Ecommerce Guide

Amazon To Grow Their Ecommerce Dominance Over Next 6 Years

Amazon, the world’s biggest and most recognisable online retailer will grow its ecommerce dominance from 34% of all U.S. online sales to 50% by 2021 according to Needham & Company, the leading US investment banking and asset management company.

In a note circulated to Needham & Company clients this week, Kerry Rice, Senior Analyst, Entertainment & Internet moved Amazon from ‘buy’ to ‘hold’ writing: “We believe Amazon’s established dominance in U.S. is sustainable with Prime, mobile penetration and third-party growth.”

Prime Is The ‘Key Driver’

Many ecommerce experts would agree that it is Prime that is the key driver of Amazon’s growth. According to Consumer Intelligence Research Partners, Prime has approximately 65 million accounts in the United States alone. Whilst most households tend to share a Prime account, this indicates that approximately 50% of all American households have an Amazon Prime account. Furthermore, statistics show that Amazon Prime members tend to spend double what non-Prime members spend on Amazon each year and 80% of Prime members shop on Amazon every month.

Additionally, Amazon is the most used ecommerce app in the United States where 76% of smartphone and tablet users have the app, compared to the Walmart app which is the next most popular and is used by just 33% of consumers. When you take into account these figures, it’s clear just how and why Amazon is such a dominant force in ecommerce. The figures released by Needham and Company predict Amazon’s market share to grow as follows:

2016: 34%

2017: 37%

2018: 41%

2019: 45%

2020: 47%

2021: 50%

Amazon And Its Competitors

The sheer dominance and size of Amazon in terms of ecommerce can be seen when looking at its competitors. Whilst Amazon currently enjoys a 34% and growing market share, its nearest rivals can come nowhere near this kind of figure. Ebay surprisingly has a market share of just 7.7% whilst Wal-Mart has less than 5%. Wal-Mart has been attempting to boost its ecommerce sales over the past 12 months which has seen it acquire businesses such as Shoebuy.com, the online footwear retailer, Moosejaw.com the online outdoor store as well as boosting the stock on its own web store, going from 8 million items in 2016 to over 35 million today.

Further Expansion

Whether it will ever challenge the online dominance of Amazon however is unlikely when you consider the rapid growth Amazon is experiencing as well as its continued expansion into new markets. It is currently expanding into Southeast Asia, China, India, Brazil and Australia and the next few years will see its reach go even further. It is also thought by Needham & Company that Netflix’s dominant position as the world’s largest video streamer could come under threat.
“If Prime Video gains traction internationally in a similar fashion as Netflix’s international expansion, one could expect the service to reach 20 million subscribers and over $1 billion in revenue by the end of 2020”.

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Scott Bretton

Scott Bretton

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