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Earnings preview: Amazon accounts for 43% of all US online sales in 2016

February 1, 2017 12:48 PM
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Amazon.com Inc. continues to gobble up market share in online retail. In advance of the merchant’s closely watched full-year earnings report due out Thursday, a new study released today suggests that 43% of all U.S. online retail purchases last year occurred on Amazon-owned sites, including sales Amazon processes for the company’s marketplace partners. In addition, the merchant accounted for more than half of all e-commerce growth in the U.S. last year, according to the study

That’s according to Slice Intelligence, a research firm that tracks email receipts of more than 4.4 million online shoppers to arrive at its sales estimates.

To help put that number into context, an Internet Retailer analysis of U.S. Commerce Department figures shows that Amazon accounted for 33.0% of total domestic e-commerce sales in 2015, up from from 25.4% in 2012, when combining Amazon’s sales of its own goods to U.S. customers and the value of goods sold by other retailers on its marketplace.  Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.

If Slice’s analysis is correct, that means Amazon managed a one-year gain of 1,000 basis points in market share–an extraordinary feat.

One company with market share north of 40% is nearly unheard of in any segment of retailing. For example, Wal-Mart Stores Inc., the world’s largest retailer in terms of total revenue and Amazon’s principal competitor, has slightly more than 9% market share of total U.S. retail sales, when factoring out the sale of goods not normally purchased online like automobiles and fuel. Wal-Mart is No. 4 in the Top 500.

Much of Amazon’s gains comes from the electronics, home and apparel categories, Slice says. “Electronics account for a significant portion of Amazon’s growth, not surprising given the size of the category and Amazon’s very successful Echo line of products,” says Ken Cassar, a principal analyst at Slice Intelligence. “More interesting is the contribution that smaller categories such as home and kitchen, food, and health and beauty made to Amazon’s sales growth. [The consumer packaged goods category] is proving to be a big catalyst of Amazon’s expansion.”

Echo is a line of voice-activated devices with Amazon’s digital assistant, Alexa. Echo devices can place Amazon orders for consumers, search the web and answer questions, play music and more. Data released late last month by securities research firm Consumer Intelligence Research Partners LLC, or CIRP, shows that 8.2 million U.S. shoppers own one of the voice-activated digital assistant devices. That’s up 173% from an estimated 3 million shoppers this time last year.

Amazon has steadily gained intense loyalty among U.S. consumers thanks in large part to its popular $99-a-year Prime membership program, which offers free 2-day shipping on 40 million Prime-eligible items on Amazon, access to movies and TV shows through Prime Video and same-day delivery in dozens of cities. CIRP in October estimated there were 65 million U.S. consumers who were Prime customer as of Sept. 30.

Amazon.com is the leading starting point among shoppers, with 52.4% of consumers reporting that they go to the web-only giant first when shopping online, according to an Internet Retailer online survey among 515 U.S. adult online shoppers in December. Google was the second most popular choice at 38.8%.

 

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