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Amazon’s growth set to accelerate in 2016 – driven by Prime

January 7, 2016
Jannie Cahill
Written By
Jannie Cahill

The dominance of Amazon as the world’s largest e-retailer continues at pace with a recent report suggesting it accounted for 24% of total US retail sales growth in 2015 – and more than half of eCommerce growth.

The study from Macquarie Research reports that Amazon took 24 cents of every $1 of retail sales growth in 2015. Within eCommerce specifically, Amazon was even more dominant, accounting for 51 cents of every $1 in online sales growth.

So what’s driving Amazon’s seemingly unstoppable rise? One word, Prime. Amazon’s membership program is its biggest driver of growth, ‘locking in’ subscribers for $99/year (£79/year in the UK) with such perks as unlimited 2-day shipping (unlimited 1-day shipping in the UK), as well as video and music streaming.

The e-retailer reported that it added three million customers to Prime worldwide in the third week of December alone as it capped a record holiday season. With 25% of US households currently subscribing to Prime, Macquarie Research predicts that this will increase to 50% of all US households by 2020 – fuelling Amazon’s rapid growth acceleration.

Amazon also emerged as the retailer most likely to find success in 2016 in a poll of RetailWire’s BrainTrust panelists.

In the poll, Profitero’s VP Strategy and Insight Keith Anderson predicts that Amazon will continue to outpace eCommerce growth by 1-2X, and potentially accelerate.

Beyond maintaining price leadership and leading on selection with new initiatives such as Merchant-Fulfilled Prime, Amazon is also investing aggressively in enabling ever more convenient ways of buying and receiving goods with Dash, Echo, and Prime Now.

According to Keith Anderson, “Amazon has often been the first to introduce things like free shipping, they were the first membership-based online retailer, the first to have same day delivery. I feel pretty comfortable to say that if you look at their recent logistical moves such as buying up truck fleets, it points to their continued commitment to being 18 to 24 months ahead of everyone. That includes not just having the convenience of fulfillment centers but, increasingly, last-mile logistics

2016 is set to be another explosive year for eCommerce growth, driven by Amazon, who will continue to set the bar for price, convenience, assortment and fulfilment – and continues to be the retailer that everyone is watching.

You might also be interested in reading these articles:

Forbes: Retail Insiders Make 2016 Predictions

Retail Dive: Five Key Trends For Retailers To Watch in 2016

RetailWire: BrainTrust Predictions 2016: Broadlines/Grocers

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