Amazon is set to reach a staggering USD500 billion in revenue this year, a report has suggested. How will the retailer get there, and how long can this unbridled success really last?
According to data analysis from Trackr, the US tech giant will surpass 30 percent annual growth based on five core factors in a post-COVID world.
Last year, the retailer exceeded its own expectations. According to Amazon, the retailer exceeded revenue of USD386 billion in 2020, reporting an increase in its profits by 38 percent.
With the unmatched growth from the pandemic fuelling online shopping, it’s no surprise why Amazon is experiencing this boom. But will it last forever? Amazon has earned the lion’s share of online spend in the US, but what has earned this title, and how long can it last?
There are five fundamental reasons why Amazon remains the leader in e-commerce across North America, which include:
- Pandemic-inspired shopping boom
- An increasing number of sellers on Amazon’s platform
- Enhancing delivery and logistics processes
- Extensions of lockdown restrictions
- The 10-year trend of ongoing Amazon revenue growth
Amazon’s growth has increased YoY | via ParcelTrackr & Amazon
The Pandemic-Fuelled Online Boom
Unless you’ve been living under a rock for the last 12 months, it should be no surprise that online retail has grown exponentially following the pandemic. Power Retail has been covering the growth and mapping out trends following the COVID outbreak, and it’s safe to say that online will continue to flourish, even as the pandemic slows down.
With COVID continuing to battle the world, new strains of the virus are keeping shoppers locked inside, which is further accelerating the online shopping boom. As such, shoppers and retailers alike can expect the current expansion of online shopping to continue in popularity.
“Shift to online is for sure unstoppable and has plenty of room to grow,” said Ernestas Petkevicius, the Co-Founder of Trackr. “Logistics is a big challenge for any retailer, and Amazon is not an exception as it will see more buying power coming online from stimulus checks and different social programs all over the world.”
According to the report, more than 200 million monthly visitors, and has secured over 150 million Prime members (compared to 142.5 million in 2020).
Millions of Sellers are Onboarding to Amazon
Shoppers aren’t the only ones flocking to the Amazon platform in 2020. Sellers have been onboarding the platform in record numbers, the report has found. According to the Trackr data, a whopping 85 percent of Amazon sellers are ‘profitable’ and drove more than half of Amazon’s revenue in 2020.
Furthermore, more than 60 percent of sellers reported an increase in revenue over the last 12 months on the platform. Interestingly, 44 percent of these sellers said that despite the pandemic’s impact on the economy, COVID actually benefited them and played a ‘significant part’ in their success in 2020.
Last year alone, 319,000 new sellers joined the platform, which has pushed the overall active seller count past two million globally.
Logistics Rule Supreme
While Amazon may not be so innovative with its website outlook (It hasn’t changed much in the last ten years at all. Don’t believe me? Check out our E-Commerce Time Machine), one of the ways it has garnered strong loyalty is with its influential logistics and delivery speed.
There’s no doubt that Amazon is a trailblazer when it comes to delivery times. Amazon continues to expand its delivery speed and satisfaction.
To effectively continuing its showstopping delivery times, Amazon enlisted in four aircraft carriers in September 2020. For the first time, the company bought the aircraft, rather than leasing them.
Amazon is famous for its same-day delivery, but it’s also pushing its one-hour services. The retailer utilises services like Amazon Flex to get the deliveries completed in the shortest time frame possible, and also relies on companies like FedEx, UPS and USPS in North America.
If that wasn’t enough, the retailer is now amplifying its 30-minute delivery times. How will the retailer achieve this? Drones. It feels like it’s been a hot minute since drones were in the conversation, but it looks like Amazon is bringing it back for 2021.
According to Power Retail data, speedy delivery remains the main reason why a shopper will abandon a cart online.
Surprisingly, when it comes to sales events, the number one important thing that a shopper will consider is not price – it’s free delivery (57 percent).
Overall, Amazon remains well-placed to ride the e-commerce wave, but how can other retailers keep up with the momentum? While Amazon may have the lion’s share for delivery times and returns, one thing it lacks is UX.
Retailers, especially in Australia, need to ensure that the overall shopping experience is the best it could possibly be.
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