Amazon to Capture 50% of U.S. eCommerce Market By 2021

Online retailer Amazon seems to be going great guns, steadily increasing its market share in the US eCommerce market. Amazon’s share of the market should increase from the current level of 34% to 50% by 2021, investment bank Needham said in its note to clients.

To put things in perspective, competitor Wal-Mart Stores, Inc. holds a market share of 5%, per CNBC estimates.

Amazon Prime

The investment bank cited the e-tailer’s continuing dominance in Amazon Prime segment, third party growth, and mobile penetration for their rating upgrade on Amazon stock from hold to buy. The stock now has a price target of $1,100. What’s more, Amazon Web Services cloud computing unit also will continue to drive profits, estimates CNBC.

Prime is the main driver of Amazon’s unprecedented growth.

The e-commerce retailer leaves no stone unturned to make Prime all the more attractive to its legion of shoppers. New initiatives include same-day delivery, free two-day shipping on several items, and a host of perks such as photo storage and streaming video.

Amazon founder and CEO Jeff Bezos openly acknowledged the importance of Prime in its scheme of things. He said that Prime offers such good value that consumers would be irresponsible not to become members of the program.

Amazon, sunnyvale
Editorial credit: Sundry Photography / Shutterstock.com

The Numbers

Amazon does not give out Prime membership numbers, making it difficult to estimate the numbers. However, the company’s annual filing with the U.S. Securities and Exchange Commission reveals that the sales from retail subscription services was a whopping $6.4 billion in 2016. Compare these numbers to $4.5 billion clocked in 2015 and $2.8 billion in 2014.

The figure include Prime fees worldwide as well as revenues from sales of e-book, audiobook, digital music, digital video and other subscription services.

More importantly, net sales from Amazon’s retail third-party marketplace touched $23 billion last year. This increased from $16.1 billion registered in 2015 and $11.7 billion clocked in 2014. Net sales comprise fulfillment and shipping fees, commissions, and other third-party seller services.

Net sales from “retail products” registered $91.4 billion in 2016 compared to $77.9 billion in 2015 and $68.5 billion in 2014. Amazon defines retail products as consisting of digital media content sold on a transactional basis as well as product sales.

70 million Amazon Prime members worldwide

Based on the premise that Prime services account for about 90% of the e-tailer’s revenues from retail services subscriptions, there are about 65 million Prime members worldwide. According to another estimate it could be somewhere close to 70 million.

Talking about Amazon’s domestic market, more than half of the e-commerce giant’s U.S. subscribers are Prime members.

Prime membership in the United States increased to 63 million by the end of June, a substantial rise from 44 million registered at the same time last year. Research also indicates that growth in Prime membership is higher among wealthier households across the United States.

walmart, indianapolis
Editorial credit: Jonathan Weiss / Shutterstock.com

Walmart Wakes Up to the US eCommerce Market

Probably sensing that Amazon’s Prime membership numbers are hard to surmount, Wal-Mart seems to have trained its guns on Amazon’s non-Prime sales segment.

Upping the ante, Wal-Mart ended its ShippingPass membership scheme, its equivalent of Amazon Prime. This was replaced with a new scheme which offers free two-day shipping to all customers whose order value exceeds $35, reducing it from the earlier threshold of $50. Wal-Mart also made shipments to stores free on eligible orders.

Amazon Counters with Amazon Cash

Determined not to cede an inch of territory, Amazon reduced its non-Prime shipping minimum to $35 following Wal-Mart’s move. What’s more, Amazon decided to hit Wal-Mart’s core customer base by announcing a new service, Amazon Cash. This is a no-fee product aimed at customers who don’t have credit cards or bank accounts.

Going by the numbers, odds seem to be favoring Amazon for the prime slot in the US eCommerce market.

Paul Andrewshttp://optiwiseonline.com
If you are looking to sell on eCommerce or are already selling on the platform but looking to scale up operations, then I am that guy you think you’re not looking for! But if you think again you can let me leverage my years of selling experience on ecommerce platforms to provide hands-on, strategic guidance to your brands or private labels to help set up, grow and scale your business.

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