Amazon announced their Q2 earnings, and the big story is that they posted their largest quarterly profit ($2.5B)…ever. Wall street is happy, as they’ve now been profitable for 13 straight quarters – thanks in large part to their ad business (growing at 100% Y/Y), AWS, and the “squeeze” they’ve been putting on all of you, manufacturers. (Keep that in mind when they ask for terms improvements this fall!) External hiring has slowed, as they have consolidated their Retail and Third-Party teams and are filling open roles with internal transfers. They also indicated a slowdown in fulfillment center expansion, signaling growth fueled by third-party sales. Expect greater integration and consolidation across the retail and third-party platforms, teams, and strategy and increased reliance on third-party for inventory (see “Word on the Street” below).
Amazon acquired the online pharmacy, Pillpack, for just under $1B. In addition to prescription pharma being a robust, $450B/year business opportunity, this move will also enable Amazon to steal repeat foot traffic from the Walgreens, Rite Aid, and CVSs of the world…driving down the value of these retailers and making them prime potential future acquisitions. Each drugstore chain represents a large number of small-format, potential pick-up points for grocery products and/or AmazonGo stores. This will also give them a ready market for new private label products typically sold at pharmacies, which they’ve already begun developing. And you can bet there will be some special prescription service for Prime customers . . .