According to a research released on Friday by American multinational investment bank – JP Morgan, Jeff Bezos-owned Amazon is on track to overtaking Walmart and becoming the largest U.S. retailer next year.
According to how analysts at JP Morgan described it, Amazon’s U.S. retail business is the “fastest growing at scale”. “Based on current estimates, we believe Amazon could surpass Walmart to become the largest U.S. retailer in 2022”, Christopher Horvers and Doug Anmuth wrote specifically.
Highlighting the factors for Amazon’s growth, Christopher Horvers and Doug Anmuth said that the company was expanding into “large and under-penetrated categories”. These categories include grocery and apparel, strong growth of third-party seller sales and the “Prime flywheel”. Amazon now has more than 200 million people subscribed to Prime, Jeff Bezos mentioned. The figure as at the beginning of 2020 was 150 million.
Amazon’s gross merchandise volume (GMV), which is a closely watched and well-used yardstick to measure the total value of goods sold during a specific period, has witnessed impressive growth. The JP Morgan analysts said that Amazon’s GMV has grown “significantly faster” than both U.S. adjusted retail sales and U.S. e-commerce.
Although neither Amazon or its biggest rival –Walmart break out gross merchandise volume (GMV) in their quarterly earnings results, the analyst at JP Morgan estimate that Amazon’s GMV is growing faster than Walmart’s. According to these analyst, Amazon’s GMV in 2020 jumped 41 percent YoY TO $316 billion. Walmart’s GMV, on the other hand, jumped 10 percent YoY to $439 billion in the same year.
Amazon’s growth, as well as that of every business in e-commerce and retail, witnessed meteoric growth as a result of the coronavirus pandemic. Consumers were at home as a result of the different lockdowns that ensued. These consumers turned to online retailers like Amazon for products as small as home-use items. Amazon became the backbone of support for many of these consumers who could not leave their homes. People even turned to Amazon for their groceries.
The pandemic-induced sales have helped Amazon expand its share of the e-commerce and retail market. According to JP Morgan estimates, Amazon expanded its share of the U.S. e-commerce market to 39 percent in 2020, up from 24 percent in 2014.
Amazon has also witnessed growth in other aspects of its businesses, It even recently bought MGM Studios as a way of expanding its Prime service.
On Tuesday, analyst at Bank of America wrote that Amazon is gearing to “become one of the largest delivery companies” in the U.S.
The pointers seem to be quite clear and it is therefore not impossible that Amazon will become the largest U.S. retailer by next year.