Disappointing Q2 revenue reports and Q3 forecasts for Amazon (AMZN) may be symptomatic of a larger weakness, Volition Capital Managing Partner Larry Cheng said in an interview with Yahoo Finance Live.
“[Amazon will] be dominant in the future,” Cheng said. “However, I do think during this period their Achilles heel has emerged, and it’s the strength and the weakness being the same thing for Amazon. Their strength is that they are ‘the everything store.’ Their weakness is that they are ‘the everything store,’ and manufacturers have proliferated products into Amazon, which is confusing the consumer experience.”
As individual manufacturers have created their own spaces in the e-commerce industry, Amazon’s market share as a collection of products from these companies has been threatened. This concern accounts for some of the disappointing Q2 results.
“Q2 was a perfect storm of headwinds for Amazon and the broader e-commerce industry as a whole,” Cheng said. “Obviously, the opening up of the economy helped physical retailers, maybe not so much online retailers, but there were other issues as well. Ad rates soared in the quarter.”
