amazon in 20 charts—the rise and rise of the e-commerce ... · amazon’s share of internet...

June1,2017

Inthisreport,wepresentmetricsfromcompanyfilings,consumersurveysandresearchfirmstochartthecontinuedevolutionofAmazon.Ourtoptakeawaysinclude:

1) AmazonWebServicesisdrivinggrowthinAmazon’soperatingmargins.Thisbusinessdivisionyieldeda25%operatingmarginin2016,upfrom19%in2015.AndthedivisionisgrowingitsshareofAmazon’stotalrevenues.

2) Amazon’sthird-partymarketplaceisalmostcertainlyprovidingfurthersupporttomargins.HalfofallunitsalesmadethroughAmazonarenowmadebythird-partysellers.

3) AmazonPrimeisshoringuptoplinegrowth.Some42%ofUSadultsnowhaveaPrimemembership,andthatfigurerisesto55%amongmillennials.

Deep Dive: Amazon in 20 Charts—

the Rise and Rise of the E-Commerce Giant

Deborah Weinswig

Managing Director

Fung Global Retail & Technology

deborahweinswig@fung1937.com

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

June1,2017

TableofContents

Introduction............................................................................................3

CompanyMetrics....................................................................................4

TheAmazonCustomer...........................................................................8

Logistics................................................................................................12

NewMarkets........................................................................................13

KeyTakeaways......................................................................................14

FurtherReadingfromFungGlobalRetail&Technology......................14

AmazonShopperIntelligenceService..................................................15TableofFigures

Figure1.US:AmazonEstimatedGrossMerchandiseVolume(USDBil.)4

Figure2.Global:AmazonTotalRevenues(LeftAxis,USDBil.)andOperatingMargin(RightAxis,%)............................................................4

Figure3.AmazonOperatingMargin,bySegment(LeftAxis,%),andAmazonWebServicesRevenueasShareofTotalRevenue(RightAxis,%)............................................................................................................5

Figure4.Global:AmazonThird-PartyUnitSalesasShareofTotalUnitSales(%)andOrdersFulfilledbyAmazon(FBA)asShareofTotalThird-PartyUnitSales(%).................................................................................5

Figure5.US:RankingofLargestRetailers..............................................6

Figure6.Amazon’sShareofInternetRetailSales,byRegion(%)..........6

Figure7.AmazonRevenueGrowth,byCountry,ExcludingCurrencyEffects(YoY%Change)...........................................................................7

Figure8.EstimatedAnnualSpendingatAmazonperAdult(USDatFixed2016ExchangeRates)...................................................................7

Figure9.USConsumerSurvey:ProportionofSurveyRespondentsWhoHaveanAmazonPrimeMembership,byAgeGroup(%).......................8

Figure10.USConsumerSurvey:ProportionofSurveyRespondentsWhoHaveanAmazonPrimeMembership,byHouseholdIncome(%)..8

Figure11.USConsumerSurvey:RetailersPurchasedfrominthePreceding90Days(%)............................................................................9

Figure12.USConsumerSurvey:ProportionofConsumersWhoShoppedatAmazoninthePreceding90Days,byAgeGroup(%).........9

Figure13.USConsumerSurvey:ProportionofConsumersWhoShoppedatAmazoninthePreceding90Days,byHouseholdIncome(%).........................................................................................................10

Figure14.USConsumerSurvey:ProportionofConsumersWhoBoughtItemsinSelectedCategoriesfromAmazoninthePreceding90Days(LeftAxis,%)andAmazon’sRankingAmongUSRetailersforEachCategory(RightAxis).............................................................................10

Figure15.USConsumerSurvey:ProportionofConsumersWhoBoughtWomenswearfromAmazoninthePast90Days(%)...........................11

Figure16.USConsumerSurvey:ProportionofConsumersWhoBoughtMenswearfromAmazoninthePast90Days(%).................................11

Figure17.AmazonFulfillmentandDataCenters:TotalSpace(Mil.Sq.Ft.).........................................................................................................12

Figure18.US:NumberofAmazonFulfillmentCenters,byState.........12

Figure19.AmazonAustralia:EstimatedTotalMerchandiseSales(LeftAxis,AUDBil.exSalesTax)andEstimatedShareofTotalInternetSales(RightAxis,%).......................................................................................13

Figure20.AmazonIndia:NumberofFulfillmentCenters....................13

June1,2017

IntroductionFewretailersaretalkedaboutasmuchasAmazon—andnotjustbycommentatorsandanalysts,butalsobyshoppersandjournalists.AtFungGlobalRetail&Technology,wecoverthiscompanyfrequentlyandindepth.

Forthisreport,wehaveminedcompanyfilings,researchdatabases,consumersurveysandpressreports,andwehaveincludedourowncalculationsandestimatesinordertopresent20chartsthatwehopewilldeepenreaders’understandingofAmazon.

Thethemesdiscussedhererangefromforecastsalesandmarginsthrough2022,toaverageper-capitaspendonAmazonbycountry,toAmazon’spopularityinthewomenswearandmenswearcategories.Therearethreesignificantthemesthatweexplore:

• ThestrengtheningofcompanyoperatingmarginsfromthecontributionofAmazonWebServices.

• Thegrowingshareoftotalsalesmadebythird-partysellersonAmazon,whichcanbepresumedtoyieldhighermarginsforAmazonthandirectretailing.

• ThegrowthinAmazonPrimeandthefactthatalmosthalfofUSconsumersnowsaytheyhaveaPrimemembership.

Weprovidelinkstofurtherrelevantreportsfromourglobalteamofanalystsattheendofthisreport.

Source:amazon.com

June1,2017

CompanyMetrics

Figure1.US:AmazonEstimatedGrossMerchandiseVolume(USDBil.)

Third-party salesare thosemadeby sellersonAmazon; first-party salesare thosemadebyAmazonitself.Source:EuromonitorInternational

Webeginwiththebasics:howmuchAmazonsellsinitscoremarketoftheUS.ChartedabovearetheestimatedvaluesofgoodssoldonAmazonintheUS.Amazonsold$98billionworthofgoodsintheUSin2016,accordingtoEuromonitorInternationalestimates.Only$35billionofthoseretailsalesweremadebyAmazonitself,with$63billionmadebythird-partysellersonAmazon’splatforms.

Amazondeclaredtotalworldwiderevenuesof$136billionin2016,andsome$90billionofthatcamefromtheUS.ButtheserevenuestellonlypartofthestorybecausesomanyofthesalestransactedonAmazonaremadebythird-partysellers,forwhichAmazonbooksonlycommission.Moreover,Amazon’sstatedrevenuesincludeitsAmazonWebServicescloud-computingbusiness.

Figure2.Global:AmazonTotalRevenues(LeftAxis,USDBil.)andOperatingMargin(RightAxis,%)

Actualdatathrough2016;consensusestimatesfor2017–2022asofMay15,2017Source:S&PCapitalIQ

Amazongrewtotalworldwiderevenuesby27%in2016.TheconsensusamonganalystsisthatAmazonwillgrowtotalworldwiderevenuesby22%in2017.Consensuscallsforrevenuestogrowatacompoundannualgrowthrate(CAGR)of16.5%thereafterthrough2022,whichwouldbringrevenuesto$356billion.

Theconsensusexpectationisthatoperatingprofitgrowthwillunderpacerevenuegrowththisyear,leadingtoaslightfallbackinmargins.However,after2017,analystsexpectstrongandconsistentoperatingprofitgrowththatwouldtakemarginstoover10%by2022.

Asweshowinthenextchart,thegrowthofAmazonWebServicesisbolsteringmargins.

16.124.2

33.444.0

54.263.0

14.918.5

2011 2012 2013 2014 2015 2016

Third-PartySales First-PartySales

4 5 7 8 1115192534

48617489

107136

166201

238276

316356

OperaingMargin Revenue

June1,2017

Figure3.AmazonOperatingMargin,bySegment(LeftAxis,%),andAmazonWebServicesRevenueasShareofTotalRevenue(RightAxis,%)

Source:S&PCapitalIQ/FungGlobalRetail&Technology

Amazon’snewlycementedprofitabilityisbeingdrivenbyAmazonWebServices,whoseoperatingmarginsfarexceedthoseoftheremainderofAmazon’sbusiness(i.e.,thesaleofproducts).In2016,AmazonWebServicesgenerateda25%operatingmargin,thoughthatwasdilutedatthegrouplevelbecauseAmazonWebServicescontributedjust9%oftotalrevenue.Thesegmentisexpectedtocontinuegrowingitsshareoftotalrevenue,soitscontributiontogroupmarginswillalsocontinuetogrow.

LossesinAmazon’sinternationalsegmenthavedeepened,andthecompany’splannedmoveintoAustraliaandinvestmentsinIndiamaketheprospectsofashifttoprofitabilityinthatsegmentremoteinthenearterm.

Figure4.Global:AmazonThird-PartyUnitSalesasShareofTotalUnitSales(%)andOrdersFulfilledbyAmazon(FBA)asShareofTotalThird-PartyUnitSales(%)

UnitsrefertophysicalanddigitalunitssoldonAmazonsitesworldwide.FBAshareofthird-partyunitsalesisdisclosedonlyinthefourthquarterofeachyearandisapproximate(e.g.,itwas“morethan55%”in4Q16).Source:Companyreports

Amazon’sprofitabilityisalmostcertainlybeingsupportedalsobythegreatershareofsalesaccountedforbythird-partysellers—althoughAmazondoesnotbreakoutprofitsbyfirst-partyandthird-partysales.Forthird-partysales,Amazontakesacommission,typicallyaround15%ofthesellingprice,inexchangeforlittlemorethanadvertisingtheproductonitssite.

Moreover,amajorityofthird-partysalesarenowfulfilledbyAmazon,whichmeansthatAmazonstoresanddispatchesinventoryonbehalfofthosesellers,therebygeneratingfurtherincrementalfeesforitself.

0.22.1 3.1

0.7 2.2 3.0

(1.9) (2.0) (2.9)

0.01.02.03.04.05.06.07.08.09.010.0

2014 2015 2016

TotalNorthAmericaInternaionalAmazonWebServicesAmazonWebServicesShareofRevenue

41 42 43 44 45 46 47 48 49 50 49 50

2Q143Q144Q14 1Q152Q153Q154Q151Q162Q163Q164Q161Q17

Third-PartyUnitSalesas%ofTotalUnitSales

FBAas%ofThird-PartyUnitSales

June1,2017

Figure5.US:RankingofLargestRetailers

Source:EuromonitorInternational/FungGlobalRetail&Technology

AmazonwasAmerica’sfourth-largestretailer,onlineoroffline,lastyear.Ithassteadilyclimbedthemarketsharerankings,thoughitstayedatnumberfourbetween2015and2016.

In2016,Amazon’stotalestimatedUSsaleswere$98billion,comparedwithtotalrevenuesof$115billionatKroger,$177.5billionatCVSand$308billionatWalmartUS(excludingSam’sClub).

AccordingtoEuromonitor,Amazoncaptured3.4%ofallUSretailsalesin2016.

Figure6.Amazon’sShareofInternetRetailSales,byRegion(%)

Includessalesbythird-partysellersonAmazon.AustralasiaisthesumofAustraliaandNewZealand.Source:EuromonitorInternational

Amazonenjoyeda33%shareofUSInternetretailsalesin2016,includingsalesmadebythird-partysellers.

Inmarketswheretherehasbeenaconsiderableappetiteforonlineshopping—notablytheUSandGermany—Amazon’sshareofonlinesaleshasgrownconsiderably.Thedrivetogetmorethird-partysellersontoAmazon’splatformhashelpedunderpingrowthinthesemarkets.

9.48.48.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Australasia US UK Germany France

June1,2017

Figure7.AmazonRevenueGrowth,byCountry,ExcludingCurrencyEffects(YoY%Change)

Source:S&PCapitalIQ/FungGlobalRetail&Technology

TheUScontributedtwo-thirdsofallAmazonrevenuein2016,andthecountryhasbeenthecompany’sfastest-growingstatedregionalsegment.USrevenueswereup28%yearoveryearin2016.

Germanycontributed10%ofAmazonrevenuelastyear,andrevenueinthecountrygrewby20%.TheUKcontributed7%ofrevenue,andrevenueinthecountrygrewatasimilarratetoGermany.

JapanandtheRestoftheWorldsegmenteachcontributed8%ofrevenuein2016.(Totalsdonotsumto100%duetorounding.)

Therevenuegrowthratesaboveareshownintherespectivenationalcurrenciesinordertostripoutcurrencyeffects.

Figure8.EstimatedAnnualSpendingatAmazonperAdult(USDatFixed2016ExchangeRates)

BasedontotalsalesmadethroughAmazon’srespectivenationalwebsites,includingsalesbythird-partysellers.Calculatedbasedonpopulationdataforthose18+.Source:EuromonitorInternational/USCensusBureau/Eurostat/FungGlobalRetail&Technology

Basedonestimatedtotalsales,includingsalesbythird-partysellers,wecalculatethateachUSadultspentanaverageofjustover$412onAmazonin2016.SpendingbyUKadultswasnotfarbehind.

Thespendingdataaboveareshownintermsoffixed2016exchangeratesinordertostripoutcurrencyeffects.

26.3 24.5

20.119.717.4

2011 2012 2013 2014 2015 2016

US Germany UK Japan

359321

412377

US UK Germany2015 2016

June1,2017

TheAmazonCustomerInthissection,weshowcaseUSconsumersurveydatafromourresearchpartnerProsperInsights&Analytics.

Figure9.USConsumerSurvey:ProportionofSurveyRespondentsWhoHaveanAmazonPrimeMembership,byAgeGroup(%)

SurveysconductedMarch2013toApril2017Base:Between4,912and7,609adultsages18+ineachthree-monthperiodSource:ProsperInsights&Analytics

PrimehasbeenadrivingforceinAmazon’sgrowth.USpenetrationratesofPrimemorethandoubled,to42%,inthefouryearsendedApril2017.Millennials(thosebornbetween1983and1998,byProsper’sdefinition)aremorelikelythanthoseinolderagegroupstohaveaPrimemembership.

Thedatachartedaboveshowtheproportionofsurveyrespondentswhoansweredyeswhenasked,“DoyouhaveanAmazonPrimemembership?”Thewordingissignificant,becauselargerproportionsthanthosechartedarelikelytohaveaccesstoPrimedeliverybenefitsthroughaPrimemembershipheldbysomeoneelseintheirhousehold.

Figure10.USConsumerSurvey:ProportionofSurveyRespondentsWhoHaveanAmazonPrimeMembership,byHouseholdIncome(%)

SurveysconductedMarch2013toApril2017Base:Between4,912and7,609adultsages18+ineachthree-monthperiodSource:ProsperInsights&Analytics

IntheUS,more-affluenthouseholdsaremorelikelytohavePrimememberships.Asthegraphaboveshows,growthofPrimemembershipamongthosewithincomesinthe$35,000–$74,999rangetracksgrowthamongtypicalPrimecustomersveryclosely.

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%

2013 2014 2015 2016 2017

AllAdults MillennialsGenXers BabyBoomers

42.3%41.6%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%

2013 2014 2015 2016 2017

AllAdults18+ Lessthan$35,000$35,000to$74,999 $75,000+

June1,2017

Figure11.USConsumerSurvey:RetailersPurchasedfrominthePreceding90Days(%)

Base:7,008(2016)and7,406(2017)adultsaged18+Source:ProsperInsights&Analytics

Measuredbyshoppernumbers,AmazonisthemostpopularretailerintheUS—evenifitisnotyetnumberonebymarketshare.AnApril2017ProspersurveyofUSadultconsumersfoundthatalmost70%ofthosepolledhadpurchasedfromAmazonintheprevious90-dayperiod.ThiswasaroundfivepercentagepointshigherthantheshareofthatsaidtheyhadpurchasedfromWalmartoverthesameperiod.

Figure12.USConsumerSurvey:ProportionofConsumersWhoShoppedatAmazoninthePreceding90Days,byAgeGroup(%)

SurveysconductedApril1,2013,throughApril1,2017Base:Between4,912and7,733USadultsaged18+ineachperiodSource:ProsperInsights&Analytics

Amazonseesseasonalfluctuationsinshopperparticipationlevels,withastrongpeakovertheholidayperiod.Inthegraphabove,wechartthemedium-termtrendwithalineartrendline,whichshowsasteadyincrease.

TheProspersurveydatarevealtwotrends:

• MillennialshavefirmlyovertakenGenXersasthemostlikelyagegrouptoshopatAmazon.Fully78%ofmillennialshadpurchasedfromAmazoninthe90daysendedApril1,2017.

• Thegapbetweentheagegroupshastendedtowiden.Thisiscountertowhatwewouldcommonlyexpect:wewouldexpecttoseethatgapnarrowasolderagegroupsadopte-commerceandcatchupwithyoungeragegroups.ThissuggeststhatAmazoniscementingitsappealamongyoungeragegroups.

69.9%64.4%

27.2%23.6% 21.1% 20.7%

64.3%58.7%

24.1%21.3% 20.4%

Amazon Walmart Target Kohl’s BestBuy Macy’s JCPenney

April2017 April2016

2013 2014 2015 2016 2017

AllAdults18+ MillennialsGenXers BabyBoomersLinear(AllAdults18+)

June1,2017

Figure13.USConsumerSurvey:ProportionofConsumersWhoShoppedatAmazoninthePreceding90Days,byHouseholdIncome(%)

SurveysconductedApril1,2013,throughApril1,2017Base:Between4,912and7,733USadultsaged18+ineachperiodSource:ProsperInsights&Analytics

Byhouseholdincome,thetrendisconsistent:more-affluentshoppersaremorelikelythantheaverageshoppertoshopatAmazonandless-affluentshoppersarelesslikelyto.

Shopperswhohaveincomesinthe$35,000–$74,999rangetrackthetypicalcustomerverycloselyintermsoftendencytoshopatAmazon,astheydoforPrimemembership(chartedearlier).

Figure14.USConsumerSurvey:ProportionofConsumersWhoBoughtItemsinSelectedCategoriesfromAmazoninthePreceding90Days(LeftAxis,%)andAmazon’sRankingAmongUSRetailersforEachCategory(RightAxis)

SurveysconductedJune2016throughApril2017Base:Between6,791and7,609USadultsaged18+ineachsurveyRankindicatesAmazon’spositionversusotherretailersnamedinthesurveybynumberofshoppers—so,a#1rankingshowsthatAmazonisthetopretailerforthatcategory,asmeasuredbynumberofshoppers.Source:ProsperInsights&Analytics

ThechartaboveshowsboththeproportionofconsumerssurveyedwhohadpurchasedaniteminoneoftheselectedcategoriesfromAmazoninthepreceding90daysandAmazon’srankinginthatcategoryversusotherretailers,basedonshoppernumbers.

Infiveofthesevencategoriesshown,Amazonisnowthenumberoneretailerbynumberofshoppers:onlymenswearandgroceriesseeotherretailerstakingthetopspot.ThelatestmenswearsurveyisfromJune2016,sowecouldseeAmazoncapturethefirstpositioninthatcategorywhenProspercompletesitsJune2017survey.

Shoppernumbersareimpactedbythefrequencyatwhichconsumersbuyitemsindifferentcategories.Electronics,forexample,tendtobepurchasedmorefrequentlythanapparel.

2013 2014 2015 2016 2017

AllAdults18+ Lessthan$35,000$35,000to$74,999 $75,000+

21% 21%17% 16%

1 1 1 1 2 1

135791113150%

5%10%15%20%25%30%35%40%

% Rank

June1,2017

Figure15.USConsumerSurvey:ProportionofConsumersWhoBoughtWomenswearfromAmazoninthePast90Days(%)

Base:4,912–7,406adultsaged18+ineachsurveyperiodSource:ProsperInsights&Analytics

Morethanone-thirdofallUSmillennialssurveyedhadboughtwomenswearfromAmazoninthe90daysendedApril2017,comparedwith21%ofallUSconsumerssurveyed.

AmazonisnowthenumberonedestinationforwomenswearintheUS,basedonshoppernumbers:itnarrowlyovertookKohl’sasthetopretailerforwomenswear,byshoppernumbers,intheApril2017Prospersurvey.

However,thisdoesnotmeanthatAmazonisthebiggestretailerinthecategorybysales,asthatmetricisaffectedbyfrequencyofshoppingandaveragespendaswellasbynumberofshoppers.

Figure16.USConsumerSurvey:ProportionofConsumersWhoBoughtMenswearfromAmazoninthePast90Days(%)

Base:5,606–8,760adultsaged18+ineachsurveyperiodSource:ProsperInsights&Analytics

Prosper’slatestsurveyregardingmenswearisfromJune2016,whenAmazonwasthesecond-most-shoppedretailerintheprevious90-dayperiodamongthosesurveyed.OnlyWalmartwasmorepopularformenswear.WemayfindthatAmazonhasmoveduptobecomethemost-shoppedretailerformenswearintheJune2017survey.

Aswithwomenswear,Amazon’stotalshoppernumbersconcealmuchhighershoppingratesamongmillennials.

• FormoreonAmazonandapparel,seeourreportDeepDive:RetailRevolution—USApparelShiftsin20Charts.

15.5%13.5%

15.2%16.6%

Apr13 Apr14 Apr15 Apr16 Apr17

AllAdults18+ MillennialsGenXers Boomers

14.0% 13.4% 13.4%

Jun13 Jun14 Jun15 Jun16

AllAdults18+ MillennialsGenXers Boomers

June1,2017

Logistics

Figure17.AmazonFulfillmentandDataCenters:TotalSpace(Mil.Sq.Ft.)

Spaceisfor“fulfillment,datacentersandother.”Source:Companyreports

Attheendof2016,Amazonoperated160millionsquarefeetofspaceacrossitsfulfillmentcentersanddatacentersworldwide.Some62%ofthisspacewasintheUS,whichaccountedfor66%of2016revenues.

RecentlyopenedUSfulfillmentcentersaretypicallybetween750,000and1millionsquarefeetandemployaround1,000peopleeach.

AccordingtopropertyresearchfirmMWPVLInternational,Amazonoperatesseveraltypesofdistributioncenters:largefulfillmentcenters,midsizeAmazonPantryandAmazonFreshdistributioncenters,midsizeregionalsortationcenters,smallerdeliverystations(forsortingpackagesforshoppersinnearbyareas)andevensmallerPrimeNowhubs(whichstockpopularproductsforrapiddelivery).

Figure18.US:NumberofAmazonFulfillmentCenters,byState

Includesfulfillmentanddistributioncenters,regionalsortationcenters,AmazonPantryandAmazonFreshdistributioncenters,deliverystationsandPrimeNowhubs,operationalorplanned,asofJanuary2017Source:MWPVLInternational/Statista

Amazonoperated214distributionfacilitiesacrosstheUSasofJanuary2017,accordingtoMWPVLandStatista.CaliforniaandTexasarehometothehighestnumberoffulfillmentcenters.

99.571.7

58.648.335.6

48.644.2

36.330.8

20162015201420132012

NorthAmerica Internaional

June1,2017

NewMarkets

Figure19.AmazonAustralia:EstimatedTotalMerchandiseSales(LeftAxis,AUDBil.exSalesTax)andEstimatedShareofTotalInternetSales(RightAxis,%)

Source:FungGlobalRetail&Technology

InApril2017,AmazonconfirmedthatitissettolaunchafullofferinginAustralia—althoughitdidnotdisclosealaunchdate.Assumingitmovesintothemarketin2018,weestimatethatAmazonAustraliacouldgeneratetotalnetmerchandisesalesofapproximatelyA$4billionin2021andA$10billionin2026(equivalenttoUS$3billionandUS$7.5billion,respectively,atthetimeofwriting).Ourfiguresincludesalesbythird-partymarketplacesellersonAmazon,sotheydonotrepresentrevenuesbookeddirectlybyAmazon.

Theseestimatestranslatetoashareofapproximately12.5%ofAustralianInternetsalesin2021and20%in2026,climbingbyanaverageof150basispointsperyear.

• SeealsoourreportDeepDive:Aussies,GetReadyforAmazon!

Figure20.AmazonIndia:NumberofFulfillmentCenters

Source:Companyreports

IndiaisasecondfocusforinvestmentbyAmazonand,above,wechartthegrowthinitsnumberoffulfillmentcentersinthecountry,basedonpressreports.Inadditiontofulfillmentcenters,AmazonIndiaalsooperatesdeliverystations,whichsortdeliveriesforshoppersinnearbyareas.

InApril2017,AmazonIndiaannouncedthatithadopenedsevennewfulfillmentcentersthatwillbeusedexclusivelyforlargeappliancesandfurniture.InMay,thecompanyannouncedthatitwouldopenafurthersevenIndianfulfillmentcentersbytheendofJune,bringingthetotalto41.

Amazon.inoperatespurelyasamarketplacesite,duetorestrictionsonforeigndirectinvestmentinmultibrandretailing(i.e.,thesellingofarangeofthird-partybrands).InAmazon’sfirst-quarter2017results,CEOJeffBezossaid,“Amazon.inisthemostvisitedandthefastest-growingmarketplaceinIndia.”AmazonIndialaunchedPrimeinJuly2016.

• SeealsoourreportDeepDive:IndiaRisingPart2—E-CommerceDisruptorsinIndia.

4.2 5.3 6.4 7.68.8

12.514.4

16.117.6

18.9 20.0

2021E 2022E 2023E 2024E 2025E 2026E

Sales OnlineShare

20 2124

Jul14 Sep15 Jun16 Sep16 Apr17 Jun17E

June1,2017

KeyTakeawaysAschartedearlier,analystscurrentlyexpectAmazontogrowworldwiderevenuesby161%,from$136billionin2016to$356billionin2022.Theconsensusamonganalystsisforoperatingmarginstostrengthensteadily,beforereachingdoubledigitsin2022.

Thekeydatapointsfromthisreportthatshowcasethebuildingblocksforthisforecastgrowthare:

1. AmazonWebServicesisbolsteringprofitgrowth.Thisbusinessdivisionyieldeda25%operatingmarginin2016,upfrom19%in2015.AndthedivisionisgrowingitsshareofAmazon’stotalrevenues:AmazonWebServicesaccountedfor9%oftotalrevenuesin2016,upfrom7.4%in2015.

2. Amazon’sthird-partymarketplaceisalmostcertainlyprovidingfurthersupporttomargins(thoughthecompanydoesnotbreakthissegmentout).HalfofallunitsalesmadethroughAmazonarenowmadebythird-partysellers,forwhichAmazonbooksacommissionwithouttakingownershipofinventory.

3. AmazonPrimeisshoringuptoplinegrowth.Some42%ofUSadultsnowhaveaPrimemembershipandthatfigurerisesto55%amongmillennials.Giventhatdeliverybenefitscanbesharedwithinahousehold,asubstantiallyhighershareoftheUSpopulationhasaccesstoPrime.

FurtherReadingfromFungGlobalRetail&TechnologyDeepDive:Aussies,GetReadyforAmazon!

DeepDive:IndiaRisingPart2—E-CommerceDisruptorsinIndia

DeepDive:USConsumerSurvey—AmazonPrimeMembersLoveShoppingOffline,Too

DeepDive:USConsumerSurvey—AmazonYettoCracktheMenswearMarket

DeepDive—USConsumerSurvey:AmazonIsWinningtheBattleintheToySegment

USHealthandBeautyAidsConsumerSurvey:AmazonIsNotOnlyCompetitiveinPrice,butAlsoinCustomerSatisfaction

FootwearPoisedtoGrowat4TimestheRateofApparelThrough2020:DataRevealSpecialtyandOnlineAreBenefiting,withAmazonGainingtheMost

DeepDive:RetailRevolution—USApparelShiftsin20Charts

June1,2017

AmazonShopperIntelligenceServiceThisreportfeaturesselecteddatathatareavailablefromtheAmazonShopperIntelligenceService.ThisservicecombinesFungGlobalRetail&TechnologyanalysisandcommentarywithinputonthousandsofUSshoppersfromProsperInsights&Analytics.Itincludes:

• Over10yearsofsurveydataonAmazonshoppersandleadingretailers’shoppers.

• ProsperShopperPreferenceShare(whichindicateshowAmazonisgrowingasapreferredretailerfor11differentmerchandisecategories,andthereasonswhy).

• Retailpositioningmaps(whichplotretailersandtheircompetitorsbasedonthepercentageoftheirshopperswhoshopthereforparticularreasons).

• Netpromoterscores.

• Keydemographics.

Source:FungGlobalRetail&Technology

June1,2017

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com

amazon in 20 charts—the rise and rise of the e-commerce ... · amazon’s share of internet...

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