[00:00:00] Marcus Johnson: Hey gang, it's Friday, May 15th. Marissa, Suzy, and listeners, welcome to Behind the Numbers, New Markets podcast. I'm Marcus. And joining me for today's conversation, we have two New York people, or at least they live there, uh, newsletter analyst and writer, Marisa Jones joins the show.

[00:00:22] Marisa Jones: Hi, thank you for having me.

[00:00:23] Marcus Johnson: Why, of course, of course. We're also joined by VP of content and host of our Reimagining Retail show, Suzy Davidkhanian.

[00:00:31] Suzy Davidkhanian: Thanks for having me.

[00:00:32] Marcus Johnson: Welcome, welcome. Uh, we start of course with the fact of the day.

[00:00:42] Marcus Johnson: Okay.

[00:00:46] Marcus Johnson: What's wrong, Su- Suzy?

[00:00:48] Suzy Davidkhanian: I'm just, my palms are sweaty. I'm waiting to see... Plus, I would like my window to be open, but- ... I know there's too much noise in New York.

[00:00:56] Marcus Johnson: All right. Here's my fact. Where did the phrase mad as a hatter

[00:01:01] Suzy Davidkhanian: come from? Mad as a what?

[00:01:05] Marcus Johnson: Mad as a hatter. Have you heard of this before?

[00:01:09] Suzy Davidkhanian: You

[00:01:09] Marcus Johnson: have? No, Alice, you- you've not heard of this before?

[00:01:11] Marcus Johnson: Marissa has. Have you heard of this?

[00:01:13] Suzy Davidkhanian: I have. I have not, but in Canada, which I don't know if this is where you're going, we used to have a birthday party place called the Mad Hatter, and it was like a kids' sort of like fun land. Yeah.

[00:01:22] Marcus Johnson: Well, so there's the character from Alice in Wonderland called the Mad Hatter.

[00:01:25] Marcus Johnson: Yeah. But there's the phrase, mad as a hatter. You know, they're mad as a hatter. And so, it originated- Oh ... in the a- in the 18th and 19th centuries, uh, due to mercury p- due to mercury poisoning among hat makers, and they were called hatters. Oh. They used mercury nitrate to turn fur into felt, and chronic exposure caused, uh, tremors, speech issues, and hallucinations leading to irrational behavior, often interpreted as insanity.

[00:02:01] Marcus Johnson: That's where it came from.

[00:02:02] Suzy Davidkhanian: Is, is this where I ask h- what does it have to do with me?

[00:02:05] Marcus Johnson: Had to... What are you, what are you talking about?

[00:02:07] Suzy Davidkhanian: Leading in, you were like, "This one's for you."

[00:02:09] Marcus Johnson: I know.

[00:02:11] Marcus Johnson: I never said that. I said... I might have said that. I said, I think you... I said, "You're gonna like this one 'cause it's interesting."

[00:02:17] Marcus Johnson: Isn't that what I said?

[00:02:18] Suzy Davidkhanian: Yeah, it is. Uh, yeah, okay. Yeah. That's probably

[00:02:20] Marcus Johnson: what it was. Yeah. Uh, this happened- I thought you were going

[00:02:22] Suzy Davidkhanian: with sushi and mercury poisoning.

[00:02:25] Marcus Johnson: Sushi?

[00:02:25] Suzy Davidkhanian: Yeah. Too much tuna. That gives

[00:02:27] Marcus Johnson: you... Oh, oh.

[00:02:29] Suzy Davidkhanian: Mm.

[00:02:30] Marcus Johnson: No, hat making. Uh, this happened long before Lewis Carroll popularized the character, the Mad Hatter, in Alice's Adventures in Wonderland, which published in 1865.

[00:02:42] Suzy Davidkhanian: Oh, wow.

[00:02:43] Marcus Johnson: Well, anyway, that's where the term mad as a hatter comes from.

[00:02:48] Marisa Jones: Marissa, had you actually heard that expression before? Yeah, I had. Oh. But I thought it was just from Alice in Wonderland. Mm. So I learned something new today, but I have heard it. Yeah.

[00:02:57] Suzy Davidkhanian: I'm, I'm going with I'm from Canada. I'm gonna use that.

[00:03:03] Marcus Johnson: Today's real topic, the big three questions surrounding Amazon.

[00:03:11] Marcus Johnson: All right, we set the table first. How have they been doing? Well, in Q1 2026, Amazon made 180, $180 billion in total revenue. That's a lot. It's up 17% year over year. It's double last Q1's growth. Uh, online net store sales, that's its largest slice. Uh, but it's down to 35% share of the total, but it did grow.

[00:03:35] Marcus Johnson: Down in terms of the share shrunk, but it's still growing as a line item. It grew 12%, also double last Q1. AWS is now a 20% slice of the total revenue. That grew 28% in the quarter, the fastest in nearly four years. And ad revenue was close to 10% of its earnings, 10% slice. That grew 24%, the fastest quarterly growth in two years.

[00:03:59] Marcus Johnson: But we're here to talk about three big questions surrounding Amazon. Marissa, what is top of mind for you?

[00:04:06] Marisa Jones: Okay. So my first big question is we're seeing Amazon's ad revenues are growing consistently at a double-digit pace according, one, to their earnings, but also to our forecasts that track their yearly ad revenues.

[00:04:19] Marisa Jones: So we're seeing it, them growing at a double pace, but the overall volume of these ad revenues is still very much notably behind Amazon's two biggest triopoly competitors, Google and Meta. So my question is what would it really take for Amazon to actually close that gap or come much closer to closing that gap?

[00:04:40] Marcus Johnson: To closing the gap of?

[00:04:42] Marisa Jones: Of between, uh, Meta and Google in ad revenue volume.

[00:04:47] Marcus Johnson: Oh, okay. In terms of like they're part of the triopoly, but could they start to threaten Google?

[00:04:54] Suzy Davidkhanian: Yes.

[00:04:55] Marcus Johnson: Which is now, I guess, in second place, but I mean, it's close.

[00:04:59] Speaker 6: Mm-hmm. Uh,

[00:04:59] Marcus Johnson: well, in terms of net at least. Um, yeah, growing pretty healthy double digits, right?

[00:05:05] Marcus Johnson: Yes. 18% this year for ad revenues in the US, 17 next year, dropping to close to a 14% the year after that. Um, what do they have to do?

[00:05:17] Suzy Davidkhanian: Well, it's hard.

[00:05:18] Marcus Johnson: Why is this... Go, go, Susie, please.

[00:05:19] Suzy Davidkhanian: No, no, I was just gonna say when you're already quite large- Mm-hmm ... and you're a little bit behind potentially, it's really hard, but it sounds like if they continue to grow their retail business, which is that like centerpiece that helps Prime, and if Amazon is thinking about all of the different offsite mechanisms and all the different partners, it's probably just a matter of time that they narrow the gap.

[00:05:44] Marcus Johnson: Mm-hmm.

[00:05:44] Suzy Davidkhanian: Yeah.

[00:05:45] Marcus Johnson: Marissa, why this question, why now?

[00:05:47] Marisa Jones: Um, I think this question, we've kind of been tracking this idea that Amazon is often growing at a faster rate than both of them. I believe only faster than Google, um, this quarter. I think Meta outpaced their growth. But we very much position, like, the big three tech companies, the big three ad earners, as these three.

[00:06:08] Marisa Jones: But there is still, even despite their growth, ads are only really a fraction of Amazon's overall business. But they are simultaneously making a very heavy ad push. They're coming out with AI tools to do everything for you. They're really pushing Prime Video ads. Um, they're introducing ads in their AI chatbot, Rufus, and pushing that as a high intent environment.

[00:06:30] Marisa Jones: So you can really see that they are also trying to kind of legitimize their position as not just a retail media platform, but as a sustainable source of ad growth.

[00:06:41] Speaker 6: Mm-hmm. Well,

[00:06:42] Suzy Davidkhanian: I think their partnerships with folks like Macy's, too, will probably help them grow- Mm ... and become even more, as you're saying, legitimate as an ad platform beyond- Yep

[00:06:51] Suzy Davidkhanian: their own space, uh, to help facilitate other people's buys.

[00:06:55] Marcus Johnson: Mm-hmm. Currently, so we have Meta 25% of digital ad revenue in the US. Um, Google 24%. Uh, Amazon 14. Um, but still growing. Google is, is kind of shrinking a bit. Yeah. Meta is, is ticking up. Um, but yeah, in a couple of years, Amazon capturing 15%, and that'll be, uh, compared to Google's 22.

[00:07:24] Marcus Johnson: So it's getting there.

[00:07:26] Marisa Jones: Yeah. Um- Absolutely.

[00:07:27] Marcus Johnson: Yeah. Um, it's a good one. Uh, Suzy, what'd you have for us?

[00:07:31] Suzy Davidkhanian: Can Amazon become the operating system for retail as it relates to supply chain? So think about- Mm ... the AWS-ification, but on supply side. A, like, couple of weeks ago, trying to make the dates happen in my head.

[00:07:51] Suzy Davidkhanian: A couple weeks ago, Amazon announced their newest, uh, Amazon supply chain services, which for those of you who did not hear the news, it is about end-to-end, uh, fulfillment from not just the last mile, and it's beyond their current clients or, you know, players or sellers. It's, like, way beyond. They sourced P&G, 3M as examples of who they might work with.

[00:08:16] Suzy Davidkhanian: They're adding a data AI layer, and it's really meant to be way beyond. They already had Fulfilled by Amazon. They have Buy with Prime. They have lots of different components of the fulfillment process, but this is really to get to the root of supply chain. So, you know, they've learned from their playbook.

[00:08:33] Suzy Davidkhanian: Build something inside house, AWS, figure out how to monetize it, and then start- Selling it to others, I think this one's a little harder because it's so capital intensive versus AWS. So will they be able to make money on it, or is it just a way for them to control more of retail in different ways?

[00:08:55] Marcus Johnson: Hmm.

[00:08:56] Marcus Johnson: What do you think? Do you have a take on that?

[00:08:58] Suzy Davidkhanian: I mean, I think it's very clever because the more pots of supply chain that they're in, the better it is for them. There are probably learnings that they're making, and they have different relationships that they're building with the retailers and brands.

[00:09:13] Suzy Davidkhanian: Mm-hmm. I don't know if it's sustainable, but I'm not surprised that they're trying. They're very good at do it yourself, roll it out. Oh, didn't work, let's pivot, until they- Mm-hmm ... find the right formula or just move on with their life. Anyways, they've already spent the money trying to figure it out for themselves.

[00:09:30] Marcus Johnson: Mm-hmm. Yeah. Um, very nice. Marissa, back to you. What'd you have?

[00:09:38] Marisa Jones: Another question?

[00:09:39] Marcus Johnson: Mm-hmm.

[00:09:39] Marisa Jones: Okay. Um, so my next question's kind of going back to Rufus. So could Rufus turn AI shopping assistants into one of Amazon's most valuable high intent ad services?

[00:09:51] Marcus Johnson: Oh, okay. This is close to one of the ones I have. Keep going.

[00:09:55] Marcus Johnson: Tell me, tell me more. Okay.

[00:09:56] Marisa Jones: So obviously we're seeing Amazon really kind of push ads into Rufus. There was recently a pitch deck that leaked, I think, that Adweek reported on, essentially showing Amazon making the case for Rufus ads, um, to its group of advertisers. They're really rolling them out, and they're positioning this as a point where users are actively looking for a specific product or a specific solution to a problem that they're having.

[00:10:23] Marisa Jones: Rufus can service these, and it's a very high intent environment. Amazon is saying it converts, um, shoppers... I'm sorry, it converts users into buyers pretty effectively. But how much of that is go- of Amazon's future ad business is going to be driven by Rufus and its AI powered, uh, chatbot versus what else it's doing in that?

[00:10:45] Speaker 6: Mm-hmm.

[00:10:46] Suzy Davidkhanian: It's funny, me too, I thought about this one, but luckily I have a different question. I think that it's gonna replace their on-site business, ad business, but not their offsite, and they might have even more data to strengthen the entire ad business. Yeah.

[00:11:07] Marcus Johnson: So this pivots into one of the questions I had, um, which was will customers...

[00:11:14] Marcus Johnson: 'Cause to build an ad business on it, you need people to use it, right? Um, and they are, it seems. Uh, Rufus has seen, it was saying- Uh, Rachel was writing a piece, Rachel Wolf, one of our retail analysts, um, was noting that Rufus has seen rapid adoption. Amazon noting the tool, um, was used by, um, 250 million, uh, folks in 2025, um, and pointing out that users interacting with Rufus were 60% more likely to complete a purchase.

[00:11:43] Marcus Johnson: Um, so it is being used. It is, uh, it does seem like it's, uh, effective, even though it's in kind of very early kind of, um, trial stages, it seems. Um, my question was will customers want a shopping-specific AI to help them, like a Rufus or a Sparky, or a generalist model like a ChatGPT or Gemini? So is there any thoughts there on whether...

[00:12:03] Marcus Johnson: 'Cause they're, they're building this thing, it, it kind of lives inside the Amazon world. Yeah. That's a, a lot of the time where people go to shop. But could you see people's shopping behavior kind of being pulled out of that environment and them wanting to use the same generalist tool that they use to copy edit an essay for them, or to ask them a question about, um, s- uh, something going on, uh, something to do with history, to use that same model to also buy them certain things?

[00:12:29] Suzy Davidkhanian: So, I mean, that was a lot of questions in one. I think Rufus is being pushed into people's systems. So, like, at, when you're on the app, it's like Rufus sort of kinda sometimes just pops up. So whether people- Mm-hmm ... are choosing to go there or not, they're definitely being sort of led to Rufus in many instances, and it's even for- Mm

[00:12:46] Suzy Davidkhanian: the returns process. It's for, for the entire shopping journey. So I think there, it's not a surprise that there's such an uptick. Uh, uh, the idea around do I want an LLM or do I want Rufus to purchase something for me- Mm ... is a little bit different from an assistant, right? The assistant is just helping me find the answers that I want, and then I make the ultimate decision, versus do I want an LLM to purchase something, so, like, truly autonomous agentic commerce.

[00:13:13] Suzy Davidkhanian: I don't think anybody's there yet, whether it's Rufus or not Rufus. Mm-hmm. The closest Amazon has to that is the subscription business, which is not actually... Well, it might be AI-driven on the back end, but it doesn't feel like AI on the front end, where you're like, "Every three weeks I want you to send me whatever it is that you need for your household," and it gives you the, like, little coupon for Subscribe & Save.

[00:13:33] Suzy Davidkhanian: Mm. So there are some instances of I relinquish power and you buy for me, but I don't think that's what you're asking. You're asking would someone prefer to be on Rufus or on an LLM to decide what they're gonna buy- Mm-hmm.

[00:13:44] Marcus Johnson: Yeah ... and have

[00:13:45] Suzy Davidkhanian: their own decision-making power. And I think- Yes.

[00:13:49] Marcus Johnson: Yes. Would they say to themselves, "Okay, pause."

[00:13:52] Marcus Johnson: Yeah. "I'm gonna go, uh, I need to shop. I need to go to the shopping-specific AI for that." Yes.

[00:13:57] Suzy Davidkhanian: So I think- When you are an Amazon Prime or a Walmart+ member and you are paying for your loy- they- you're paying them to be loyal to them, the chances that you go to Sparky or Amazon to repeat purchases is pretty strong.

[00:14:13] Suzy Davidkhanian: But when you're looking for something brand new or you're looking to be inspired or you're thinking about like, "It's my birthday and I want a theme," you might go to your favorite LLM and do it because then it'll be like, okay, you need party favors from Party City, which is at Staples, and you need, uh, whatever dips from this company- Mm-hmm

[00:14:33] Suzy Davidkhanian: but then you need that from that other company. So then I think an LLM will be easier. Mm-hmm. Uh, I don't know that there's a world where people are gonna choose one or the other. I think they're gonna do whatever makes their life easiest.

[00:14:43] Marcus Johnson: Yeah. Um, Rissa, what do you think? Th- th- uh, The Economist had an interesting line saying, uh, "One source of worry, uh, for the company is, is the rise of AI agents embedded in chatbots that can shop on a user's behalf.

[00:14:56] Marcus Johnson: They could threaten Amazon's core business, bypassing amazon.com or robbing it of relationships with customers and advertisers. Yet, uh, the company is better placed than its skeptics fear. Shortly after it struck a deal with OpenAI, the model maker shelved plans to launch a shopping service called Instant Checkout.

[00:15:14] Marcus Johnson: Rufus has also helped generate $12 billion in incremental annualized sales last year." So what, what are your thoughts here?

[00:15:21] Marisa Jones: Um, I think there is some interest in a shopping-specific AI tool like Rufus, mostly because it kind of feels like a normal chatbot before gen AI was really a thing. It's just an, uh, a virtual assistant.

[00:15:35] Marisa Jones: Um, I think it doesn't really feel as maybe intimidating to users who are kind of averse to AI. I think Amazon has a good benefit that everything could happen within its own ecosystem versus a platform like ChatGPT, where it can give you the recommendations, kind of lead you to the checkout, but not necessarily complete everything yet within its own ecosystem, though they are probably moving in that direction.

[00:15:59] Marisa Jones: Um, but I think for now Amazon has quite an advantage, and I don't think users would be as averse to it as they would with a different LLM. Mm-hmm.

[00:16:07] Marcus Johnson: Mm-hmm. Uh, we do have numbers on generative AI shopping users. Mm-hmm. Um, so this is using either, uh, the ChatGPT or Rufus or a Sparky or something, something like that.

[00:16:18] Marcus Johnson: We have about 80, eight-zero, million in 2026. Uh, that is about half of gen AI users and about a quarter of people in America. Um, and that's this year. It's growing probably about eight to 10 million, uh, over the next couple of, each of the next couple of years, probably, uh, six to eight million each co- the next couple of years.

[00:16:40] Marcus Johnson: Um, I have another one for you guys, which I- Mm-hmm ... I wanna throw out there 'cause I think it's related, and this one came from, um- Rachel, Rachel Wolff, who I mentioned earlier, our retail analyst, she, uh, wrote a really interesting piece, and, uh, the question that came out of it is, "Can Amazon's test of AI-generated search overviews reshape discovery?"

[00:16:58] Marcus Johnson: So AI overviews, you know them as the ones that Google has when you ty- type in something, it gives you a little summary box at the top. Um, and these apparently are coming, or this style of, um, search response is coming to, to, to Amazon. Uh, she's writing that Amazon's AI experiments, uh, could radically transform the retail search experience.

[00:17:17] Marcus Johnson: Instead of being confronted with a large array of similar-looking products, shoppers may be shown a smaller selection of items, three products, along with backup options, uh, better suited to their needs. Uh, Suzy, do you think Amazon's test of AI-generated search overviews could reshape discovery?

[00:17:33] Suzy Davidkhanian: So I think, I'm, I don't mean to hedge, but I just think it depends on the category.

[00:17:37] Suzy Davidkhanian: It does. If it's like, uh- Yeah ... an everyday household item that you're constantly buying, you probably will even skip the overviews, and you'll just go to whatever you're buying to make your life easier.

[00:17:47] Speaker 6: Mm-hmm.

[00:17:47] Suzy Davidkhanian: Uh, if you're kind of open and on the fence about the brand, you don't love the last experience that you had with that brand, I think it'll help a little bit take away, like, change discovery.

[00:17:57] Suzy Davidkhanian: But I don't think when it's something net new for you or it's something that's a trend piece or, like, clothes where you're, you know, you have a specific distinct style, certainly not in the beginning when it doesn't understand your style because it's kind of like furniture shopping, right? You can ask for a blue couch, and you can get all kinds of different things that show up.

[00:18:15] Suzy Davidkhanian: So it's like they have to refine it. Mm-hmm. And I don't think an overview's gonna be able to do that in one shot. Mm-hmm. But it is definitely, everybody, every retailer needs to take a step back and think about the impact of AI to what they're doing and whether the tools are customer-facing or not to just make sure that they are part of the change.

[00:18:34] Marcus Johnson: Yeah. Yeah, Marissa, Rachel, uh, illustrates some of the pros and, and cons of this, um, of the AI-generated search overviews for, for Amazon. On the one hand, she was saying it could deliver more curated results, helping to minimize decision paralysis and consequently, uh, increase conversions. On the other, showing fewer products means fewer advertising opportunities, uh, which could be a potential sticking point since nearly 70% of Amazon's US search ad revenues this year will come from search.

[00:19:01] Marcus Johnson: What, uh, any thoughts on these search overviews, uh, for Amazon?

[00:19:05] Marisa Jones: It kind of sparks another question, um- Mm ... that I was kind of, um, that I was considering touching on, um, which is could Rufus and this new sponsored, um, search push, I guess, diminish the power of traditional sponsored search that advertisers have relied on for so long with Amazon?

[00:19:26] Marcus Johnson: Mm. Yeah.

[00:19:27] Marisa Jones: Does that lose relevance in a heavily AI-driven environment?

[00:19:31] Marcus Johnson: Yeah. Um, Suzy, any thoughts?

[00:19:35] Suzy Davidkhanian: Well, I think, um, these AI overviews, like, are a different way of saying curation, right? And, like, you need to show me, as a shopper, you need to show me what's relevant to me in the moment that I'm ready to make the purchase, or else I'm gonna walk away.

[00:19:47] Suzy Davidkhanian: There is a lot of, and we talked about this with Roch, like, there's a lot of endless aisle. Uh, the, the bigger a marketplace is, the more stuff is on the pa- in the pages for you to try and find. Mm-hmm. The job of the folks that are programming the AI overviews or any sort of personalization, quote-unquote, hack, is to make sure that they give you enough friction so you discover new things, but not so much friction that you leave.

[00:20:13] Suzy Davidkhanian: And so I think it's like that midpoint- Mm ... of the overview will make my life easier so I don't have decision paralysis, but also give me a few more options that maybe I didn't have in mind.

[00:20:24] Speaker 6: Yeah.

[00:20:25] Suzy Davidkhanian: And I think that's just gonna take some time. The LLMs are learning about each of us as they get more information, and they're learning more about the retailers and the brands, and so all of that kind of coming together, um, will make a difference.

[00:20:38] Marcus Johnson: Mm-hmm. There's also a trust piece here, um, because it's not just a result, it's a, a result that people, um, a lot of people are becoming quite skeptical of, because these things can hallucinate, and people are nervous that they're, the results they're getting aren't just organic results, natural results, they're results that are being paid for by certain companies, um, or certain brands, certain advertisers.

[00:21:02] Marcus Johnson: Uh, this chart, folks can see on the screen, is from Bizrate Insights, uh, that I found. Um, and it noted AI-generated summaries or overviews are some of the least trusted sources for online shoppers. Um, so that's, uh, customer ratings and reviews were the highest most trusted, 71%, recommendations from friends, family in second place, customer submitted photos or videos in third, uh, and then you keep going down, and with just 15%, uh, was AI-generated summaries or overviews right there with influencer reviews.

[00:21:31] Marcus Johnson: That could be because these are outside... Like, if you had o- overviews that were out inside of Amazon, maybe they'd be a bit more trusted than the ones that they're seeing outside of Amazon, because they trust that shopping environment and that brand, um, that experience. But for now, at least, they're some of the least trusted.

[00:21:50] Marcus Johnson: I

[00:21:50] Suzy Davidkhanian: don't equate overviews with advertising, and I feel like they have to tell you. It's kind of like the sponsored ads on Amazon when you're searching.

[00:21:57] Speaker 6: Mm-hmm.

[00:21:57] Suzy Davidkhanian: It's very clear that it's paid-for advertising. What's annoying in the current search is that- Sometimes there's way more sponsored ads things before you get to the organic stuff.

[00:22:09] Suzy Davidkhanian: Mm-hmm. I, I wonder if people are mistrustful of the overviews when it comes to shopping because they had something specific in mind and that didn't show up. Or like they asked for Nike runners- Yeah ... or they asked for running shoes and expected to see Nike and that didn't show up, organic or not organic.

[00:22:25] Suzy Davidkhanian: And- Yeah ... then they're like, "Oh, if the biggest brand isn't showing up, then I don't trust it." But I just think it's the way that the product pages are on the back end that's what's showing up.

[00:22:36] Marcus Johnson: It's a great point, and this is a kind of, I, I always find this, um, conversation quite interesting, is that we notice it, but I do wonder how much people outside of our world- Mm

[00:22:46] Marcus Johnson: notice it. Um, and so it's kind of like the, right, there's the, uh, is it Meta, they, right now they label their posts sponsored. They're gonna be switching that to just ad, and there's a questions about will people notice it even less. But then there are questions about how much do people notice sponsored right now, and we know because we know how advertising works.

[00:23:05] Marcus Johnson: But how much does the average person know that this thing is sponsored, this thing isn't, this was influenced by an advertiser, this one isn't. Um, but you're right, there are labels, so yeah, maybe, maybe that is already clear. Um, do you have, Suzy, you have another one for us? I have

[00:23:21] Suzy Davidkhanian: one more. Of course it's retail related.

[00:23:24] Marcus Johnson: Sure.

[00:23:24] Suzy Davidkhanian: Is Amazon even a retailer anymore? In that it started as a bookstore, we know that. It turned into a marketplace. The marketplace turned into Prime. I might not get it in the exact order, but you know what I'm saying. Like, and then- Right ... it became AWS, and then they started selling their fulfillment services, and then they started selling, uh, definitely not in the right order, but then they started selling space on their marketplace.

[00:23:49] Suzy Davidkhanian: Originally it was their product, and then they had this three P model. Then they started doing advertising, and then they're making AI chips. Like, it's just ongoing, the list of things that they're doing that are no longer retail even. Mm-hmm. You know, they're like retail adjacent. Um, so are they a retailer?

[00:24:07] Marcus Johnson: It's a good one, and I, I struggle with this now when I'm talking about Amazon or like working on a script for them, and every time I go to say the retailer, I stop myself and say the company. Um, uh, or their anything, and then their earnings would agree with you. Uh, I look at f- I mean, quarter on quarter things fluctuates seasonality and stuff.

[00:24:29] Marcus Johnson: If you look at their full year earnings from last year, like I was saying before, online net store sales is 38% now. Uh, and that was, you know, just going back in time, uh, that was 50% in 2020.

[00:24:41] Speaker 6: Wow.

[00:24:42] Marcus Johnson: So that's already shrunk quite a lot. Uh, then they're getting 24% of theirs from, from third party s- third party seller services.

[00:24:49] Marcus Johnson: They're getting 18% from AWS. They're getting 10% from advertising. Uh, they're getting 7% from subscriptions. So it's a good question. It is a good question.

[00:24:59] Suzy Davidkhanian: I mean, for me- Retail is the underpinning, right? Yes. That's what's fueling everything- Mm-hmm ... and it's the engine that they need to have to do everything else.

[00:25:08] Suzy Davidkhanian: It's very nor- especially 2020 taught us, they were already ahead of the curve, but, like, you need to, as a retailer, you need to have other revenue streams. If you're only relying, especially on stores, or if you think about it like distribution centers were closed, like, people weren't anywhere near physical spaces to even deliver your goods to you.

[00:25:26] Suzy Davidkhanian: So clearly it's important to have more than one revenue stream.

[00:25:29] Speaker 6: Mm-hmm.

[00:25:30] Suzy Davidkhanian: Um, but it's still, I mean, it's still a big chunk of their... When you add 3P, 1P, 'cause I don't, again, consumers don't understand the difference. For them it's just re- And when we think about their business, we compare the entire marketplace- Yep

[00:25:43] Suzy Davidkhanian: regardless of who's selling, to a Target- Mm-hmm ... or a Walmart. Mm-hmm. So I think, yeah, they're kind of a retailer, but with lots of other sort of tentacles? Yeah. I don't know if that's the right word.

[00:25:53] Marcus Johnson: Uh, irons in the fire?

[00:25:55] Suzy Davidkhanian: Maybe.

[00:25:56] Marcus Johnson: Could be anything. Uh- Mad Hatters? Definitely. All right, folks, let's pick a top three.

[00:26:03] Marcus Johnson: Marissa, which of, uh, the ones that we've talked about do you wanna keep for our top three?

[00:26:08] Marisa Jones: I'm gonna keep one of mine, which is- Okay ... could Rufus turn AI shopping assistants into one of Amazon's most valuable high-intent ad services?

[00:26:16] Marcus Johnson: Susie, how about for you?

[00:26:18] Marisa Jones: So I

[00:26:19] Suzy Davidkhanian: definitely think we need a Rufus one. I, I feel like there has to be an AI big question.

[00:26:23] Suzy Davidkhanian: Okay. Um, I think if I was- Is that,

[00:26:27] Marcus Johnson: is that your choice or what, what, what's happening right now?

[00:26:29] Suzy Davidkhanian: I am, um- ... playing within the borders of the rules.

[00:26:33] Marcus Johnson: Okay, go ahead.

[00:26:34] Suzy Davidkhanian: I'm agreeing that that should be a top question.

[00:26:36] Marcus Johnson: Oh, okay.

[00:26:36] Suzy Davidkhanian: And I'm adding that- Here we go. Yeah, here we go. And I'm adding that, if I pick the top question based on relevance, it would be the supply chain.

[00:26:46] Suzy Davidkhanian: Like, are they gonna be able to be the backbone of retail supply chains based on their newest announcement? But if I'm talking about the best question from a philosophical most chatter, it would be are they still a retailer? So I don't know. I'm not sure. It's too hard.

[00:27:02] Marcus Johnson: Five minutes later, I've got nothing.

[00:27:05] Suzy Davidkhanian: The supply chain one. How about that? All right,

[00:27:06] Marcus Johnson: very good. Can Amazon be the backbone of the retail supply chain?

[00:27:10] Suzy Davidkhanian: Yeah. Okay. I mean, that wasn't the original question, but I think that's fair.

[00:27:13] Marcus Johnson: Yeah, we do already have a Rufus one, so I'm gonna- Yeah ... skip over that and go to the one that I stole basically from Rachel, um, 'cause she's smarter than me, so I'm gonna include this one.

[00:27:22] Marcus Johnson: Uh, can Amazon's test of AI-generated search overviews reshape discovery? So our top three for today, big questions, big three questions for Amazon are, could Rufus turn AI shopping assistants into one of Amazon's high... Uh, sorry, Amazon's most high-intent ad services? Um, then we had can Amazon be the backbone of the retail supply chain?

[00:27:40] Marcus Johnson: And then lastly, can Amazon's test of AI-generated search overviews reshape discovery? Uh, there are our top three for, for you today. Thank you so much to my guests for helping me put them together. Thank you first to Marissa.

[00:27:51] Suzy Davidkhanian: Thank you for having me

[00:27:53] Marcus Johnson: And of course, to Suzy

[00:27:54] Suzy Davidkhanian: Thanks so much

[00:27:55] Marcus Johnson: Yes, indeed, and to Lance on the crew today, uh, helping us with this episode, and to everyone for listening in to Behind the Numbers: The eMarketer Podcast.

[00:28:02] Marcus Johnson: Uh, keep listening to the end of these episodes to hear new outtakes and behind-the-scenes clips these guys are just learning about. We'll be back on Monday. Until then, happiest of weekends.

[00:28:12] Suzy Davidkhanian: It recorded when you said that I was amazing.

[00:28:15] Marcus Johnson: Never said you were amazing.

[00:28:16] Suzy Davidkhanian: Um, you did now.

[00:28:19] Marcus Johnson: No, I didn't.

[00:28:22] Suzy Davidkhanian: Lance is gonna cut it so it sounds like you said you're amazing.

[00:28:27] Marcus Johnson: Well, I do have a fact of the day, which is, I don't wanna say just for you.

[00:28:33] Suzy Davidkhanian: Oh, God, is it about Canada?

[00:28:36] Marcus Johnson: Shouldn't have said that. It's super offensive. Uh, no, it's not about Canada. You're safe.

[00:28:41] Suzy Davidkhanian: Oh, then I'm offended. I'm already offended.

[00:28:44] Marcus Johnson: You should be, actually.

[00:28:45] Suzy Davidkhanian: Oh, great. Perfect. I love it. All right. Here

[00:28:49] Marcus Johnson: we go.