How Can Brands Thrive Alongside Amazon?

Amazon, one of the most revered and feared titans of retail, has seen explosive growth as the e-commerce channel captures an ever-increasing share of the consumer dollar. Amazon’s growth has outpaced the overall e-commerce market at 24 percent annually, topping 30 percent in 2017. With 2017 sales in excess of $177 billion, Amazon accounts for more than one-third (39 percent) of all online sales and 4 percent of retail sales in the United States.

• Amazon boasts more than 310 million active shoppers, and more than half of all online product searches begin on Amazon.

• Amazon has pursued a strategy of aggressive category expansion from its startup days in media and electronics adding more than 20 unique product categories over the last two decades, in addition to a robust private label offering that spans clothing, batteries, baby products, and other household goods, including pet products, a new addition in 2018. The retailer is also making a push into bedroom, dining room, and office furniture. According to Recode, Amazon now sells more than 70 of its own brands. Private label sales are forecasted to reach $15 to $20 billion by 2022, representing about 5 percent of total sales.

• The $13.6 billion acquisition of Whole Foods in August 2017 is expected to transform retail grocery, taking on rival Walmart.

• Major launches include Marketplace in 2000, which supports more than one million independent merchants and accounts for more than half of the units sold on Amazon, and in 2005, Prime, which now exceeds 100 million members globally. In 2017, Amazon shipped more than five billion items with Prime worldwide.

U.S. E-commerce Sales Trends

E-commerce continues to capture a growing share of retail sales.

Online sales have grown in excess of 14 percent annually in the United States since 2012. U.S. e-commerce sales expanded to $114.4 billion in the first quarter of 2018, up 16.4 percent from a year ago. Online share of retail increased to 13.8 percent in the quarter, up from 12.4 percent in 1Q 2017 and 13 percent for all of 2017. By 2022, U.S. online sales are projected to exceed $650 billion.

Amazon Shopper Trends

Consumers use Amazon to shop for very specific items- Forty-four percent of customers buy from Amazon’s product recommendations.