Amazon may be a lot bigger than we know
With third- party sales, its actual reach may be double what it reports
Amazon’s data- savvy e- commerce model has already upturned the retail market. But it may have a far bigger reach in retail than commonly understood — signaling more threats to mass- market retailers.
Amazon’s yearly sales account for about 15% of total U. S. online sales, according to the company’s statements and the Department of Commerce.
But the Seattle e- commerce company may actually be handling double that amount — 20% to 30% of all U. S. goods sold online — due to the volume of sales it handles for third- party retailers on its website. Only a portion of those sales add to its revenue.
“The punch line is that Amazon’s twice as big as people give them credit for, because there’s this iceberg under the surface, but you only see the tip,” said Scot Wingo, executive chairman of ChannelAdvisor, an e- commerce software company that works with thousands of online sellers.
When third- party sales are taken into account, Amazon’s share of what U. S. shoppers spend online could be as high as $ 125 billion yearly, and it could represent close to 30% of the online goods Americans buy, according to an analysis of Amazon’s financial statements.
Gene Munster, a senior retail analyst at Piper Jaffray, puts Amazon at about 30% of total e- commerce in the United States, and growing.
“Amazon’s just going to slowly grab more and more of your wallet,” he said.
In 2015, Amazon reported revenue of $ 63.7 billion for retail sales in the United States and Canada, with Canada making up a relatively small portion of its sales.
In the United States, annual retail sales are about $ 5 trillion, with the Department of Commerce estimating that 8% of that is e- commerce. That puts total online sales at around $ 400 billion, and Amazon’s share at 15%.
Those sales, however, don’t reflect the full value of the items sold on Amazon by other retailers. These are companies that use Amazon as either one of or sometimes their only online sales venue. Amazon says 49% of its units sold come from third- party sellers.
As an example, think of televisions. Search “32- inch TV” on Amazon, then click “32” and under.” A total of 457 possible matches come up. But only 45 of them are actually sold by Amazon. The rest come from companies like AMeado Enterprises LLC, with 55, ByBuy with 54 and IPC- Store with 33.
These are separate companies that use Amazon as a sales platform.
“Amazon’s twice as big as people give them credit for.” Scot Wingo, executive chairman, ChannelAdvisor