$800 Billion in eCommerce Growth; Amazon Tightening its Supply Chain.
Amazon Continues to Dominate Three Year eCommerce Forecast
In our recently published eCommerce forecast report, we extended our forecasts out to 3 years to help branded manufacturers plan their businesses over the medium term. In the forecast, the US eCommerce market is expected to continue to grow by double digits annually through 2022, surpassing $800B in total. By far the largest dollar growth opportunity through 2022 remains Amazon, with expected GMV growth of $172B, representing more than half of total eCommerce growth over that period. The largest portion of Amazon’s growth is expected to come from its 3P marketplace, where we are forecasting 24% compound annualized growth, which continues to outpace the 1P business (forecasting +12% CAGR). Omnichannel retailers are likely to see the largest percentage growth online over the coming years, led by Walmart, Target, and Home Depot, driven by their success converting in-store shoppers to click & collect shoppers in addition to expanding delivery to the home capabilities.
Amazon Now Delivering Nearly Half of Its US Orders
A WSJ article today detailed the expansion of Amazon’s supply chain operations over the past several years, including expansion of the company’s fulfillment centers (FCs), transportation assets, and last mile delivery. Of particular note is that Amazon is now delivering nearly half of its own packages with its own delivery service, up from less than 15% in 2017. Also of note is the extensive investment the eTailer has made into FCs, growing from 65 in 2013 to around 400 today. This rapid expansion is a major reason why we believe Amazon’s overnight Prime delivery service on more than 10 million items will be difficult for other eCommerce players to replicate, even as retailers such as Walmart and Home Depot expand shipping offerings in an attempt to compete.
Census Data Shows Strong eCommerce Growth
Updated US Census data shows that eCommerce sales grew 13.3% Y/Y during the second quarter, as compared to 15.5% during 2018. By contrast, retail growth excluding eCommerce grew only 2.1% in the quarter, as eCommerce share of total retail sales increased to 10.7%.
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