Whilst we await Amazon’s fourth quarter report on Thursday, data from Slice Intelligence indicates that we can expect Amazon to have had another breakout quarter. Slice Intelligence’s data, which comes from more than 2 million transactions that it processes as a receipt mining company indicates that Amazon accounted for over 50% of all US ecommerce growth in 2016. That’s much more than 2015 when Amazon was responsible for 40%.
What Is Fuelling Amazon’s Growth?
Amazon’s significant growth in 2016 can be accounted for a number of ways, but perhaps the most obvious is electronics. Electronics account for a significant proportion of Amazon’s growth which isn’t surprising when you consider the size of their offering as well as the launch of their very successful Echo line of products. Perhaps more surprising is the contribution that home and kitchenware makes to Amazon. The full breakdown of Amazon’s growth in 2016 is as follows:
- Electronics and accessories: 18%
- Home & kitchen: 15%
- Apparel and accessories: 12%
- Food: 11%
- Health and beauty: 10%
- Shoes: 6%
- Toys and games: 4%
- Tools & home improvement: 4%
- Other: 19%
Another major driver is Amazon’s obsession with making the customer experience as easy and pain-free as possible. An example of this is its Prime program that offers free and reliable shipping. Whilst Amazon’s rivals are investing big money to try and get goods to us quicke, Amazon is already there with a significant lead. By December 2016, the average ecommerce business delivery was 5.6 days. Amazon’s average delivery time is just 3.4%. But this making it easy for customers approach isn’t just about delivery times, Amazon has mastered the art of subscriptions and use devices such as dash buttons that allow people to order at the click of a button. With the new Echo devices, people can order hands-free whilst doing other things.
It was no doubt due to the dominance of Prime that Wal-Mart decided to scrap its Shipping Pass program, which it as testing as a competitor to Prime. Instead, Walmart have recently announced that it will be lowering its minimum spending threshold to $35 and offering free two day shipping on two million of its items. Marc Lore, president and chief executive officer of Walmart recently said of the decision: “In this day and age, two-day shipping is really just table stakes”.
Talking about the figures, Ken Cassar, the principle analyst at Slice Intelligence said
“There is no doubt that Amazon is hitting on all cylinders. The big question in 2017 will be whether Amazon can continue to execute well online at the same time that it embarks on its biggest challenge yet, imagining and building the store of the future.”
Amazon’s full quarter four results will be published on Thursday.