INSUBCONTINENT EXCLUSIVE:
Amazon has already been in the crosshairs of the White House when it comes to threats of antitrust investigations, and while some say this
is simply Trumpian bluster that has a slim chance of going anywhere, some new numbers out from the researchers at eMarketer could prove to
be a fan to the flames.
Amazon is set to clear $258.22 billion in US retail sales in 2018, according to eMarketer figures, which will work
out to 49.1 percent of all online retail spend in the country, and 5 percent of all retail sales.
It started as an online bookstore, but
today Amazon is a behemoth in all areas of e-commerce, fuelled by a strong Marketplace network of third-party sellers, an ever-expanding
range of goods from groceries to fashion, and a very popular loyalty program in the form of Prime.
Now, it is fast approaching a tipping
point where more people will be spending money online with Amazon, than with all other retailers — combined
Amazon next-closest competitor, eBay, a very, very distant second at 6.6 percent, and Apple in third at 3.9 percent
Walmart, the world biggest retailer when counting physical stores, has yet to really hit the right note in e-commerce and comes in behind
Apple with 3.7 percent of online sales in the US.
The figures — which eMarketer says are estimates &based on an analysis of quantitative
and qualitative data from research firms, government agencies, media firms and public companies, plus interviews with top executives at
publishers, ad buyers and agencies& — are also remarkable not because of their size, but because of Amazon pace has not slowed down
Its sales are up 29.2 percent versus a year ago, when it commanded 43 percent of all e-commerce retail sales.
The rocket ship for Amazon
growth at the moment is its Marketplace — the platform where Amazon allows third-party sellers to use its retail and (if they choose)
logistics infrastructure to sell and deliver items to Amazon shoppers
It currently accounting for 68 percent of all retail sales, working out to nearly $176 billion, versus 32 percent for Amazon direct sales,
and eMarketer projects that by the end of this year, Marketplace share will be more than double that of Amazon own sales (it already about
double).
It no wonder that so many other online commerce businesses are chasing the marketplace model, which essentially creates
transactions on two fronts for the platform operator, thereby improving margins that might be cut by not selling items directly.
&The
continued growth of Amazon Marketplace makes sense on a number of levels,& eMarketer principal analyst Andrew Lipsman notes in the eMarketer
&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.&
In terms of popular categories, consumer electronics and tech continue to be the leading product category:
eMarketer projects sales of $65.82 billion, around one-fourth of all turnover.Second will be apparel and accessories, which will pull in
$39.88 billion of sales.Third in 2018 are health, personal care and beauty with $16 billion
Fourth is food and beverage at a distant $4.75 billion.
All of these are already up by 38 percent or more over a year ago (see the full
table below), but what perhaps most notable is how Amazon has been investing in being a direct player in each of the categories as well.
In
tech, it has its Kindles and Fire tablets, Fire TV, and of course its huge hit Alexa-powered Echo devices, among many other products
Apparel is being pushed heavily in the company private-label efforts
Amazon just the other week announced that it was acquiring online drug seller PillPack for $1 billion, which will be a major lever in its
wider health products and services strategy
And lastly, there is Amazon acquisition of Whole Foods and its much wider play around meal kits and its server-free physical shops
The physical aspect, eMarketer believes, will play a strong role in Amazon growth in this category.
&Amazon strategy for food and beverage
is no different, in some respects, than it was for books—dominate the category,& eMarketer senior analyst Patricia Orsini notes in the
&However, e-commerce in the grocery sector is a challenge
Share of online sales in this category is low because most people, for a host of reasons, prefer to buy food in brick-and-mortar stores
Amazon has an advantage because its shopper base is comfortable with shopping online
Along with insights gathered about Whole Foods shoppers, Amazon probably has the best chance of converting in-store grocery buyers to online
grocery buyers.&
All of these will not just boost Amazon own direct sales but help create an environment for people to come to Amazon to buy
either these at price-busting rates, or other-brand alternatives.
So far, people think that it is unlikely that Amazon would stand an
antitrust investigation because e-commerce is still a small part of all commerce (as evidenced by the five percent of all retail sales
figure), and Amazon would argue that in the world of &omnicommerce& it still just a bit player
However, Amazon dominance is clear when considering e-commerce alone.
