Due to the various lockdowns 2020 was arguably the first real online Christmas, which has meant a great final quarter for Amazon, closing out a real stand out year for the company. The research team believe that Amazon marketplace’s GMV has grown by at least 50% from US$200bn in 2019 to around US$300bn in 2020.Get more news about FBA DELIVERY,you can vist our website!
That said, some other retailers have also reported record figures and in many ways the logistical advantage (FBA, Prime Air, Fulfillment centre network) Amazon has built up over the competition over years has (almost unbelievably) been somewhat reduced, as competing retailers have invested heavily into their own digitalisation (Walmart, Kroger etc) and logistics efforts and/or services such as Instacart have proliferated and are easily available on a plug and play basis. One should mention the runaway success of Shopify in enabling independents and major retailers alike to go online in this context too.
While Amazon’s logistics network was simply overwhelmed in Q1/2 2020 with the spike in extra demand, a situation which has stabilised now, there is another reason, why the research team thinks the competitive moat of FBA has been somewhat eroded. This is due to the rise of click & collect, which has become such a major trend in the USA.
For Walmart click & collect (or drive up) has taken 50% of all online orders - and possibly all of US online grocery has developed like this, as it is the cheapest option for both retailers and shoppers, due to the last mile deliveries cost falling away. During the pandemic click & collect also enabled shoppers to avoid going into crowded shops.
Amazon lacks the same physical presence as its bricks and mortar competitors (Walmart, Target for example), but has started to address this with the acquisition of the Whole Foods business, the locker roll out, its click & collect partnerships (with Kohls’ for example) and of course its Go and Fresh stores.
Another prediction the publisher is making is that Amazon advertising is set for massively successful 2020 and 2021. Estimates are pegged at an annual US$20bn run rate for the business unit. And looking ahead, there might be another nascent market in audio ads (coupled with Alexa) that could grow massively in years to come.
Advertising on the Amazon platform will be driven by the sheer endless number of SKUs on the website and the problem to gain visibility for brands and sellers as a necessary prerequisite for sales conversion. In this sense Amazon follows down the path of the Alibaba model, where the Chinese platform makes most of its money from advertising rather than the listing fees. End user experience on Amazon has suffered for some time now, with the search function being overwhelmed by the sheer mass of Asins and advertising making the problem even worse.