Behind the Numbers: An EMARKETER Podcast

Episode: Amazon’s ‘Buy for Me’ and Smart CTV Ads Could Drive Growth — If Tariffs Don’t Get in the Way
Release Date: May 23, 2025
Host: Marcus Lu
Guests: Rachel Wolf (Retail Analyst, New York), Jeremy Gordon (Senior Director of Briefings, New York)

Introduction and Overview

In this episode of Behind the Numbers, host Marcus Lu engages with retail analyst Rachel Wolf and senior director Jeremy Gordon to delve into Amazon's latest strategic initiatives, including the innovative “Buy for Me” feature and new Connected TV (CTV) advertising formats. The discussion also covers the impact of tariffs on Amazon's operations and its broader implications for the retail and advertising landscape.

Amazon’s Financial Performance and Strategic Guidance (00:00 - 07:43)

Financial Highlights:

• Amazon reported $156 billion in revenue for Q1, marking a 9% year-over-year increase.
• Online store net sales grew by 5%, a slowdown from the previous quarter’s 7% growth.

Key Insights:

• Rachel Wolf emphasizes the uncertainty in Amazon’s profit guidance, noting a wide profit range of $13 billion to $17.5 billion for the next quarter, indicating potential fluctuations between a 19% gain and an 11.6% decline (04:27).

  “They gave a huge range for profits in the next quarter between $13 billion and $17.5 billion. That’s basically they think it’s either going to gain 19% year on year or fall by 11.6%.” – Rachel Wolf (04:26)

• Marcus highlights varying forecasts for ad spending, suggesting a possible growth of 7-8% or a flat/slight decline, reflecting broader economic uncertainties (05:30).

• Jeremy Gordon underscores Amazon’s growth levers, including cloud and advertising revenues, which could help mitigate broader economic challenges:

  “If you look to see like cloud revenues going up 17%, advertising revenues … going up 18%, … it gives me like a bit more of an optimistic hope that their Q2 is going to be able to fight against like some of these issues.” – Jeremy Gordon (05:53)

Operational Advantages:

• Rachel points out Amazon’s competitive strengths, such as fast shipping, Prime membership benefits, and strategic sales events like the extended Prime Day, which bolster customer loyalty and spending (07:10).

  “They have their fast shipping, they have Prime. … it’s a pretty hefty advantage over everybody else.” – Rachel Wolf (07:10)

• Investment in rural delivery infrastructure, with Amazon committing around $2 billion over two years to enhance delivery capabilities, aims to increase convenience and customer dependence on Amazon’s services (07:43).

Expanding Amazon’s Advertising Footprint with CTV Ads (07:43 - 10:24)

Ad Revenue Growth:

• Amazon’s advertising revenue grew by 18% in Q1, contributing nearly 10% to the company's total business.
• Amazon is positioning its CTV ad offerings to rival industry leaders like Roku, with Prime Video Ads anticipated to grow by 56% this year (09:00).

New CTV Ad Formats:

1. Contextually Relevant Pause Ads: Ads displayed during natural pause points in streaming content.
2. Interactive Cart Addition: Viewers can add products to their Amazon cart directly from the ad playing on their streaming device.
3. Send to Phone Button: Allows users to receive more information or reminders about products on their mobile devices for later consideration.

Impact and Potential:

• Jeremy believes the interactive nature of these ads bridges the gap between advertising and commerce, enhancing conversion rates and data collection for more targeted future ads:

  “Getting people used to converting, basically, and bridging the gap between what's advertising and what's commerce. … Amazon can monetize more.” – Jeremy Gordon (09:45)

• Rachel is intrigued by Amazon’s efforts to attract brands outside its marketplace to invest in advertising, enhancing Amazon’s positioning as the “everything store”:

  “Amazon is sort of rethinking the entire E-commerce experience to become that everything store.” – Rachel Wolf (10:24)

Introducing Amazon’s “Buy for Me” Feature (10:24 - 14:29)

Feature Overview:

• “Buy for Me” is an AI-driven feature within Amazon’s mobile app that allows users to purchase products directly from brand websites when Amazon does not stock them.
• Shoppers can request Amazon to complete the purchase, receiving order confirmations from the respective brands while tracking these purchases within Amazon’s app.

Guest Insights:

• Jeremy views “Buy for Me” as a strategic move to reinforce Amazon’s role as the go-to shopping destination by enhancing customer convenience and data collection:

  “It’s an amazing CX move from Amazon. … time will tell. It’s not going to change the e-commerce landscape overnight.” – Jeremy Gordon (12:38)

• Rachel anticipates slow initial adoption due to consumer hesitancy in delegating purchase authority to AI but acknowledges the potential for Amazon to solidify its position as the primary shopping hub:

  “Adoption is going to be limited at first, … but it fully plays into Amazon being the everything store.” – Rachel Wolf (13:57)

• Marcus references research indicating strong consumer interest in agentic AI for purchasing, with two-thirds interested in AI making purchases at target prices, highlighting market readiness despite slow adoption rates.

Diversification and Tariff Challenges (14:29 - 19:04)

Business Diversification:

• Amazon has successfully diversified its revenue streams, with AWS accounting for nearly 20% and advertising close to 10% of its business. This shift from relying solely on online store sales (now 37% down from 50% three years ago) provides financial resilience against sector-specific downturns.

Impact of Tariffs:

• Rachel discusses the uncertainty surrounding Amazon’s exposure to tariffs, particularly those imposed on Chinese goods. With over half of Amazon’s sellers and approximately 30% of its direct-sold products sourced from China, increased tariffs are likely to raise product costs, potentially reducing consumer spending:

  “If prices go up, will shoppers buy less? … sellers might allocate less budget toward Amazon’s fulfillment services or advertising.” – Rachel Wolf (16:03)

• Jeremy adds that supply chain vulnerabilities extend beyond Chinese suppliers, affecting raw material costs globally, which could further strain Amazon’s profitability and advertising growth.

Regulatory Scrutiny:

• Amazon faces heightened government attention due to its size and influence. Rachel notes that publicized interactions with the White House highlight the complexities retailers face in communicating price increases without drawing regulatory backlash:

  “Retailers are trying to communicate those price increases … pointing to tariffs at the cause, but more circumspectly due to potential scrutiny.” – Rachel Wolf (18:18)

Market Positioning:

• Marcus emphasizes Amazon’s dominance in online shopping, capturing 40% of the market in America, yet constituting less than 4% of total retail, illustrating its concentrated influence:

  “Amazon accounts for 40% of online shopping in America, but less than 4% of total retail.” – Marcus Lu (19:04)

Conclusion and Final Thoughts (19:04 - End)

Marcus wraps up the episode by highlighting Amazon’s strategic initiatives aimed at reinforcing its market dominance through innovative AI features and expanding ad capabilities. Despite facing challenges from tariffs and regulatory scrutiny, Amazon’s diversified revenue streams and robust infrastructure position it well for sustained growth. The guests agree that while some initiatives like “Buy for Me” are still in early stages, Amazon’s comprehensive approach to integrating shopping and advertising could significantly influence the future of e-commerce and digital marketing.

Notable Closing Remarks:

• Rachel Wolf: Emphasizes the importance of Amazon’s evolving role as the central hub for consumer needs.
• Jeremy Gordon: Highlights the potential long-term impact of Amazon’s integrated advertising and commerce strategies.

“Amazon is where people start their shopping searches … they're the place people go.” – Marcus Lu (19:04)

Key Takeaways

• Amazon’s Financial Health: Steady revenue growth with cautious profit guidance amidst economic uncertainties.
• Advertising Growth: Significant investment in CTV ad formats positions Amazon as a major player in digital advertising.
• Innovative Features: The “Buy for Me” AI feature aims to enhance customer convenience and expand Amazon’s e-commerce ecosystem.
• Tariff Impacts: Rising tariffs on Chinese goods present challenges, potentially affecting pricing and seller revenues.
• Market Dominance and Diversification: Amazon’s diversification into AWS and advertising mitigates reliance on online store sales, ensuring financial resilience.
• Regulatory Environment: Increased government scrutiny necessitates careful communication of price changes and cost impacts.

This comprehensive analysis provides valuable insights into Amazon’s current strategies and future prospects, offering marketers, retailers, and advertisers a nuanced understanding of one of the industry's most influential players.