IORMA International Newsletter
Amazon crosses the 100 billion dollar mark.
International sales growth slowing down
The dominance of Amazon as the world’s largest e-retailer continues at pace with a recent report suggesting it accounted for 24% of total US retail sales growth in 2015 – and more than half of e-commerce growth.The study from Macquarie Research reports that Amazon took 24 cents of every $1 of retail sales growth in 2015. Within eCommerce specifically, Amazon was even more dominant, accounting for 51 cents of every $1 in online sales growth.
Only recently CEO and founder Jeff Bezos announced that Amazon was the “fastest company to ever reach” the $100 billion revenue milestone, adding that the Amazon Web Services unit is growing at an even faster rate. He further said, reflecting about the astonishing growth in the past years: “Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers,”
The biggest driver behind Amazon’s almost unstoppable rise is Prime ‘locking in’ subscribers for $99/year (£79/year in the UK) with such perks as unlimited 2-day shipping (unlimited 1-day shipping in the UK), as well as video and music streaming. The e-retailer reported that it added three million customers to Prime worldwide in the third week of December alone as it capped a record holiday season. With 25% of US households currently subscribing to Prime, Macquarie Research predicts that this will increase to 50% of all US households by 2020 – fuelling Amazon’s rapid growth acceleration. Prime membership grew by 47% in the United States during 2015. Worldwide, Prime membership grew 51%. Read more about Prime here.
Amazon generated about 60% of total U.S. online sales growth in 2015 far outpacing the competition, according to data compiled by Forrester Research. The retail giant tallied $23 billion more in U.S. e-commerce sales in 2015 than 2014, the report found. “Amazon makes up a larger percentage of e-commerce in the U.S. than any other player, and its retail growth has outpaced overall online retail,” Forrester Research wrote in a recent report, titled “U.S. Online Retail Forecast: 2015 to 2020.”
For the full year 2015, Amazon reported:
• Net sales of $107.01 billion, a 20.2% increase from $88.99 billion in 2014. Of that revenue, $79.27 billion (75%) stemmed from Amazon selling products itself to consumers, and those sales were up 13.1% year over year. The rest, $27.74 billion (25%) , came from commissions from outside merchants that sell on Amazon marketplaces, the Amazon Web Services cloud computing service and other smaller revenue sources. Those “net service sales,” as Amazon calls them, were up 46.7% from last year.
• North American net sales of $63.71 billion, up 25.3% from $50.83 billion in 2014. North America accounted for 59.5% of sales in 2015, compared with 57.1% in 2014.
Germany is, in fact, the largest international market for Amazon, accounting for more than 13% of the top line. The United Kingdom trails Germany as the third largest market with $8.3 billion of sales in 2014, up 14% from 2013. Readers may be surprised to learn that Japan, not China, is the fourth largest market. Sales in Japan have been the weakest of the major markets, falling 2% in 2013 only to recover 3.6% last year to $7.9 billion. That allowed the United Kingdom to overtake Japan for the first time in 2014.Together, Germany, Japan, and the United Kingdom now account for more almost 85% of international sales, despite the fact the company operates in as many as 12 key markets, including China, Spain, India, and Australia.
IORMA International News
Director International Consumer Trends