and so I kept like.<\/p>\n<p>Jason:<br \/>[27:42] Pulling more data at waking teams up in the middle of the night like hey let\u2019s figure out what the scope of this is is it really as big as it seems is it a blip, is it some kind of test what you know is there some are they under some negotiation and this is a negotiating tactic like there are all these hypotheses. You know now it\u2019s been a week later the ads are all still offand you can imagine that.<\/p>\n<p>Jason:<br \/>[28:06] Google has a bunch of salespeople they just lost 60% of the revenue that are now knocking on every other Retailer\u2019s door in the world saying hey you\u2019ve got an unprecedented chance to buy more share of voice like, you know and they\u2019re they\u2019re trying to get all the other retailers to step up and and. Take over Those ads it\u2019s a a reverse auction For Those ads so when the the biggest spend or leaves obviously the the cost of those ads goes down nominally and so that\u2019s, that\u2019s been interesting and you know they\u2019re all we like to talk about all these new AI shopping things a lot of the AI shopping things at the end of the day result in a, product tile that you can click on to buy something and now all those ones that are being fed by Google don\u2019t have Amazon product tiles in them so.<\/p>\n<p>Jason:<br \/>[28:53] So this was a super interesting thing. The number 1 topic I\u2019ve I\u2019ve had with any of my retail clients over the last week has been related to this all you know the internal teams that in my big giant Ad Agency are spun up around this I\u2019ve got, Limitless hypotheticals about what could be going on but we all frankly were eagerly waiting last night for some, mention or explanation to answer all this this conjecture and I with some pretty carefully and as far as I can tell there was Zero mention Amazon, did not bring it up in any way and someone surprisingly none of the analysts or reporters on their 2 calls like nobody nobody asked them.<\/p>\n<p>Scot:<br \/>[29:34] The at the same time yesterday they added code to robots text and also to their their, you know it\u2019s very clear there now blocking Google\u2019s not their web crawler but their AI crawler that they have perplexity anthropic and open AI are now being blocked by by Amazon, so Amazon is and then they\u2019ve also blocked operator for a while and which is now called Agent at openai. So Amazon\u2019s taking this we are going to put a Walled Garden around our data and we\u2019ll we\u2019ll AI out which is what they\u2019re buy for me project does is like when you\u2019re on Amazon you can send an AI agent out of Amazon to buy within their ecosystem, but they are not they\u2019re they\u2019re they\u2019re allowing you to shop from Amazon out but not out into Amazonnow my.<\/p>\n<p>Scot:<br \/>[30:22] My thesis is Google shopping is data they realize they\u2019ve made some internal decision where they\u2019re like here\u2019s the benefit we get from advertising on Google shopping and here\u2019s the cost and those inverted and I think on the cost side. If you think about what is what is Google shopping get they get a data feed of product data and I think Amazon is increasingly believing that is valuable in in their world, I think that\u2019s I think that\u2019s wrong but that\u2019s the theology so it\u2019s hard to you know there\u2019s no right or wrong I guess is what you believe but then also, it may not just be the product catalog I think it\u2019s probably actually more about the Google can use that for signals right so if you have. 100 million skus from Amazon and Google shopping you can they don\u2019t see the transaction data but they see the click data so they they know what the most popular products are at Amazon and that may be, that\u2019s a little bit more gold Dusty to me than just product catalog data is starting to get some idea of the the, the sales rank of products and and whatnot and I think that\u2019s Amazon\u2019s kind of saying why don\u2019t we start like building a fortress of our data right now and then over time we can decide what we let back out, I think that\u2019s what\u2019s going on.<\/p>\n<p>Jason:<br \/>[31:37] Yeah I I generally agree there\u2019s you know this the there\u2019s a aam\u2019s razor which is the the likely answer is usually the the simplest I I think fundamentally. Amazon and Google are more direct competitors and they each see that each other aspires to to move into each other\u2019s things and so they, there the US need uh each other and they must want to share any helpful insight with each other and so I think this is just. A a move in that direction I\u2019m I\u2019m sort of with you like I don\u2019t personally value the product feed in and of itself that much but. All the most common economic model for all of these things is advertising in the old world of advertising advertisers sold reach like here\u2019s how many millions of people saw my ad over the last 20 years of digital, like I would argue unfortunately everybody\u2019s pivoted to the.<\/p>\n<p>Jason:<br \/>[32:30] The direct effectiveness of the ads did someone click on that ad and then immediately buy something and I actually think there\u2019s too much focus on that and it\u2019s it\u2019s not prudent. In that world what you most need in order to establish value for your ads is data about how many people bought something right and so for Google it\u2019s super valuable to know how how many of those ads resulted in someone on a product detail page and the product detail Pages people ends up on the most, is on Amazon so by taking that that that 17 billion dollars of Revenue away from Amazon they\u2019re taking away that\u2019s super important signal that from Google that that Google could have used to dramatically improve all its AI to become a better Marketplace and shopping engine itself any of the, if the 10 year future of all this AI stuff is that that that the best answer engines that win the glass and win the attention of the consumer are are actually the sellers then you know Amazon wants to be that and they don\u2019t want to help Google be that.<\/p>\n<p>Scot:<br \/>[33:34] Yeah I thinkI think it\u2019s interesting I wish someone had asked the question because I would like to hear the Meandering answer on.<\/p>\n<p>Jason:<br \/>[33:37] I I do too I\u2019m I\u2019m not surprised that they didn\u2019t bring it up but I it didn\u2019t occur to me when the night started that no analyst would bring that up.<\/p>\n<p>Scot:<br \/>[33:47] I think they\u2019re so worried about AWS they don\u2019t care about in their retail stuff at this point.<\/p>\n<p>Jason:<br \/>[33:52] Yes and this is why it\u2019s annoying when when obviously people should only be talking about retail all these other silly distractions are really annoying.<\/p>\n<p>Scot:<br \/>[33:59] I have a 2 a mini soap box and then a bigger soap box so my first soap box it\u2019s not. My first 1 is it\u2019s just like mind-blowing to me so so I went through and now that we\u2019ve had this cycle Google Google\u2019s capex for 2025. Is going to be 85 billion so they it was 75 and then they bumped it up 10 and almost all of this is going towards Data Center and AI meta is at 72. Microsoft 80 and Amazon 118. If you swirl all that together you get 355 billion for 2025 in investment in basically gpus and data centers to support this AI buildout. That doesn\u2019t include what open AI is doing themselves they have a partnership with Oracle and then also Elon at X and and then also Tesla is building a huge AI data center that there\u2019s there\u2019s probably another hundred billion out there so let\u2019s call it. 500 let\u2019s round it to what you know what\u2019s 100 billion between friends so it\u2019s half a trillion dollars in capex in a year.<\/p>\n<p>Scot:<br \/>[35:06] To put that inspect in perspective over the last 10 years Amazon has spent 115 billion in fulfillment centers so think about that so so in 1 year,<\/p>\n<p>Scot:<br \/>[35:16] we are spending on AI investment 5 times what Amazon spent for their whole fulfillment network over the last 10 years so. It\u2019s just it\u2019s just nuts to me that this is such a big you and I have been at this a long time we\u2019ve never seen anything on this scale, of build out and there it\u2019s not speculative the every 1 of these companies is seeing their revenue surged from usage of these things these are not they\u2019re out of the experimental phase and they\u2019re into having dramatic business impact phase, it\u2019s like the weirdestit\u2019s a it\u2019s an exciting time becauseit\u2019s gonna change things in ways we can\u2019t predict but it\u2019s also scary so that\u2019s.<\/p>\n<p>Jason:<br \/>[35:56] I I think there was a specific narrative in it might have been in the middle of Andy\u2019s 8 Minute rant but where he basically said like, we\u2019re we\u2019re probably not even in the first inning of this game yet and it\u2019s already 123 billion marked into run rate right like, like how often do we talked about you know the that scale of numbers when like it hasn\u2019t even scaled yet like it\u2019s crazy.<\/p>\n<p>Scot:<br \/>[36:22] And then the other 1 is if we if we so now let\u2019s narrow the feature back to Amazon the the lens and if we if we look at the internals of Amazon there\u2019s, the fastest growing component is ADS at 23% and then you have AWS at at 17.5. There\u2019s just something wrong with that and then overall they\u2019re going 12% in the retail business is growing kind of smaller than that so the.<\/p>\n<p>Scot:<br \/>[36:46] I really worry about this ad component I I think. I think a year ago or so the user experience at Amazon jumped the sharkit\u2019s not getting better it\u2019s getting worse this ad load is crazy and they\u2019re clearly pushing it. You know even further that we\u2019re going to see it accelerate more. And I think it\u2019s this Canary in the coal mine that they\u2019re covering up for you know a degradation of something and it it just feels like. In my heart of hearts you cannot have a deteriorating user experience for very long in this world because people will start to go other places and I I feel like they\u2019ve opened up a strategic error here, where the agentic shopping folks are going to drive a huge wedge into it now they can try to block it and everything, but I also think these agentic browsers are unblockable and I don\u2019t. I think all that effort they\u2019re doing on that is going to end up being for not and it\u2019s going to be really interesting to see. Hey if I\u2019m right and when this starts to be a problem for us at all and what it all looks like when it you know if it does. It\u2019s probably the biggest strategic opening I\u2019ve ever seen anyone have against Amazon since I\u2019ve been following them for 20 years and I\u2019m going to be really interested to see if openai or you know 1 of these companies can drive a wedge in there.<\/p>\n<p>Jason:<br \/>[38:04] Yeah no I I generally agree the worst sentence I heard in the whole earnings report last night by the way Scott was there I can\u2019t remember if it was a response to a question or it was part of some other answer but Andy says that oh when he was bragging about how much better Alexa plus is than than previous things and we we you and I talked about this in the last podcast it it is excellent in a lot of ways. And he mentioned that that he could well imagine you know a version of ads being in that at some pointwhich, a was from a user experience standpoint was pretty disappointing for me to hear like I I think there\u2019s a bunch of things that are problematic about voices a user interface for a lot of things and then once, once you add more Interruption to the voice like I think it\u2019s potentially awful right and the I I agree like if other people invent. Alternative versions of this that are less dependent on ads than Amazon\u2019s is they\u2019re just going to be at a fundamental, customer experience disadvantage and in the past they\u2019ve had, such a huge moat because of their supply chain advantages that they could kind of get away with it for a short term but I\u2019m with you I don\u2019t think they can get away with it in the long run.<\/p>\n<p>Scot:<br \/>[39:17] Yeah yeah so it\u2019s going to be interesting to watch that I noticed they do have ads and Rufus now so Rufus is already not very good and it already is like down a notch in my book because. Uh I\u2019ve been a really good example is to take some of these everyday essentials and that\u2019s where the ads are really just kind of at this fever pitch cpg type stuff.<\/p>\n<p>Scot:<br \/>[39:36] Like I was getting these dog Dental things and I asked ruthless about it and it did everything it could to sell me something else and not give me the thing I wanted.<\/p>\n<p>Jason:<br \/>[39:45] Yeah and you know again we\u2019ll probably have to do a new an episode about this but I I actually think there\u2019s a vast overdependence on ads as an economic model and it it has worked great for the last 20 years I don\u2019t see it working as well going forward compared to some of these other businesses there there\u2019s a lot more ambiguity about how effective ads actually are right and the all the math that we all use is is horrible the Hocus Pocus and and doesn\u2019t doesn\u2019t measure very well but here\u2019s the biggest thing if if the world goes from 1 quick to zero click if if there\u2019s a bunch of these every day Essentials if we turn over shopping responsibility for those to the Bots then. Ads don\u2019t matter anymore in in any of those categories like the AI like the ad was to help a human do something that was hard for the human is the most generous version. And when the human isn\u2019t doing that there\u2019s no purpose for the ads and so all the businesses that are based on the revenue from Those ads. Are going to have to reinvent themselves so I I think it\u2019s um, it\u2019s going to be a super interesting time I can\u2019t wait to be a retired senior citizen talking to the smart people that are running these businesses down the road and hearing how it all played out because I. I don\u2019t think I\u2019ll make it that farbut Scott I wanted to touch I know we\u2019re running up on time you did mention 1 other thing you talked about.<\/p>\n<p>Jason:<br \/>[41:07] Amazon said we see we\u2019ve seen no sign of effective tariffs on the on the business so far which is certainly accurate from what I I heard them talk about. I did just want to point out Terrace is super interesting in the macroeconomics because it arguably has 2 effects like, people lose consumer confidence in their their worried about their their own economic situation and they spend less so it can have a detriment effect on spending but it also, we\u2019re not living through the the worst of the tariffs like the it\u2019s mostly a fear of future tariffs and so that actually has a positive effect people rush out to spend money, before the the tariffs come into full effect and so the the most.<\/p>\n<p>Jason:<br \/>[41:49] Obvious example I\u2019ve seen of that this week was UPS also reported yesterday and they had the a pretty crazy earnings report they specifically said, we\u2019ve seen consumer demand fall off a cliff like we\u2019ve seen like consumers are super worried about these terrorists and they\u2019re not spending on anything and then in the next breath they\u2019re like, but consumers are so depressed about the doomed economic situation that they\u2019re like indiscriminately spending to make themselves feel better right so they, UPS kind of put every theory of of what impact terrorists were having out there all all in the same earnings call uh so I\u2019m going to Discount all of that but I\u2019m just going to tell you the. The mic drop moment in the UPS call was and so stuff is so uncertain and so confusing that we\u2019re not going to issue a go forward guidance.<\/p>\n<p>Jason:<br \/>[42:35] And I I do think that\u2019s an interesting note for for all of us that you know the next 6 months of this year. Have a lot more uncertainty than I think some of us us realize and you know it could go in a bunch of different directions it\u2019s going to be really interesting.<\/p>\n<p>Scot:<br \/>[42:50] Yeah so we will be here reporting on it at the Jason\u2019s gotcha.<\/p>\n<p>Jason:<br \/>[42:55] And hopefully that added some value for you and if it did we sure would appreciate it if you jump on iTunes and leave us that 5-star review regular listeners will know, that the Amazon earnings calls are Scott\u2019s second favorite episode of the Year second only to May 4th episode. But that is all the time we have for today we finished a little early so you\u2019re all welcome and until next time happy commercing!<\/p>\n<\/div>\n<p><p><a href=\"https:\/\/dmsretail.com\/online-workshops-list\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-496\" src=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\" alt=\"Retail Online Training\" width=\"729\" height=\"91\" srcset=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png 729w, https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90-300x37.png 300w\" sizes=\"auto, (max-width: 729px) 100vw, 729px\" \/><\/a><\/p><br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A weekly podcast with the latest e-commerce news and events. Episode 329 is an evaluation of Amazon Q2 2025 earnings report. Subscribe: ????? 0:38\u00a0 Welcome […]<\/p>\n","protected":false},"author":1,"featured_media":1121,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-15769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcasts"],"_links":{"self":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/comments?post=15769"}],"version-history":[{"count":0,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media\/1121"}],"wp:attachment":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media?parent=15769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/categories?post=15769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/tags?post=15769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Subscribe<\/strong>:<\/p>\n<span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" data-mce-type=\"bookmark\" class=\"mce_SELRES_start\">?<\/span><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">?<\/span><\/iframe><\/figure>\n<div class=\"\">\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">0:38\u00a0 <\/span>Welcome to the Jason and Scott Show<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">12:57\u00a0 <\/span>Amazon\u2019s Mixed Earnings Report<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">18:07\u00a0 <\/span>The Impact of AWS on Retail<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">21:18\u00a0 <\/span>AWS Performance and AI Concerns<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">28:55\u00a0 <\/span>Amazon\u2019s Advertising Strategy<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">33:33\u00a0 <\/span>Amazon\u2019s Relationship with Google<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">35:24 <\/span>The Future of AI Investments<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">39:44\u00a0 <\/span>User Experience and Advertising<\/div>\n<div class=\"\"><span class=\"pr-1 cursor-pointer opacity-70 hover:opacity-100\">42:42\u00a0 <\/span>Economic Uncertainty and Consumer Behavior<\/div>\n<\/div>\n<p>Welcome back to the Jason & Scot Show! In episode 329, recorded on August 1st, 2025, we dive into the highly anticipated Amazon Q2 earnings report alongside other critical tech giants\u2019 earnings results. Your hosts, Jason Goldberg (the retail geek) and Scott Wingo, bring their expert insights and analysis of a rollercoaster earnings season that saw mixed results across the board.<\/p>\n<p>Kicking off the episode, Scot sets the stage with a review of Google\u2019s recent earnings results, which painted a mixed picture. While search revenue indicated a solid 12% growth, concerns about the impact of AI on search operations raised eyebrows. Google Cloud did not exhibit the explosive growth anticipated, leading investors to remain cautious. Following this, we turn our focus to the simultaneous announcements from Microsoft and Meta. Each company churned impressive earnings and strategic maneuvers, surpassing expectations and highlighting strong growth driven largely by their AI advancements.<\/p>\n<p>Transitioning to Amazon, the top story emerges: the company reported Q2 earnings that, unfortunately, mirrored Google\u2019s mixed performance rather than the triumphs seen with Microsoft and Meta. Despite a revenue growth of 12% and operating income surpassing expectations, investors reacted negatively to AWS\u2019s performance, which failed to keep pace with its competitors. Jason and Scott dissect the factors leading to Amazon\u2019s stock drop post-earnings call and the implications for its sprawling empire.<\/p>\n<p>Amazon\u2019s retail performance, particularly in North American and international markets, sparks a lively discussion. Notably, the North American retail business beat expectations by 2%, and international retail excelled by 7%. The hosts clarify that while the overall performance was commendable, it left much to be desired when juxtaposed against AWS\u2019s stunted growth and other tech players\u2019 successes.<\/p>\n<p>Delving deeper, Jason emphasizes the company\u2019s continued enhancements to its supply chain, signalling improvements that strengthen their retail operations, crucial for maintaining growth amidst increasing competition. He also highlights an interesting trend: for the first time, first-party sales outpaced third-party sales, reflecting a noteworthy shift in Amazon\u2019s marketplace dynamics as consumer spending leans towards everyday essentials.<\/p>\n<p>As the discussion progresses, Scott raises a critical point about the evolving landscape of online advertising and the pivotal role it plays in driving Amazon\u2019s growth. Despite a slight deceleration in year-over-year growth for the ads business, it remains a bright spot for Amazon, contrasting starkly with AWS\u2019s performance and hinting at the challenges faced in balancing user experience against monetization strategies.<\/p>\n<p>The conversation pivots towards AWS, where the hosts dissect the figures that fell below investor expectations\u2014the margins declining for the first time since the previous year, raising questions about structural issues. The ambiguity surrounding Amazon\u2019s ability to capture AI growth is a focal point, with analysts expressing concerns about lagging behind competitors.<\/p>\n<p>Nearing the end of the episode, a fascinating turn occurs when Scott sheds light on Amazon\u2019s recent decision to withdraw its shopping ads from Google. This pivotal move sends ripples across both platforms, provoking various theories about strategic shifts and implications for competitors. The duo shares intriguing insights into how this action marks a significant stake in the ground regarding data ownership and market positioning.<\/p>\n<p>As the episode wraps up, Jason and Scott reflect on the broader landscape of AI, retail, and shifting consumer behaviors, suggesting that while Amazon remains a dominant player, its approach and evolution will be crucial in navigating future market dynamics.<\/p>\n<p>Be sure to listen in for their final takeaways from the earnings calls and nuanced observations regarding the tech landscape. If you enjoyed this episode, please give us a five-star review on iTunes, and stay tuned for next week\u2019s insights!<\/p>\n<p>**Episode 328 of the Jason & Scot Show was recorded on Thursday, July 23rd, 2025.**<\/p>\n<p>Join your hosts Jason \u201cRetailgeek\u201d Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.<\/p>\n<p><strong>Transcript<\/strong><\/p>\n<p>Jason:<br \/>[0:23] Welcome to the Json and Scott show this is episode 329 being recorded on Friday August 1st,<\/p>\n<p>Jason:<br \/>[0:30] 2025 I\u2019m your host Jason retail geek Goldberg and as usual I\u2019m here with your co-host Scott Wingo.<\/p>\n<p>Scot:<br \/>[0:38] Hey Jason and welcome back Json and Scott showed listeners. Well today we are going to go over Amazon earnings it was a very eventful earnings season so let\u2019s set it up before we jump into Amazon. So back on July 23rd so about a week ago Google announced their results and they were what I would call mixed. Search grew 12% which was good. But there were some concerns and management kind of dodged some tricky questions about what\u2019s going on with AI overviews and how that\u2019s impacting search Google Cloud did very well but not what I would say crushing it. So then their stock did not reactgreat or bad to that so it\u2019s been kind of flat to down slightly since thenso then that was the setup last week. And then on Wednesday of July 30th we came in and had Microsoft and meta announced on the same day which is really hard for our internet analyst friends out there to have 2 Big E\u2019s announcing at the same time but they they survived.<\/p>\n<p>Scot:<br \/>[1:44] Came out I just uh did this alphabetically and. Meta came out first and it was a a Whopper so it was a the best thing you can do in Wall Street is, to not only meet expectations but meet them and then raise next quarter\u2019s expectations and that\u2019s what meta did so it was a what we call a classic beaten rays which is a. It\u2019s kind of the the Holy Grail the upper right quadrant the place to be if you\u2019re a public company. So they beat the Topline estimates by 6% which is good but then they just crush the bottom line coming in about 21% more profitable than Wall Street, expected and then the icing on the cake if it as if it couldn\u2019t get any better it did is they their growth is accelerating so in the first quarter they grew 16% year-over-year and then in second quarter they grew 22% year-over-year, so that\u2019s a really material quarter on quarter roll acceleration to their business. And they they attribute a lot of that to the use of AI internally at meta to run their advertising systems and automate the whole. Supply chain of advertising from you know bid management which is where they they\u2019ve been working at, probably the most and then now add creation that type of stuff and Wall Street rejoiced and the stock was up 8% which these are Big market cap companies and that\u2019s a really big move.<\/p>\n<p>Scot:<br \/>[3:11] Jason anything on meta before we move on to Microsoft.<\/p>\n<p>Jason:<br \/>[3:14] No I mean I think you you covered it interestingly, I would just point out I found it interesting it was so much about the future and Ai and kind of meta as a technology company and you know historically all the revenue at meta comes from. Advertising and you know there are all these macroeconomic uh interesting conversations that at the moment that are a play about the future of that advertising business and all these Chinese advertisers that are on again off again on on The Meta platform I was, somewhat struck by how little conversation like how little any of that seem to matter like their current. Predominant source of Revenue seem somewhat Irrelevant in the whole dialogue am I do you feel like I missed that or do you think it\u2019s.<\/p>\n<p>Scot:<br \/>[3:57] No I think that\u2019s right yeah yeah because they\u2019re they basically give away Ai No 1 really cares other than it it\u2019s impact on the business. The and then Microsoft came up and they said hold my beer so they also did a beat and raise and both on the top and bottom line. And then they\u2019re they\u2019re really confusing because they talk about AI overall which is includes a bunch of stuff, and that grew 157% which is just Bonkers but I. Parsed what that means some of its tokens and it\u2019s just really hard but then the other thing that Wall Street was really pleased with, and you\u2019ll remember for the longest time Amazon wouldn\u2019t break out the ads business and everyone was really frustrated and then for the longest time they wouldn\u2019t break out the AWS business and everyone was frustrated, and same at Microsoft they have not broken out their Azure platform which is their cloud computing separately uh and then they finally for the first time made a disclosure on that, uh Wall Street just really liked that and they always take it as a signal when companies disclose things that the company\u2019s feeling really great about that long term and, and is opening up new disclosures because they feel like they\u2019re all going to go up into the right.<\/p>\n<p>Jason:<br \/>[5:09] And isn\u2019t it always a coincidence that they decide to do that on a quarter that\u2019s quite favorable.<\/p>\n<p>Scot:<br \/>[5:14] They yes it is because if you did it when you were not doing well no 1 would care so like why why do that and then the, yeah so wall Street\u2019s weird like that lots of it\u2019s a psych it\u2019s 80% psychology in ways and 20% reality but that\u2019s that\u2019s kind of. How the world Works anywayso I think the most Germaine part to our discussion in there is that the, Ai and it\u2019s not Azure in this disclosure grew 39% and so that was good and analysts had they kind of pick apart at it and get to a number and their their guesstimate was 34%. That stock went up about 8% at at the peak and is down now a little bit.<\/p>\n<p>Scot:<br \/>[5:55] But for a while there Microsoft was the second company to get the the 4 trillion dollar market cap which Nvidia passed a while ago, so that was the setup coming into this so you had Google mid Microsoft and meta crushed it, and then within within Google and Microsoft their cloud computing is accelerated quarter-on-quarter so, I think expectations really started to rise going into the Amazon report that AWS would see something similar because you kind of think well there\u2019s this AI tide lifting all the boats certainly we will see it in AWS and that brings us toAmazon newsyour margin is z opportunity.<\/p>\n<p>Jason:<br \/>[6:44] So unfortunately Amazon\u2019s results were probably more similar to Google\u2019s than than meta in Microsoft in in your setup Scott it was sort of mixed but but in you know a a pretty bad way of your Amazon investor probably so predominantly that\u2019s because AWS didn\u2019t expectations relative to to the other big cloud platform businesses and you know given all that that favorable traction that meta Microsoft got like that we\u2019re already starting to see their their stock get punished I think, after hours trading started like in the middle of their earnings call and the last time I checked Shares are down like like 6% which is. Kind of put you at that 2.5 trillion dollar market capyou know which means they they, was something like 150 billion dollars since the earnings call which you know a few billion here billion there it adds up.<\/p>\n<p>Jason:<br \/>[7:36] What\u2019s I guess slightly weird or lost in all that conversation is like the top line was pretty good like like they were beats like Revenue was up 12%, which was a beat versus expectations operating uh margin was was up which like like. I think they came in for the quarter like nearly 20 billion write 19.2 billion good job intern which which was a Beat, and so the overall business performed well and there is we\u2019ll we\u2019ll break it up of course all down and we\u2019ll we\u2019ll highlight a lot of things that are going well but big picture. AWS is still a fast growing business for them and grew fast it didn\u2019t grow as fast as their competitors, and as we\u2019ll dive deeper into it the the narratives surrounding that was not completely fulfilling and so the the stock is is taking a hit at the minute at the moment but.<\/p>\n<p>Jason:<br \/>[8:27] Kind of going back to the to the top level there were a lot of interesting things that came up in in the earnings call in a few things that were interesting that didn\u2019t come up for those of us that care mostly about retail I would I would say like. The supply chain discussion you know continues to Roll Along that you know the people are forgetting about 18 months ago they made this major transformation from from a national distribution system to a regional Hub and spoke system and they\u2019ve been, claiming wild successes both, improving their service level by having faster delivery and more products available for faster delivery and improving their profit profitability and the cost to serve going way down and all of those Trends continued this quarter, they\u2019re improving their service levels Nationwide for delivery and they\u2019re improving their cost to serve which is, beneficial to their margins the the North American retail business which you know the way they measure it because their Marketplace and and have this big ads business is slightly problematic but but kind of just base it on Gap. North American retail was a Beat by 2% potentially more importantly International retail was a Beat by 7% the US is Amazon\u2019s most mature market and so, in a lot of ways.<\/p>\n<p>Jason:<br \/>[9:42] You know it\u2019s it\u2019s slowed down because of the law of large numbers and so the analysts really pay attention to how Amazon\u2019s growing in these more emerging markets and and seems like there\u2019s still gas in the in the international growth for Amazon, the I saw 1 Tibet in their earnings that that online Revenue increased by 11% I\u2019m sorry 10%, I have seen some analysts that are saying that like the US Quarter over quarter gmv growth was probably 11%. And they\u2019re now predicting that the annual gmv growth is going to be in the area of 8.7% so those are all good numbers, if you consider the US retail industry is growing right now at 3.8%.<\/p>\n<p>Jason:<br \/>[10:24] And even e-commerce at the moment across the US is only growing about 7% and so you know talking about Amazon growing between 9 and 11%. As big as they are is is super impressive physical stores grew this is a relatively small number in the overall scheme of things that Amazon and of course it\u2019s it\u2019s it\u2019s almost exclusively Whole Foods at this point but Whole Foods has been kind of a.<\/p>\n<p>Jason:<br \/>[10:48] A mixed story for Amazon so growth there is interesting physical stores grew 7.5% year-over-year so that\u2019s now up 5. 6. 1 interesting thing third-party seller growth for the first time that I can remember in a long time they had good third-party seller growth I think it was like 10% but it was actually slower than their first-party sales growth so, I mean I would argue that transcends the day they invented the marketplace has been that the 3p has grown faster than than 1 P with a few exceptions this quarter they saw 1 p, drove faster and partly that\u2019s back to the supply chain story because there\u2019s always been a lot of demand for these low-cost everyday essentials that, in the old Amazon supply chain we\u2019re not very efficient to deliver an Amazon wasn\u2019t as competitive on but as they\u2019ve improved their supply chain there are a lot better at selling these like you know I just need a pack of paper towels I just need a pack of of razor blades and in a macroeconomics world where, a lot more consumer spending is going to those everyday essentials the fact that Amazon is competing more successfully in that space and selling more 1 P every day Essentials because the.<\/p>\n<p>Jason:<br \/>[11:59] Party Marketplace is not a an awesome offering for those everyday essentials at the moment so that was all super interesting subscription Revenue was up unit sales were up. The I still think they\u2019re they\u2019re hovering around 62% of all their their Market retail sales are Marketplaceand I think they they had a stat in the. In the discussion that every day Essentials are now 1-3 of their their total sales which is. Another unsung story of kind of Amazon successfully Reinventing their business while No 1 notyeah let me take a breath Scott do you.<\/p>\n<p>Scot:<br \/>[12:36] Yeah I thought I thought that\u2019s a good recap I thought it was interesting it, you know we\u2019re in like the summer movies Zone and I just saw Superman I\u2019m gonna see Fantastic 4 and I know there\u2019s going to be there\u2019s always these multiverses I almost wonder like if there was a universe where.<\/p>\n<p>Scot:<br \/>[12:50] All of retail missed but AWS did better I I think the stock would have been up 10 so so we\u2019re in this really weird phase.<\/p>\n<p>Jason:<br \/>[12:58] That Tobey Maguire Spider-Man version of okay sorry.<\/p>\n<p>Scot:<br \/>[13:16] But in a way AWS is bringing down the retail part of the business which is kind of crazy for because for the longest time it was the other way around.<\/p>\n<p>Jason:<br \/>[13:23] I was going to say the retail business owes.<\/p>\n<p>Scot:<br \/>[13:24] It\u2019s a weird Bizarro world world.<\/p>\n<p>Jason:<br \/>[13:26] Owes AWS carrying that water for some quarters.<\/p>\n<p>Scot:<br \/>[13:29] It does yeah yeah but as as we\u2019ll get to you here\u2019s a tip for you there is another piece that\u2019s carrying the retail part what do you think that is Jason.<\/p>\n<p>Jason:<br \/>[13:38] Oh my gosh you know what would be interesting is if you had the world\u2019s attention and you you you rent it or sold that attention in the form of like some kind of advertisement.<\/p>\n<p>Scot:<br \/>[13:48] Yeah how did dads do.<\/p>\n<p>Jason:<br \/>[13:50] Well obviously this has been. A big story to Amazon for a long time and it continues to to be 1 of the bright stars in Amazon growing much faster than the overall business and so you know we\u2019ve we broken down the math the number of times the the annual run rate on their ads business is well over 60 billion dollars a year this quarter, they they did 15.7 billion which was a beat versus analyst expectations and so the the year-over-year growth was like 23% 22.9 percent, so that that is actually a slight deceleration of the ad growth because it\u2019s been growing so fast but obviously compared to the overall Amazon business. This is a 60 billion dollar business that\u2019s that\u2019s still growing. You know super fast and and well in excess of of wall Street\u2019s expectations which were like 17%.<\/p>\n<p>Jason:<br \/>[14:42] So so the ad business continues to be a bright star sparked side note that\u2019s the bane of my existence because every other retailer on the planet sees that and they want to replicate that and for variety of reasons most retailers. Can\u2019t and shouldn\u2019t try. My whole industry spends a lot of time whipping up the the lather around retail media networks and and as we\u2019ve covered in the past on this show, if you\u2019re not Amazon or Walmart retail media networks are kind of mehso I\u2019ll just shout out to to Carrie in case you\u2019re listening. The but again good quarter for Amazon the ads are going up there\u2019s some big news in ads that will will talk about later.<\/p>\n<p>Jason:<br \/>[15:22] The thing I\u2019m always watching in their ad business is is I would actually argue, there\u2019s 2 add businesses at Amazon and they kind of off off skate each other there\u2019s sponsored product listings on a third-party Marketplace which is. All the high volume stuff and it\u2019s it\u2019s you know that that\u2019s true the true retail media network but increasingly. Amazon is a darn successful Media company with sports franchises and unique programming and so you know you you\u2019d want to hear them talking about their ad success for all of that content and how that compares with, Disney and HBO or whatever they want to call themselves this month and and the you know the the old school television networks and you\u2019d want to see how their growth rate there is comparing with those other content providers uh and talk about that separate from how their retail media is competing with Walmart but we can\u2019t because they they bundle all these 2 wildly different things together and call it adds, but and and we didn\u2019t get a very good hint about how much traction they\u2019re getting on on the content ads they are continuing to increase the, the inventory of type of ads and so that\u2019s somewhat interesting and of course you know I\u2019m always listening for tidbits about those 2 Worlds colliding and how you might introduce shoppable ads you know or or more ads with a direct call to action in all that content and and this quarter there wasn\u2019t much discussion of any of that becausethe, Ai and AWS stole all the all the attention.<\/p>\n<p>Scot:<br \/>[16:50] Yeah on on the add topic everyone I talked to about prime day said Amazon was pushing ads so incredibly hard that it was almost a gate for you had to buy make commit to a big ad Buy before you could even get into the programs and stuff, so so I suspect we may actually see this 1 accelerate again into Q3 because, the Amazons really leaning in and and you know but at some we we\u2019ll talk about this in a minute but I have some theories on this ad thing that.<\/p>\n<p>Jason:<br \/>[17:20] Yeah I mean I I would just say like whether Amazon\u2019s trying to lean in or not like it\u2019s almost inevitable because of their assortment right like you\u2019re you\u2019re a billion items now no 1\u2019s ever going to organically find any of your items and so ads are the only path to Discovery for all all of the sellers on the platform and a smaller version of that same thing is playing out for Prime day like there there used to be 3,000 items for sale on Prime day and 100 lighting deals right and and you could browse all those in the same way that people used to browse the internet on Yahoo but you know now, there\u2019s no way to to browse any of those things so unless you have an ad promoting your,<\/p>\n<p>Jason:<br \/>[17:59] Prime Day deals or promoting your Lightning Deals nobody\u2019s ever going to see them and so even if Amazon wasn\u2019t putting the screws to people which they are. You would still like advertising is now the the most important and necessary path to any kind of success on on Amazon\u2019s platform and obviously Amazon\u2019s not overly disappointed about that.<\/p>\n<p>Scot:<br \/>[18:22] So this brings us to AWS so as mentioned the top line was in line to a slight beat but the bottom line missed so Wall Street was expecting 10.9 billion on the bottom and it was 10.2. So that\u2019s a that\u2019s a pretty good miss their or bad Miss. It grew the AWS grew 17.5% year-over-year which is good but it was not an acceleration which again the comps of gcp and Azure did accelerate, this is the first time the margins of actually declined since the second quarter of 2023, on the call and we\u2019ll talk about this a little bit more but specifically they talked about they are very capacity constrained. And they they called out power a lot of these data centers that are trying to be built are are really having a hard time getting to enough power to build out things so that\u2019s an area but I think. They\u2019re actually kind of low on the the king of all this is NVIDIA they make the the biggest gpus that these centers need Amazon has its own chipset I don\u2019t think it\u2019s nearly as good as Nvidia and it\u2019s cheaper which is great. But they\u2019re not adding enough of those and they\u2019re not adding enough Nvidia. So that\u2019s a huge problem they also called out part of the part of the margin decrease was some just structural things around how you calculate stock based comp and some depreciation things so a lot of it wasn\u2019t really a change in the business model.<\/p>\n<p>Scot:<br \/>[19:51] The the so that that\u2019s kind of like what\u2019s in writing and then what happened is in the conference call and that I think you got a chance to listen to this, the Jassie just seemed off is kind of like how people described it and especially when it came to this AI topic and let me just read like a little note I thought was interesting. RBC has an analyst Brad Erickson and he said the title of his report for the whole quarter was is this a structural issue or just an off night and here\u2019s a little excerpt, on the other for AWS growth didn\u2019t accelerate like its peers margin missed and Management\u2019s commentary on the call did little to attenuate investor fears that AWS may have a bigger structural issue in capturing its fair share of the growth from AI. The retail strength pushes our estimates higher and Target Target moves up modestly but admittedly the Optics of AWS underperformance in isolation and Management\u2019s commentary make it hard to defend Amazon so. You know there was this really long rambling answer that jasse gave where this the question was specifically like are you doing enough to capture. AI share and he answered it a little bit in this like 8 Minute answer but then he kept talking about how they\u2019re using it internally and it\u2019s helping the retail business it felt like a big. Hey not a very great answer because it kind of went.<\/p>\n<p>Scot:<br \/>[21:07] All over the place but then it felt like a hard diversion from answering the question which people were kind of he didn\u2019t lean in and say we\u2019re crushing it in AI we\u2019re going to dominate and I think that\u2019s what they wanted to hear.<\/p>\n<p>Jason:<br \/>[21:18] Yeah it should have been a 1 cent, yeah well so a like I I want to say the analysts that actually asked the question was the Morgan Stanley Guy Brian Nook and I I when I was listening it was awesome because he he, pre-war in the question I think it started something like hey I have 2 questions for you about AWS they\u2019re a little tough but I\u2019m going to throw them at youwith with.<\/p>\n<p>Scot:<br \/>[21:39] Please don\u2019t penalize me for asking a hard question.<\/p>\n<p>Jason:<br \/>[21:41] Yeah which is literally like the the setup right and then he goes into this there\u2019s a Wall Street you know Finance person narrative right now that AWS is falling behind in generative AI and that you\u2019re losing share to your peers what\u2019s your rebuttal to that right and. You know again you would expect a a polished CEO like Andy who had generally kills it in these in these settings to have a. Short crisp answer about why oh we\u2019re actually killing both of those but since we\u2019re so far ahead of them, like it\u2019s harder for us to earn the growth right that would have been the easy 1 sentence answer right like we\u2019re we\u2019re 3 times larger than them so we we we grew a little bit slower than them. And there are all these endemic constraints on all of us the world doesn\u2019t have enough electricity the world doesn\u2019t have enough chips right like you could have come up with some. Some kind of conversation like that but you for your point like he went on a 8 Minute narrative that like I I think included a couple visits to his own shopping behaviors and thingsand it it was just unclear like. Did he just miss the importance of the question and he gave a bad answer or was he literally like trying to dodge the question and and distract people. I tend to think it was the first that it just it wasn\u2019t wasn\u2019t hishis most Stellar answer but.<\/p>\n<p>Scot:<br \/>[22:57] Yeah the the problem isthey don\u2019t have a model right so so Microsoft is married open AI they are an investor.<\/p>\n<p>Jason:<br \/>[23:05] Side note did you see that openai is now buying capacity from G gcp too.<\/p>\n<p>Scot:<br \/>[23:10] Yeah yeah yeah they\u2019re the rumor is they\u2019re building their own tpus they\u2019re going to use that to kind of start coding against TPS and they\u2019re going to build their own their own inference. The they do have a relationship with anthropic. But anthropics kind of taking a hard left turn into the coding vertical which is great but you know the workloads Amazon is looking to help people with their probably more corporate and so they they\u2019re kind of, I do think they\u2019re in a little bit of a hard position with AWS and I don\u2019t think they\u2019ve leaned in enough on building against this I think I think it\u2019s probably because they\u2019re a little bit more conservative with their retail background, I don\u2019t think they\u2019re going like all suck on this and paying people billions of dollars and building, you know as much infrastructure as they probably could have so so I think there is a there is an argument that there\u2019s a structural issue here. Yeah Amazon\u2019s good and they have all the resources to be able to get out of this I don\u2019t feel like it\u2019s un unfixable.<\/p>\n<p>Jason:<br \/>[24:07] No and I but I would say just in general Amazon is used to inventing a darn good moat that gives them some kind of endemic competitive advantage and you know at the moment like everybody\u2019s in the same boat on electricity right like there\u2019s so many so you know so many, sides to build data centers next to hydro electric dams and whatnot and and you know the, the market for energy is pretty efficient and Amazon has some cool IP they I think they would argue stronger than you would that the their IP for for chips is, is competitive but they don\u2019t have their own Fab so like they don\u2019t they don\u2019t have a way to Seoul to solve their capacity problems so they\u2019re kind of in the. Level Playing Field which they\u2019re not used to.<\/p>\n<p>Scot:<br \/>[24:50] Mhm, yeah absolutelyand then that brings us to guidance which was also mixed so the midpoint of Revenue was a bit up from consensus which is viewed as positive but margin was light. And you know everyone\u2019s parsing through that given this kind of psychological fear around AWS and kind of reading through it that. There\u2019s no no anticipated fix in AWS in this guidance. So so there\u2019s a little bit of a wall of worry around Amazon right now and you know just a a we\u2019re doing this actually we usually record at night we\u2019re doing it during the day oddly today but you know it\u2019s down 8% now. So a couple other interesting tidbits I I I did think it was interesting, that they specifically called out that tariffs have not impacted demand or margins or, cause ASP or average order value or or the ticket price to go up so so they they basically said so far they\u2019re not seeing anything from these tariff changes which there was a lot of worry around that on the retail side of the business. And then. I thought you had teased this earlier but what did you you know another interesting tidbit is what\u2019s going on between them and Google right now what what are you seeing there.<\/p>\n<p>Jason:<br \/>[26:03] Yeah well so there was there was big news last week while we were recording our last episode Scott that Amazon essentially took all of their shopping search ads off of Google and you know for those that don\u2019t know Amazon is the largest Advertiser on Google and they spend something in the order of 17 billion dollars a year on on ads and I\u2019ve always argued like this is the greatest unsung story in the history of business that Amazon essentially buys 17 billion dollars worth of eyeballs from Google every year. And then they they sell some paper towels to those eyeballs and make money on those paper towels but then, they once that eyeball has bought a paper towel from Amazon Amazon shows them an ad for a third party Marketplace seller and they sell the ads that they show for 60 billion dollars. Um so it\u2019s it\u2019s awesome eyeball Arbitrage they buy 17 billion dollars of ads from Google that that by the way means Amazon has the largest share of products search results on Google they\u2019re about 60% of all, product tiles that pop up on Google are send you straight to Amazon and so it seems like these 2 have this. Very synergistic relationship that seemed like it was working done well for both of them and so then overnight Amazon goes.<\/p>\n<p>Jason:<br \/>[27:24] Yeah we\u2019re turning that down to zero and and when it first happened everyone\u2019s like oh this something weird is happening here and we\u2019ve seen them, reset before where like maybe they over spent slightly and they pulled back for a short period of time or they did a test in some some Geo and so I kept like.<\/p>\n<p>Jason:<br \/>[27:42] Pulling more data at waking teams up in the middle of the night like hey let\u2019s figure out what the scope of this is is it really as big as it seems is it a blip, is it some kind of test what you know is there some are they under some negotiation and this is a negotiating tactic like there are all these hypotheses. You know now it\u2019s been a week later the ads are all still offand you can imagine that.<\/p>\n<p>Jason:<br \/>[28:06] Google has a bunch of salespeople they just lost 60% of the revenue that are now knocking on every other Retailer\u2019s door in the world saying hey you\u2019ve got an unprecedented chance to buy more share of voice like, you know and they\u2019re they\u2019re trying to get all the other retailers to step up and and. Take over Those ads it\u2019s a a reverse auction For Those ads so when the the biggest spend or leaves obviously the the cost of those ads goes down nominally and so that\u2019s, that\u2019s been interesting and you know they\u2019re all we like to talk about all these new AI shopping things a lot of the AI shopping things at the end of the day result in a, product tile that you can click on to buy something and now all those ones that are being fed by Google don\u2019t have Amazon product tiles in them so.<\/p>\n<p>Jason:<br \/>[28:53] So this was a super interesting thing. The number 1 topic I\u2019ve I\u2019ve had with any of my retail clients over the last week has been related to this all you know the internal teams that in my big giant Ad Agency are spun up around this I\u2019ve got, Limitless hypotheticals about what could be going on but we all frankly were eagerly waiting last night for some, mention or explanation to answer all this this conjecture and I with some pretty carefully and as far as I can tell there was Zero mention Amazon, did not bring it up in any way and someone surprisingly none of the analysts or reporters on their 2 calls like nobody nobody asked them.<\/p>\n<p>Scot:<br \/>[29:34] The at the same time yesterday they added code to robots text and also to their their, you know it\u2019s very clear there now blocking Google\u2019s not their web crawler but their AI crawler that they have perplexity anthropic and open AI are now being blocked by by Amazon, so Amazon is and then they\u2019ve also blocked operator for a while and which is now called Agent at openai. So Amazon\u2019s taking this we are going to put a Walled Garden around our data and we\u2019ll we\u2019ll AI out which is what they\u2019re buy for me project does is like when you\u2019re on Amazon you can send an AI agent out of Amazon to buy within their ecosystem, but they are not they\u2019re they\u2019re they\u2019re allowing you to shop from Amazon out but not out into Amazonnow my.<\/p>\n<p>Scot:<br \/>[30:22] My thesis is Google shopping is data they realize they\u2019ve made some internal decision where they\u2019re like here\u2019s the benefit we get from advertising on Google shopping and here\u2019s the cost and those inverted and I think on the cost side. If you think about what is what is Google shopping get they get a data feed of product data and I think Amazon is increasingly believing that is valuable in in their world, I think that\u2019s I think that\u2019s wrong but that\u2019s the theology so it\u2019s hard to you know there\u2019s no right or wrong I guess is what you believe but then also, it may not just be the product catalog I think it\u2019s probably actually more about the Google can use that for signals right so if you have. 100 million skus from Amazon and Google shopping you can they don\u2019t see the transaction data but they see the click data so they they know what the most popular products are at Amazon and that may be, that\u2019s a little bit more gold Dusty to me than just product catalog data is starting to get some idea of the the, the sales rank of products and and whatnot and I think that\u2019s Amazon\u2019s kind of saying why don\u2019t we start like building a fortress of our data right now and then over time we can decide what we let back out, I think that\u2019s what\u2019s going on.<\/p>\n<p>Jason:<br \/>[31:37] Yeah I I generally agree there\u2019s you know this the there\u2019s a aam\u2019s razor which is the the likely answer is usually the the simplest I I think fundamentally. Amazon and Google are more direct competitors and they each see that each other aspires to to move into each other\u2019s things and so they, there the US need uh each other and they must want to share any helpful insight with each other and so I think this is just. A a move in that direction I\u2019m I\u2019m sort of with you like I don\u2019t personally value the product feed in and of itself that much but. All the most common economic model for all of these things is advertising in the old world of advertising advertisers sold reach like here\u2019s how many millions of people saw my ad over the last 20 years of digital, like I would argue unfortunately everybody\u2019s pivoted to the.<\/p>\n<p>Jason:<br \/>[32:30] The direct effectiveness of the ads did someone click on that ad and then immediately buy something and I actually think there\u2019s too much focus on that and it\u2019s it\u2019s not prudent. In that world what you most need in order to establish value for your ads is data about how many people bought something right and so for Google it\u2019s super valuable to know how how many of those ads resulted in someone on a product detail page and the product detail Pages people ends up on the most, is on Amazon so by taking that that that 17 billion dollars of Revenue away from Amazon they\u2019re taking away that\u2019s super important signal that from Google that that Google could have used to dramatically improve all its AI to become a better Marketplace and shopping engine itself any of the, if the 10 year future of all this AI stuff is that that that the best answer engines that win the glass and win the attention of the consumer are are actually the sellers then you know Amazon wants to be that and they don\u2019t want to help Google be that.<\/p>\n<p>Scot:<br \/>[33:34] Yeah I thinkI think it\u2019s interesting I wish someone had asked the question because I would like to hear the Meandering answer on.<\/p>\n<p>Jason:<br \/>[33:37] I I do too I\u2019m I\u2019m not surprised that they didn\u2019t bring it up but I it didn\u2019t occur to me when the night started that no analyst would bring that up.<\/p>\n<p>Scot:<br \/>[33:47] I think they\u2019re so worried about AWS they don\u2019t care about in their retail stuff at this point.<\/p>\n<p>Jason:<br \/>[33:52] Yes and this is why it\u2019s annoying when when obviously people should only be talking about retail all these other silly distractions are really annoying.<\/p>\n<p>Scot:<br \/>[33:59] I have a 2 a mini soap box and then a bigger soap box so my first soap box it\u2019s not. My first 1 is it\u2019s just like mind-blowing to me so so I went through and now that we\u2019ve had this cycle Google Google\u2019s capex for 2025. Is going to be 85 billion so they it was 75 and then they bumped it up 10 and almost all of this is going towards Data Center and AI meta is at 72. Microsoft 80 and Amazon 118. If you swirl all that together you get 355 billion for 2025 in investment in basically gpus and data centers to support this AI buildout. That doesn\u2019t include what open AI is doing themselves they have a partnership with Oracle and then also Elon at X and and then also Tesla is building a huge AI data center that there\u2019s there\u2019s probably another hundred billion out there so let\u2019s call it. 500 let\u2019s round it to what you know what\u2019s 100 billion between friends so it\u2019s half a trillion dollars in capex in a year.<\/p>\n<p>Scot:<br \/>[35:06] To put that inspect in perspective over the last 10 years Amazon has spent 115 billion in fulfillment centers so think about that so so in 1 year,<\/p>\n<p>Scot:<br \/>[35:16] we are spending on AI investment 5 times what Amazon spent for their whole fulfillment network over the last 10 years so. It\u2019s just it\u2019s just nuts to me that this is such a big you and I have been at this a long time we\u2019ve never seen anything on this scale, of build out and there it\u2019s not speculative the every 1 of these companies is seeing their revenue surged from usage of these things these are not they\u2019re out of the experimental phase and they\u2019re into having dramatic business impact phase, it\u2019s like the weirdestit\u2019s a it\u2019s an exciting time becauseit\u2019s gonna change things in ways we can\u2019t predict but it\u2019s also scary so that\u2019s.<\/p>\n<p>Jason:<br \/>[35:56] I I think there was a specific narrative in it might have been in the middle of Andy\u2019s 8 Minute rant but where he basically said like, we\u2019re we\u2019re probably not even in the first inning of this game yet and it\u2019s already 123 billion marked into run rate right like, like how often do we talked about you know the that scale of numbers when like it hasn\u2019t even scaled yet like it\u2019s crazy.<\/p>\n<p>Scot:<br \/>[36:22] And then the other 1 is if we if we so now let\u2019s narrow the feature back to Amazon the the lens and if we if we look at the internals of Amazon there\u2019s, the fastest growing component is ADS at 23% and then you have AWS at at 17.5. There\u2019s just something wrong with that and then overall they\u2019re going 12% in the retail business is growing kind of smaller than that so the.<\/p>\n<p>Scot:<br \/>[36:46] I really worry about this ad component I I think. I think a year ago or so the user experience at Amazon jumped the sharkit\u2019s not getting better it\u2019s getting worse this ad load is crazy and they\u2019re clearly pushing it. You know even further that we\u2019re going to see it accelerate more. And I think it\u2019s this Canary in the coal mine that they\u2019re covering up for you know a degradation of something and it it just feels like. In my heart of hearts you cannot have a deteriorating user experience for very long in this world because people will start to go other places and I I feel like they\u2019ve opened up a strategic error here, where the agentic shopping folks are going to drive a huge wedge into it now they can try to block it and everything, but I also think these agentic browsers are unblockable and I don\u2019t. I think all that effort they\u2019re doing on that is going to end up being for not and it\u2019s going to be really interesting to see. Hey if I\u2019m right and when this starts to be a problem for us at all and what it all looks like when it you know if it does. It\u2019s probably the biggest strategic opening I\u2019ve ever seen anyone have against Amazon since I\u2019ve been following them for 20 years and I\u2019m going to be really interested to see if openai or you know 1 of these companies can drive a wedge in there.<\/p>\n<p>Jason:<br \/>[38:04] Yeah no I I generally agree the worst sentence I heard in the whole earnings report last night by the way Scott was there I can\u2019t remember if it was a response to a question or it was part of some other answer but Andy says that oh when he was bragging about how much better Alexa plus is than than previous things and we we you and I talked about this in the last podcast it it is excellent in a lot of ways. And he mentioned that that he could well imagine you know a version of ads being in that at some pointwhich, a was from a user experience standpoint was pretty disappointing for me to hear like I I think there\u2019s a bunch of things that are problematic about voices a user interface for a lot of things and then once, once you add more Interruption to the voice like I think it\u2019s potentially awful right and the I I agree like if other people invent. Alternative versions of this that are less dependent on ads than Amazon\u2019s is they\u2019re just going to be at a fundamental, customer experience disadvantage and in the past they\u2019ve had, such a huge moat because of their supply chain advantages that they could kind of get away with it for a short term but I\u2019m with you I don\u2019t think they can get away with it in the long run.<\/p>\n<p>Scot:<br \/>[39:17] Yeah yeah so it\u2019s going to be interesting to watch that I noticed they do have ads and Rufus now so Rufus is already not very good and it already is like down a notch in my book because. Uh I\u2019ve been a really good example is to take some of these everyday essentials and that\u2019s where the ads are really just kind of at this fever pitch cpg type stuff.<\/p>\n<p>Scot:<br \/>[39:36] Like I was getting these dog Dental things and I asked ruthless about it and it did everything it could to sell me something else and not give me the thing I wanted.<\/p>\n<p>Jason:<br \/>[39:45] Yeah and you know again we\u2019ll probably have to do a new an episode about this but I I actually think there\u2019s a vast overdependence on ads as an economic model and it it has worked great for the last 20 years I don\u2019t see it working as well going forward compared to some of these other businesses there there\u2019s a lot more ambiguity about how effective ads actually are right and the all the math that we all use is is horrible the Hocus Pocus and and doesn\u2019t doesn\u2019t measure very well but here\u2019s the biggest thing if if the world goes from 1 quick to zero click if if there\u2019s a bunch of these every day Essentials if we turn over shopping responsibility for those to the Bots then. Ads don\u2019t matter anymore in in any of those categories like the AI like the ad was to help a human do something that was hard for the human is the most generous version. And when the human isn\u2019t doing that there\u2019s no purpose for the ads and so all the businesses that are based on the revenue from Those ads. Are going to have to reinvent themselves so I I think it\u2019s um, it\u2019s going to be a super interesting time I can\u2019t wait to be a retired senior citizen talking to the smart people that are running these businesses down the road and hearing how it all played out because I. I don\u2019t think I\u2019ll make it that farbut Scott I wanted to touch I know we\u2019re running up on time you did mention 1 other thing you talked about.<\/p>\n<p>Jason:<br \/>[41:07] Amazon said we see we\u2019ve seen no sign of effective tariffs on the on the business so far which is certainly accurate from what I I heard them talk about. I did just want to point out Terrace is super interesting in the macroeconomics because it arguably has 2 effects like, people lose consumer confidence in their their worried about their their own economic situation and they spend less so it can have a detriment effect on spending but it also, we\u2019re not living through the the worst of the tariffs like the it\u2019s mostly a fear of future tariffs and so that actually has a positive effect people rush out to spend money, before the the tariffs come into full effect and so the the most.<\/p>\n<p>Jason:<br \/>[41:49] Obvious example I\u2019ve seen of that this week was UPS also reported yesterday and they had the a pretty crazy earnings report they specifically said, we\u2019ve seen consumer demand fall off a cliff like we\u2019ve seen like consumers are super worried about these terrorists and they\u2019re not spending on anything and then in the next breath they\u2019re like, but consumers are so depressed about the doomed economic situation that they\u2019re like indiscriminately spending to make themselves feel better right so they, UPS kind of put every theory of of what impact terrorists were having out there all all in the same earnings call uh so I\u2019m going to Discount all of that but I\u2019m just going to tell you the. The mic drop moment in the UPS call was and so stuff is so uncertain and so confusing that we\u2019re not going to issue a go forward guidance.<\/p>\n<p>Jason:<br \/>[42:35] And I I do think that\u2019s an interesting note for for all of us that you know the next 6 months of this year. Have a lot more uncertainty than I think some of us us realize and you know it could go in a bunch of different directions it\u2019s going to be really interesting.<\/p>\n<p>Scot:<br \/>[42:50] Yeah so we will be here reporting on it at the Jason\u2019s gotcha.<\/p>\n<p>Jason:<br \/>[42:55] And hopefully that added some value for you and if it did we sure would appreciate it if you jump on iTunes and leave us that 5-star review regular listeners will know, that the Amazon earnings calls are Scott\u2019s second favorite episode of the Year second only to May 4th episode. But that is all the time we have for today we finished a little early so you\u2019re all welcome and until next time happy commercing!<\/p>\n<\/div>\n<p><p><a href=\"https:\/\/dmsretail.com\/online-workshops-list\/\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-496\" src=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\" alt=\"Retail Online Training\" width=\"729\" height=\"91\" srcset=\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png 729w, https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90-300x37.png 300w\" sizes=\"auto, (max-width: 729px) 100vw, 729px\" \/><\/a><\/p><br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A weekly podcast with the latest e-commerce news and events. Episode 329 is an evaluation of Amazon Q2 2025 earnings report. Subscribe: ????? 0:38\u00a0 Welcome […]<\/p>\n","protected":false},"author":1,"featured_media":1121,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-15769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcasts"],"_links":{"self":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/comments?post=15769"}],"version-history":[{"count":0,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/15769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media\/1121"}],"wp:attachment":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media?parent=15769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/categories?post=15769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/tags?post=15769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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