Amazon's value might actually be understated
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It's widely known that e-commerce giant Amazon consistently dominates in retail due to its low prices, reputation for customer service, and standard-setting fulfillment options.
However, Amazon's value may actually be understated, reports USA Today. Amazon is estimated to account for 15% of the total US annual e-commerce market, but this share may be even higher when considering the volume of third-party sellers on the site. Moving forward, retailers may glean more value from approaching Amazon as a useful resource for driving up conversion rates, rather than trying to compete against it.
Amazon's size is already impressive, but could be bigger than previously reported:
Prior reports already put Amazon in a powerful position: The US Department of Commerce had previously pegged Amazon's share of total US e-commerce sales at 15%. However, only a portion of third-party sales on Amazon contribute to its total revenue, which could be minimizing the estimates for the company's impact on all of e-commerce.
But it may be even bigger than that: Taking third-party sales into account, USA Today estimates, based on a variety of sources, that Amazon may actually account for anywhere between 20-30% of the entire US e-commerce market. This translates to as much as $125 billion annually spent by US shoppers online.
As Amazon's threat looms larger, retailers should leverage the global marketplace to boost conversions. Amazon's power lies not only in its vast product listings, but also in its initiatives to remove friction from last-mile fulfillment, as well as its attractive membership programs. This likely contributes to its massive, loyal user base, which retailers can use to their advantage by selling on the marketplace. Almost half of all sales on Amazon are through third-party sellers, according to USA Today estimates.
Legacy retailers, in particular, have a huge opportunity to quicken the shift to digital by using Amazon's platform for international expansion, boosting customer loyalty, and driving up overall sales. As the e-commerce giant continues to grow, competition could prove to be too dire for smaller e-commerce players that cannot keep up with Amazon's expanding market share.
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