Amazon’s Massive Growth Creates Opportunities for Small Businesses
You sell it. They ship it. Amazon has proven extremely successful at creating and expanding one of the world’s most advanced fulfillment networks. The best thing about Fulfillment by Amazo (FBA) is that just about anyone can reap the benefits of Amazon’s expertise–it’s simpler than starting a traditional retail business. FBA means that all kinds of small businesses can store their products in an Amazon fulfillment center. Then, when each one sells, Amazon will pick it, pack it, and ship it. And they’ll even provide customer service. The cost of this is less than what it would be for a traditional retail business.
Amazon is the country’s leading e-retailer, boasting almost 178 billion USD in net sales for the year 2017, and sales show no signs of slowing.
Amazon’s Share of Online Business
Business as usual at Amazon means yearly growth, and their online retail business is no exception. In fact, Amazon is responsible for approximately 44 percent of all of 2017’s U.S. e-commerce sales and around 4 percent of the total retail sales in the entire country. While ecommerce sales remain a fairly minimal part of U.S. retail, the segment is growing rapidly with Amazon leading the pack. Ecommerce sales are projected to increase 15.8 percent, reaching $452.8 billion by the end of 2017.
Third Party Sellers
Although the majority of Amazon’s revenues come from retail sales, third-party seller revenues run a close second, followed by AWS, and then subscription services. Active customer account figures for the first quarter of 2016 showed that the company had more than 310 million of them worldwide. Now, that figure is certainly more. Since the company also possesses amazing global scope and reach, the Amazon brand is considered to be one of the most valuable in the world. With that many active customer account holders, Amazon’s marketplace is a valuable resource for many businesses.
FBA & The Rise of Ecommerce
Amazon’s broad scope and reach have made it a household name in the US. Their fast delivery, easy returns, and exceptional customer service have made Amazon a trusted name. Amazon also holds their marketplace sellers to the same standards. These seller expectations not only increase customer trust in the company, but they also increase customer spending. The Amazon name naturally gives potential customers a lot of confidence when they shop online, regardless of whether their purchases come from third-party sellers or Amazon itself.
Retailers’ Online Growth
Other online retail giants include Walmart.com, Jet.com, and Target.com. All in all, U.S. e-commerce sales saw a 16 percent growth in 2017. In fact, online retail sales in the U.S. saw more rapid growth than any year since 2011. Overall, e-commerce represented 13 percent of the total 2017 retail sales, as well as 49 percent of the growth. Of course, Amazon was responsible for the majority of those gains.
Shopping online is becoming more normal rather than the oddity it was less than a decade ago. For many customers, online shopping has even replaced traditional physical brick and mortar stores. Younger shoppers no longer want to deal with coupons, search for products in a vast store, and waste time waiting in line. For these shoppers and those who come after, shopping at a physical store may be the exception rather than the norm. This will be especially true if Amazon manages to bring to delivery the same efficiencies it brought to its fulfillment. And this is looking to be the case with its plans for its drone delivery and potential shipping plans.
Grocery Ordering and Beyond
When people think about Amazon, they think about a large online marketplace with fast delivery and excellent customer service. However, Amazon is more than just a marketplace. Amazon Prime members also enjoy video subscriptions, amongst other small perks. But Amazon is more than just an online retail store.
From cloud-computing resources to groceries, Amazon is poised to disrupt other spaces as well. Amazon’s Handmade sellers compete directly with websites like Etsy, while Amazon Professional Services allows small business owners to sell their services. Amazon isn’t content to stop there. Rumors of an Amazon partnership with a healthcare company may disrupt the healthcare industry.
What all of this means for marketplace sellers is that they’ll see more traffic to their products. From that traffic, they’ll see more sales. Amazon’s expansion and growth will only create more opportunity for individuals and small businesses. And not all of these opportunities are related to sales.