Everyone knows that Amazon dominates the U.S. eCommerce retail market, but exactly how well are they doing? According to data from Slice Intelligence, which scanned more than 1 million digital shopping receipts, Amazon accounted for 46 percent of all online spending in the U.S. in the final weeks leading up to the holidays. Overall, Amazon took 39 percent of all online spending from Thanksgiving to Christmas.
A couple of takeaways:
Other Retailers are begging for scraps
Amazon sold ~2.6 times more online than the next 9 largest retailers COMBINED and sold ~16 times more than Best Buy, the number two on this list. Large brick and mortar retailers are investing heavily in online, when will it start paying off?
It’s a Platform World
In the Internet and Mobile eras large tech companies have increasingly become platform companies controlling the full end to end experience, akin to a utility. Google is where you go for search, Facebook for social, Uber is how you get around, and Amazon is where you go to buy stuff. Amazon has the world’s largest selection of products and recent research reveals that most American consumers begin their search on Amazon. Only Amazon offers the breadth of products in one place and offers a far more superior shopping experiences than bouncing around several websites to compare prices. In the past, customers went to shopping malls; today Amazon is the shopping mall of the Internet era.
Prime Maintains the Moat
Prime, the subscription membership model that offers unlimited free two day shipping with no minimum order size, plays a central role in Amazon’s dominance. The program has not only generated 63 million memberships worldwide, but has also substantially increased customer spending. Once you're a member, is there any compelling reason to cancel or switch to a competing service?
Fast and Cheap Shipping
The company’s focus on fast and cheap shipping is core to Amazon’s DNA of focusing on the customer first, and worrying about profits later. The fact that online shoppers gravitated at a higher rate to Amazon in the lead up to the holidays rather than other retailers is a testament to Amazon’s capability to not only offer fast and cheap shipping, but also deliver on the promise. Amazon’s investments in their fulfillment and logistics, which may continue to be a drag on their short-term profitability, are paying off and further widen the moat.