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Marcus Johnson: Hey, gang. It's Friday, August 14th. Marissa, Rachel, and listeners, welcome to Behind the Numbers: An eMarketer Podcast, made possible by AWIN. I'm Marcus. And joining me for today's conversation we have two people. Uh, one of them is currently in Ohio. Um, we're on different, uh, sides of Cleveland, but we're in the, technically in the same city at the moment, but soon to be Boston-based newsletter analyst, Marissa Jones.

Marisa Jones: Hi, Marcus. Thank you for having me.

Marcus Johnson: Hello there. Of course. You mean to Cleveland?

Marisa Jones: Yes.

Marcus Johnson: I didn't, I didn't ... I'm not the mayor of Cleveland. Although I'd love to be the mayor of Cleveland. You could

Marisa Jones: be.

Marcus Johnson: I would invite the world. It's the ... I love it here. Uh, also joined by our retail analyst, uh, still in New York, but visited Ohio a decade ago, Rachel Wolf.

Rachel Wolff: I feel called out right now.

Marcus Johnson: Yeah, you should. Where have you been? Uh, today's fact.

Marcus Johnson: Okay, you can't outrun a T-Rex, so Jurassic Park is nonsense. It's also a movie, so it's not like it's a documentary. But for humans, a short sprint is, like, 12, 13, 14 miles an hour. T-Rex is faster. It's not much faster, it's a few miles per hour faster, so they will run you down eventually, and they have bigger lungs.

Marcus Johnson: But they've got more mass, which is why they can't run faster- Mm-hmm ... is 'cause it's a lot on their joints. So-

Rachel Wolff: So you're saying the odds are, like, 50/50- ... if you could run for a long time- ... if you could, you know, survive a T-Rex attack?

Marcus Johnson: If you run, then you c- like, if you're a runner, you'll be okay.

Rachel Wolff: Okay.

Marcus Johnson: If you're not, which is most people, you're not fine.

Marcus Johnson: What I do know is that if you're in a Jeep, Jurassic Park, you'll be able to easily outrun a T-Rex. There should be none of this, "Ah, speed up, he's right behind us." No, you'll be fine 'cause Jeeps can go typically 60 miles per hour, or in Jurassic Park, 15.

Rachel Wolff: I feel like Steven Spielberg has been getting a lot of angry letters from Marcus on this subject.

Marcus Johnson: Maybe. Did he mention? Uh, what, what is also true is the T-Rex lived closer in time to humans than the Stegosaurus, the ones with the, for the video people- Yeah ...

Marisa Jones: these on their back.

Marcus Johnson: That's my Stegosaurus. Uh, if you're watching, hopefully you're not. You're probably not. You didn't miss anything. Uh, they were extinct for about 80 million years before the T-Rex.

Rachel Wolff: Wow. That's another thing

Marcus Johnson: that Jurassic

Rachel Wolff: Park

Marisa Jones: gets wrong. Lucky

Marcus Johnson: devils. That, didn't they? Yeah. Exactly. I'll write him another. Anyway, today's real topic, the big three questions surrounding Amazon.

Marcus Johnson: Should be surrounded Jurassic Park.

Marisa Jones: Yep.

Marcus Johnson: All right, let's set the table first. Q2 2026, how did Amazon do? They made over $200 billion in total revenue. It's the second time they've ever done that in a single quarter. First time was Q4 2025. That 200 billion was up 20% year over year, faster than last Q2, uh, which was 13%.

Marcus Johnson: Online net store sales, that's the largest slice of its money, 35% share. That grew 15%, faster than 11 last Q2. And ad revenue, a line item that is being closely watched as it continues to grow. It's about 10% of its earnings, growing 26% in Q2, the fastest quarterly growth since Q4 2023. So that also did well.

Marcus Johnson: We're here to talk about the thr- big three questions surrounding Amazon at the moment, uh, and we'll start with Rachel. What's one of yours?

Rachel Wolff: So one of my big questions, and this is not just because I wrote about this for the briefing yesterday, but, um-

Marcus Johnson: Oh ...

Rachel Wolff: shameless plug.

Marcus Johnson: How convenient. Took some work she did yesterday.

Marcus Johnson: I know. Recycled material. Go ahead. All

Rachel Wolff: right. Um, so my big question is, you know, can Amazon keep its grocery momentum going? Because that was really- Mm ... a focus I felt of its Q2 earnings, where the- Amazon talked a lot about how their new same-day perishables offering is really juicing e-commerce growth.

Rachel Wolff: It's getting people to order more often and order more. Um, and I think the question for Amazon is, you know, what other levers can you pull to really get people to come to Amazon as their primary grocery retailer of choice?

Marcus Johnson: Mm-hmm. I like this one. I had a similar one, and it was- Inspired by Zach. So Zach Stambor, he is, uh, one of our retail analysts, and he was noting Amazon appears poised to surpass Costco as the second-largest US consumer packaged goods retailer.

Marcus Johnson: Um, folks can see from this chart on the screen, uh, they now have a, a 8.1% share of US consumer packaged goods, um, that is on the precipice of overtaking Costco. Um, and because they've been growing quite, quite fast, uh, my question, uh, was, um, what can Amazon do to accelerate its share of CPG dollars to threaten that of Walmart?

Marcus Johnson: Walmart is 21%. Amazon Whole Foods, as I mentioned, is ei- 8.1. Costco is 8.2. Zach explaining Amazon's push to add perishables to same-day deliveries last year, along with the platform's vast selection, comp- competitive pricing, the vast delivery speeds-- Sorry, fast delivery speeds, they're vast too, has driven consumers to adjust their shopping habits, enabling it to take more routine purchases from traditional brick-and-mortar retailers.

Rachel Wolff: Yeah, I mean, Amazon said that fresh groceries are now six out of the top 20 best-selling products on Amazon's website. Mm. Um, but I think, you know, the other key to this is that it's not just the e-commerce business. They're also accelerating Whole Foods, which, you know, this may be, again, sort of personal bias, not-- They're opening another one of these Whole Foods, uh, Daily Shops, which are like these smaller format, you know, groceries that are better suited to urban areas, and I feel like that is a really big focus of Amazon's

Rachel Wolff: brick-and-mortar- Yeah ... um, strategy going forward, and I would be curious to see how quickly they decide to scale this up.

Marcus Johnson: Yeah, it's a line item I continue to keep an eye on because it just keeps going down- ... and down. Physical store, uh, net sales, uh, it's 3%. I guess it's been 3% of the business for a while.

Marcus Johnson: Quarter to quarter it, it kind of changes obviously. But yeah, for the last three, four, five, six, basically six years, um, it's been about 3% of the business, and you're just waiting for that moment when they turn on the taps with a store format that really, um, just hits the nail on the head. Still waiting, but maybe this is the one.

Marcus Johnson: Um, Marisa, what do you have?

Marisa Jones: Okay. Um, so my first question for the day, um, is, is Prime Video becoming a true premium ad opportunity for Amazon in its own right, or is it still being treated as an added bonus around Amazon's core shopping ecosystem? Uh, this is something they didn't really touch on too much in earnings.

Marisa Jones: They don't break out, uh, Prime Video ad revenue specifically. Our own forecast shows them growing pretty fast, over 21% in this year, which would be about 3.1 billion. But I think the obvious caveat there is that's a very small portion of Amazon's total US ad revenues, which we forecast being over 57 billion this year.

Marisa Jones: Mm-hmm. And it's also well below Amazon's display and search ad revenues.

Rachel Wolff: Mm-hmm.

Marisa Jones: Uh, so kind of just I'm curious on is Prime Video going to be mostly a complement to Amazon's broader retail ecosystem that drives most of its value? But Amazon simultaneously kind of seems to be pushing it as a profit center in its own right, introducing tools that are geared toward Prime Video advertising, uh, like their dynamic creative, uh, dynamic TV creative tool.

Marisa Jones: But even that resource is reliant on Amazon's browsing and shopping data, along with Prime Video activity and other data from that to tailor details to specific viewers. So- Mm-hmm ... I wanna know if Prime Video will ever really command the pricing and demand and advertiser interest as other premium streaming inventory does.

Rachel Wolff: Mm. I think that's a really interesting question for Amazon especially. I mean, if you think about how much money they're spending on, like, sports for example- Yeah ... and all these sports rights, that you would think would help get, you know, advertisers that don't sell on its platform to decide to spend. But as you say, it seems like, you know, that maybe isn't enough, so what else can Amazon do in that scenario?

Marcus Johnson: Mm-hmm.

Marisa Jones: Yeah.

Marcus Johnson: Uh, fast-forward- Two y- I say two years, Marissa. What, what do you think happens?

Marisa Jones: I think Amazon's gonna really be kind of in a similar place. I- Mm ... don't doubt that they're going to keep pushing Prime Video and Prime Video solutions, um, and ad tools geared toward Prime Video. But I think for Amazon to not be as reliant on its retail business or for Prime Video not to essentially be appealing because it leverages all the shopper data- Mm-hmm

Marisa Jones: Amazon has, I don't know that that's a realistic possibility in the next couple of years.

Marcus Johnson: Yeah. Yeah, I think that's fair. Uh, very good. Rachel, back to you.

Rachel Wolff: Okay Um, so I'm gonna shift gears to AI a little bit. And so, um, my question is-

Marcus Johnson: I said that like I was a news anchor, didn't I?

Rachel Wolff: Rachel, back to you in the studio.

Rachel Wolff: Feel like the weather behind me, you know. With Marcus Johnson. There's a storm coming in. Yeah. Cold front.

Marcus Johnson: Production crew, if you could put some of that graphic behind me- ... that'd be great. Rachel, back to you in

Rachel Wolff: the studio. Back to me. Okay. Um, so my question, are Amazon's AI tools gaining traction with consumers, advertisers, and enterprise clients to a certain extent?

Rachel Wolff: You know, obviously AWS was a big focus of, um, the earnings this time around with, you know- Mm-hmm ... incredible, I think growth was nearly se- 37%.

Marcus Johnson: Yes.

Rachel Wolff: But I think going beyond that and looking at, you know, are consumers using Alexa for shopping, formerly known as Rufus? Are they using Amazon's ads agent, these types of tools?

Rachel Wolff: And it seems like they are. Amazon said over 350 million people have used Alexa for shopping in the past 12 months. Um, and y- in the US, customers who use Alexa for shopping spend an average of 40% more per order than those that don't. Those that try Alexa Plus are signing up for Prime at nearly 25% higher rates.

Rachel Wolff: So I think it's really interesting to see how these tools are accelerating Amazon's business in multiple ways. Mm-hmm. And on the ad side, they say advertisers using ads agents, um, targeting see 8% lower CPI, 6% lower cost per acquisition. So all of these tools are really unlocking benefits for both customers and advertisers, and it'd be interesting to see what new features they decide to add over time to get people, advertisers to engage with these tools more.

Marcus Johnson: Mm-hmm.

Marisa Jones: Mm-hmm. Yeah, please. I also am, sorry, I also- No ... am interested in, I had a similar question, kind of focusing on Amazon's AI strategy and where it goes. Um, I'm really interested in, like, the tools they have for creating ads based on product images and kind of making their own AI visuals. Just kind of, one, where that goes when consumer sentiment is still very shaky on, um, AI being used to create ads.

Marisa Jones: And two, how effective it is compared with its competitors' tools. Like Meta has the same, or essentially the same thing. You can create an ad using Meta's tools. Um, a lot of their competitors already have these, so I wonder how Amazon differentiates itself.

Marcus Johnson: Mm-hmm.

Rachel Wolff: But I wonder if it's also- Yeah ... because if you think about the types of advertisers on Amazon, right, these are mostly small merchants.

Rachel Wolff: They probably don't- Mm-hmm ... have the resources to hire a creative team, and, and using AI is really a great way to get your advertising to scale quickly on a budget.

Marisa Jones: Yeah.

Rachel Wolff: So I think in that sense, Amazon kind of has an advantage there in that it k- kind of does already have a built-in advertiser base with, you know, strong demand for these types of tools.

Rachel Wolff: Mm-hmm. But the other part of the AI piece that I'm interested in is, like, advertising within, say, Alexa for shopping, right? And how that might change how consumers perceive those types of results because, you know, versus you were saying, like, the trust issue of can you trust a result that comes from Alexa shopping, for shopping if there's an ad attached to it?

Rachel Wolff: Does that affect how you see the, uh, assistant's output? And I think this is something that is gonna be a focus for Amazon as well as companies like Google that are leading into this as well.

Marcus Johnson: Mm-hmm. Mm-hmm. Zach, uh, writing about this story, Amazon unifying Alexa Plus and Rufus under the Alexa for Shopping brands.

Marcus Johnson: Uh, Rachel, how much do you think this is gonna, uh, increase adoption?

Rachel Wolff: I-

Marcus Johnson: If at all ...

Rachel Wolff: don't know that it would necessarily increase adoption. I feel like if you're already using Rufus, or like if you were already the type of person to be interested in, in AI shopping and AI recommendations, you're probably already- Mm-hmm

Rachel Wolff: interacting with Rufus in some way. But I think- Okay ... what Amazon is doing well is that it's really just sort of integrating Alexa into the normal experience of shopping on Amazon, right? Like, when you go to the search bar, you will get results from Alexa for shopping that just pop up, and I think more and more- Right

Rachel Wolff: that's becoming embedded into the experience. And so that's probably one reason why so many people have been interacting with it, because it's just kind of hard to ignore.

Marcus Johnson: Going back to the AWS thing you mentioned, that was one of mine. Will AWS account for a quarter of Amazon's whole business by 2027?

Marcus Johnson: So the reason I was wondering this is because last Q2 2025, it was AWS was 18% of its entire business. This Q2 it was 21% of its entire business, and so back of the napkin, just a easy extrapolation into Q2 2027, you could have 24%. And it is easy to see it getting there or beyond. I would actually guess, if you ask me right now, I'd probably say closer to 25, 26% because its growth isn't slowing down.

Marcus Johnson: It's not coming down like a slide, it's actually going up. It's been accelerating, uh, each of the last five or six quarters. The growth going back has been every, uh, the last six quarters has been 16%, 17, 20, 23, 28, and then that 37 that Rachel mentioned, so it's been getting faster and faster. That 37% growth, the fastest quarterly growth for AWS in nearly five years.

Marcus Johnson: So-

Rachel Wolff: Yeah, I think

Marcus Johnson: it's- ... I think that could be-

Rachel Wolff: Yeah ...

Marcus Johnson: huge. Please.

Rachel Wolff: It's an interesting, well, trajectory, right? And one thing that Amazon- Mm-hmm ... said on its earning call that I thought was interesting was that one of the reasons that AWS growth has accelerated, especially with, you know, AI adoption, is that a lot of enterprise clients are already using AWS for other functions within their businesses.

Rachel Wolff: And so when you're thinking about scaling these AI initiatives, it just becomes easier to work with the tools you already have, which in many cases is already AWS. Mm-hmm. So I think the limiting factor will be, you know, at what point do companies decide, you know, to pull the brakes a little bit on those AI expenditures and to focus on getting results from their existing AI experiments as opposed to spending money on s- like, more moonshot initiatives that may have- Mm

Rachel Wolff: you know, limited ROI in the short term.

Marcus Johnson: All right, I have one more for you guys. Will rival retailers put a stake in the ground when it comes to their own shopping holidays? And so what I mean by this is Amazon has been moving around its shopping holidays year to year. Sometimes it's the similar or the same, sometimes it's not.

Marcus Johnson: It w- do- doesn't just jump month, but jumps quarters. Um, and so, uh, Rachel, you were mentioning before, um, that, that one of the significant things about this, uh, earnings is that Prime is in this earnings, uh, unlike last year, and so, uh, that's worth note, uh, noting. But I'm wondering whether, um, Amazon's ... So Amazon is earlier than usual Prime Day.

Marcus Johnson: It was June 23rd to 26th. Target's Circle Deal Days was the same timeframe. Walmart's, uh, summer deals overlapped. It was 22nd of June to the 28th. Dollar General had, uh, Star Stripes and Savings promotion. That was June. Um- Our Karen Jacobs was saying they're doing this because by timing the deals around Amazon's event, chains can drive traffic and give consumers opportunities to compare promotions.

Marcus Johnson: However, I do wonder how, uh, frustrating it's gotta be for them waiting for Amazon to decide when Prime Day's gonna be and then having to scramble last minute. Rachel, do you think it makes sense for Am- for these rivals to put a stake in the ground and say, "This is when our shopping holiday's gonna be, and we don't really care when Amazon does theirs"?

Rachel Wolff: I think in an ideal wor- world for these retailers, they would love that to be the case. But I think the reality is that Prime Day just has so much awareness and marketing spend that's already around the event that it makes sense for Walmart and Target and all these retailers to just sort of piggyback off of that.

Marisa Jones: Okay.

Rachel Wolff: Um, the question would be, like, could they find, can they find another time in the calendar to have their own event that maybe draws- Mm-hmm ... a similar level of attention? I know it's possible. I mean, if you look at China, right, you have two big holidays, Singles Day and 618, both of which are essentially shopping holidays created by the two largest retailers in China.

Rachel Wolff: So it's not out of the realm of possibility that Walmart may decide that, I don't know, April 7th is the new, uh, the new Walmart day.

Marcus Johnson: Mm-hmm.

Rachel Wolff: But I think for the time being it makes more sense to, to ride Prime Day's coattails.

Marcus Johnson: Okay. Um, all right. That's the last one I had. Let's pick a top three. Um, Marissa, which one do you wanna choose?

Marisa Jones: I'm gonna go with Rachel's first on Amazon and, and Amazon's groceries and CPG, um, business, only because, one, it's a good question, and two, I don't really look into Amazon groceries that much, so it's fun to hear about.

Marcus Johnson: Okay. Very nice. Rachel?

Rachel Wolff: I'm gonna go with Marissa's question about-

Marcus Johnson: No I wanted that one.

Marcus Johnson: I knew I should've gone first. Forget that. Cut it. All right, my one. Go on.

Rachel Wolff: Um, Marissa's question about whether Prime Video can become an avenue for premium advertising spending.

Marcus Johnson: Great.

Rachel Wolff: All right, Marcus.

Marcus Johnson: I don't wanna talk about it.

Marisa Jones: You can also say it, and then I'm just the winner.

Marcus Johnson: You are the winner. Um, and not just because you're also in Ohio.

Marcus Johnson: Uh-

Rachel Wolff: Oh.

Marcus Johnson: I will pick, I, I think the AWS story is really interesting. Yeah. Um, for them to be growing that business as fast as they have, and if I was kinda looking back, um, it's been a significant part for a, for a while. Um, if you go back to basically around the pandemic, it's always been about 12, 13% of their business.

Marcus Johnson: But the fact that it's now 21% and, and this, like, trajectory, um, to use your words, uh, Rachel, that it's on, that it could become a quarter or more, close- you know, closing in on a third of its business by 2030, I think is really significant, so I like that one. Um, all right. That's all we've got time for today's episode.

Marcus Johnson: Thank you so much to my guests for hanging out with me today. Uh, that's our top three most interesting, uh, questions surrounding Amazon, uh, list. Um, thank you so much to my guests for helping me put it together. Thank you first to Marissa.

Marisa Jones: Thank you for having me again.

Marcus Johnson: Of course. Thank you second to Rachel.

Rachel Wolff: Thank you, despite the anti or pro-Ohio- ... slant on this episode.

Marcus Johnson: Maybe. Uh, thanks to the production crew, Danny, Lance, and Mike. Uh, not really Danny, he left already. Lazy. Uh, but thank you so much to everyone who listened to my Numbers Need Marketing podcast. Subscribe and follow to hear about new episodes, and I hope to see you on Monday when we will be discussing the audio giant Spotify.

Marcus Johnson: Until then, happiest of weekends.