More than 6 million sellers worldwide but losses in Europe?
Amazon has continued its success story in the past weeks: The total number of 3P sellers on the e-commerce platform has exceeded 6 million. In the US, Amazon now dominates the fashion retail market and, together with Google and Facebook, also the online advertising market.
In Europe, however, things seem not to be as positive at first sight when looking at the company’s 2020 financial statements: the e-commerce giant recorded a loss with its European activities last year. But with regard to Amazon’s overall strong growth, this does not necessarily indicate a poor performance. The losses were most likely caused by strategic write-offs and investments.
In the UK, Amazon is already in the starting blocks with a new line of business – speculations are heating up regarding the looming launch of Amazon Pharmacy.
General Updates
Price per unit indications are becoming mandatory on Amazon
To make it easier for customers to compare products, the unit price must be listed on Amazon starting March 31, 2021. The regulation is coming into effect in the United Kingdom, Germany, France, Italy, and Spain and applies to the categories of baby products, food, wine, drugstore items, and pet food. If unit prices are not shown, the respective product will no longer be displayed, according to Amazon.
Amazon records €1.2 billion loss in Europe in 2020
Despite a 36% year-over-year increase in sales (total of €43.84 billion), Amazon is reporting a loss in Europe in 2020. In this case, the company would not have to pay digital taxes that are in the talks of being introduced in some EU countries. Personnel costs and operational costs that are not further defined are responsible for the loss. On that note, strategic decisions probably explain the official balance sheet for the past year.
2021 estimate: $367 billion in sales for Amazon in the US
According to an estimate by eMarketer, Amazon will generate $367.19 billion in sales in the US this year – roughly six times as much as competitor Walmart is expected to turn over online. The prediction represents 40.4% of total US e-commerce sales, which is still a rather conservative calculation though. Sales by 3P sellers on Amazon are estimated at $220 billion, representing 60% of Amazon’s total sales.
Over 6 million 3P sellers on Amazon – adding 3,700 every day
According to an analysis by Marketplace Pulse, more than six million Third-Party Sellers are active on Amazon worldwide. In 2021, 3,700 new sellers have been added every day so far. If this growth continues, the total number of new 3P sellers will be 295,000 by the end of the year. The reason for this is the platform’s wide reach and popularity: companies starting online now want to benefit from this trend. The U.S. accounts for the largest share of new sellers at 26%, while Germany’s share is 6.6%.
Amazon, Google, and Facebook account for 50% of US advertising revenue
Amazon, Google and Facebook together accounted for more than half of all advertising revenue in the U.S. in 2020: $117 billion. Amazon’s share of that was $17 billion – and that’s despite the fact that its advertising business is not the company’s primary focus. The overall share of U.S. online ads served on the three platforms also increased from 80% in 2019 to 90% in 2020.
Amazon overtakes Walmart as largest fashion retailer in the US
Amazon’s apparel sales in the US have overtaken Walmart’s: in 2020, Amazon made $41 billion in apparel and footwear sales – up to 25% more than Walmart. The share of apparel sold through Amazon is about 12% in the U.S. overall, and as much as 35% in online-only fashion retail. The reason, according to Wells Fargo, is the change in shopping behavior in the Corona pandemic.
Is Amazon Pharmacy launching in the UK soon?
Amazon has registered a trademark for “Amazon Pharmacy” in the UK – suggesting that the launch of the online pharmacy will happen there soon. We believe that the launch of Amazon Pharmacy in Germany is also only a matter of time. Affected retailers should start to prepare for this development now.
Zalando expands its marketplace model
Fashion retailer Zalando plans to further expand its platform strategy, relying on the marketplace model pioneered by Amazon. Customers will be able to buy clothing, shoes, and accessories from all kinds of brands – including those that Zalando does not sell itself. Zalando aims to become the largest fashion company in Europe. By the end of the year, the number of sellers on the platform is expected to have doubled.
Walmart opens marketplace to foreign sellers
Until now, sellers on Walmart were required to have a registered address in the US or an American tax number. Since the beginning of March 2021, the platform is now also open to merchants who do not meet these requirements – but they are closely checked before admission. Nearly 100 new sellers from China have already joined in the first few weeks since the update came into effect.
YouTube is testing automated product recognition
The world’s largest video content platform is working on rolling out a new shopping feature: During the current test phase, YouTube is displaying a list of products that have automatically been recognized in a video. Similar products are also displayed to viewers – both variants include links to shop the products. The test is currently running in the US. Is this a new e-commerce sales channel in the making?
What caught our attention
Online commerce is often seen as less profitable than traditional retail. However, reservations about e-commerce platforms and Amazon in particular are steadily declining. Consumer packaged goods (CPG) manufacturers see Amazon as one of the channels with the greatest potential for growth and profitability, despite possibly lower margins initially, according to a recent McKinsey study.
Amazon DSP offers a large amount of possibilities to target the right consumer with your advertising. While there are a lot of pre-selected Audiences built by Amazon, you can also set up your own audiences and target customers that have already searched for your product. Although this sounds promising, we were always wondering what search terms exactly Amazon is taking into account. Especially, as this data can be used for search campaigns again. Now we know, there is a way to find out as Amazon saves these information in the source code of your custom-built Audience.
Top 5 Amazon Keywords
Amazon customers in all countries are looking for Easter gifts and decorations. Father’s Day gifts and game consoles are also high on the list, while face masks only make it into the Top 5 in the UK, Italy and Spain.