Amazon begun as an online bookstore but has grown and ventured into different areas of e-commerce and technology, fueled by a strong Marketplace network of third-party sellers, a growing range of goods and items, and further helped by the success of its Fulfilled by Amazon Program and Prime membership. But how big is its e-commerce business as of July 2018 and what are some of its key characteristics?
According to a report by eMarketer published on July 2nd 2018, Amazon's retail e-commerce sales (as gross merchandise value, or GMV) in the U.S. are estimated to reach at least $258.2 billion in 2018, recording a 29% increase from 2017 and largely exceeding total US retail E-commerce’s growth of 16%.
That means Amazon will account for 80% of total US retail e-commerce growth and is on pace to capture half of the U.S. E-commerce market by the end of 2018. The company ended 2017 with about 44% of the market.
Interestingly for Amazon sellers especially those using the FBA Program, third-party sellers continue to gain importance on the platform with Marketplace sales growing twice as much as direct sales (35.6% vs. 17.5%). This means that, on average, sellers are doing better than vendors on Amazon.
Unsurprisingly, Amazon marketplace sales will make up 68% of the company’s retail ecommerce sales in 2018 ($175.5 billion), and that figure will surpass 70% by 2019.
“The continued growth of Amazon’s Marketplace makes sense on a number of levels [...]. More buyers transacting more often on Amazon will naturally attract third-party sellers. But because third-party transactions are also more profitable, Amazon has every incentive to make the process as seamless as possible for those selling on the platform.” - Andrew Lipsman, eMarketer Principal Analyst
The figures mentioned above which eMarketer says are estimates are “based on an investigation of quantitative and qualitative data from research firms, government agencies, media firms and public companies, inclusive of interviews with executives at publishers, ad buyers and agencies”.
According to the same report, eBay is rumored to end 2018 with 6.6% of the U.S. e-commerce market. After eBay comes Apple, Home Depot, Best Buy, QVC Group, Macy's, Costco and Wayfair.
Computers and consumer electronics continue to be the top selling items on Amazon: eMarketer projects sales of $65.82 billion, around one-fourth of all turnover. The category will have grown by 38% from the end of 2017, eMarketer said. Next in line are the Apparel and accessory category with $40 billion in forecasted sales, followed by the Books, music, videos category, then the Furniture/home furnishings category, the Toys category and the Health and personal care & beauty category.
Amazon also announced on July 13th 2018 that it is acquiring online drug seller PillPack for $1 billion, which will be added in its wider health products and services strategy. The physical aspect, eMarketer believes, should stand an enormous role in Amazon’s growth in this category. Amazon also has the advantage because it’s shopper base is comfortable with shopping online and Prime Day 2018, which was on Monday, July 16th at 3PM. ET and run through to Tuesday, is expected to give Amazon another huge boost into the remaining half of the year by notably bringing in new members to the platform.
It’s no mystery why many new and growing online commerce businesses are following the Marketplace model by selling on Amazon and thus being able to leverage cost savings and dramatically-high growth opportunities related to an increased exposure to Amazon customers, automations from the FBA program, and an opportunity to sell direct-to-consumer, thereby raising margins that might be cut by selling through intermediaries.
With some smart structuring and careful analysis, there is a lot of potential for merchants who are willing to start selling on Amazon through FBA. We are approaching a breaking point where more and more people will be spending money online with Amazon, more than with all other retailers combined. DataHawk provides powerful Amazon insights and market-related data to help upcoming and new sellers and vendors thrive on Amazon.
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