Amazing Amazon: like or hate the company, it dominates e-commerc. From Wolf Richter at wolfstreet.com:
It owns 33% of the internet “cloud,” 49% of US e-commerce, and is elbowing into other sectors.
Amazon (AMZN) is a Goliath in very different sectors. One is the internet cloud, a booming business. Amazon Web Services has evolved into the single largest player offering cloud computing services to companies, governments, and individuals. In the first quarter, AWS owns 33% share of the cloud infrastructure market, ahead of Microsoft (MSFT) with a 13% share, and Google (GOOG) with a 6% share. Being the biggest kid on the block, it has become the shoo-in for a multi-year $10-billion Pentagon contract. That business is highly profitable.
Less profitable are Amazon’s e-commerce operations. But in terms of magnitude, Amazon totally rules. According to a report from eMarkter, cited by CNBC, Amazon’s online sales in the US are expected to surge 30% in 2018 compared to a year earlier, to $258 billion. This would boost Amazon’s share of US e-commerce sales of 49.1%!
The other combatants are fighting over the crumbs in terms of market share. The next nine largest e-commerce operations combined grab about 22% of the market:
- eBay (EBAY): 6.6%
- Apple (AAPL): 3.9%
- Walmart (WMT): 3.7%
- Home Depot (HD): 1.5%
- Best Buy (BBY) 1.3%
- QVC Group (QVCA): 1.2%
- Macy’s (M): 1.2%
- Costco (COST): 1.2%
- Wayfair (W): 1.1%
That leaves 29% of e-commerce for all the other retailers with online operations, from Bed Bath & Beyond (BBBY) to the tiniest home-office operations, millions of them.
Amazon online sales fall into two categories: its “direct sales” and the sales from other sellers that use Amazon’s platform and execution (“Marketplace sales”). Both are growing in leaps and bounds, but Marketplace sales are growing the fastest.
In 2018, Marketplace sales are expected to account for 68% of Amazon’s e-commerce sales, and direct sales for 32%, according to eMarketer estimates.
Overall, e-commerce sales in the US have soared 16% in the first quarter from a year ago and are on track to exceed $500 billion this year.
But some types of sales have resisted the move to the internet, largely because of the type of product that doesn’t lend itself easily to online sales: gasoline, new and used vehicles, groceries, and beverages. Together they account for 51% of total brick-and-mortar sales.
To continue reading: How Amazon Rules