Amazon.com, Inc. (NASDAQ:AMZN) To Take Up 26% Of The US e-commerce Market


Amazon.com, Inc. (NASDAQ:AMZN) is projected to boost its share of the U.S. e-commerce market to 26% by the end of the year from 22% last year and 16% four years ago. According to Macquarie Capital is set to continue dominating the U.S. e-commerce space in the coming years, primarily thanks to its Prime membership program.

Macquarie estimates that Amazon.com, Inc. (NASDAQ:AMZN) accounts for over a half of e-commerce growth. That means for every $1 growth, Amazon takes $0.51, leaving the rest of its competitors to battle for the control of the remaining $0.49.

At the end of this year (2015), Macquarie predicts that Amazon’s share of the U.S. online retailer market will have grown 400bps over last year to 26%. Amazon’s share of the market was 22% at the end of 2014 and only 16% at the end of 2011.

Prime effect

Most of Amazon.com, Inc. (NASDAQ:AMZN)’s retail growth this year and the coming years is expected to stem from Prime membership program. Prime costs $99 a year and comes with free shipping and other add-ons such as unlimited cloud photo storage, video streaming and digital books rental.

Loyal shoppers

Prime members usually spend more on average on Amazon’s marketplaces compared to non-members. According to data compiled by RBC, more than 73% of Prime members shop at least twice a month on Amazon. Only about 22% of non-Prime members shop twice a month or more on the platform.

Additionally, RBC reported from its findings that 49% of Prime customers spend $800 on average on Amazon purchases every year. That compares with only 16% of non-Prime members who spend that amount annually.

Prime membership numbers

Amazon.com, Inc. (NASDAQ:AMZN) doesn’t break out Prime membership numbers, but it is believed that they represent about 25% of the U.S. households. Some estimates say that Amazon’s Prime membership will capture 50% of the U.S. householders by 2020.

More growth headroom

Because Amazon.com, Inc. (NASDAQ:AMZN) currently accounts for just about 3.5% of the U.S. retail sales, there is more growth headroom for the company going forward, especially for Prime program. Amazon’s Prime strategy defeated rival Jet.com to copy. Jet thought it could undercut Amazon with a $50 per year Prime competitor but it didn’t go far as it ended the program only a few months after launch.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

You may also like...

Read previous post:
Facebook Inc (NASDAQ:FB)
Facebook Inc (NASDAQ:FB)’s Oculus Starts Shipping Rift Headsets To Developers

Facebook Inc (NASDAQ:FB) is targeting developers with finished versions of its virtual reality headset called Oculus Rift. The company is...

Close