April 30, 2013, 12:09 PM

Amazon keeps spending—and growing

For the 10th straight year Amazon.com is the biggest Top 500 retailer.

Lead Photo

The fastest-growing web merchants ranked over a decade in the Internet Retailer Top 500 have been the ones that have adapted to the web more quickly and aggressively than others. In particular it’s Amazon.com that continues to outperform many other Top 500 retailers. The prime reasons, says long-time Amazon.com observer and ChannelAdvisor Corp. CEO Scot Wingo, are Amazon’s ongoing ability to anticipate new and better ways for consumers to shop online through new e-commerce technology, building out its national and international fulfillment capacity and make sensible acquisitions.

Today Amazon continues to dominate the online retail industry—and the Top 500. In 2012, Amazon’s total sales of $61.09 billion accounted for 28.2% of total Top 500 sales of $216.72 billion, 32.7% of Top 100 sales of $187.07 billion and 66.7% of all Top 500 web-only merchant sales. Minus its 2012 international sales of $26.28 billion, Amazon still single-handedly accounted for $34.81 billion in sales, amounting to 15.4% of all U.S. e-commerce sales of $225.5 billion and 20.2% of all U.S. Top 500 sales of $172.27 billion.

Amazon hasn’t always been so dominant. A decade ago Amazon was the top-ranked Top 300 merchant, but its 2003 web sales of $5.26 billion only accounted for 13.1% of all Top 300 sales, 14.3% of the top 100 and 9% of all U.S. e-commerce sales. It wasn’t until about 2009 and 2010, about the time when consumers were beginning to regain confidence after coping with the biggest recession since the Great Depression, that Amazon truly emerged as a dominant retailer, Wingo says.

In the years prior to the big recession Amazon kept on expanding into new merchandise categories, including through acquisitions such as its $900 million purchase of online shoe retailer Zappos.com in 2009. The e-retailer added millions of square feet of fulfillment space to offer same-day delivery in many major U.S. cities and in 2007 launched Amazon Prime, a program that offers free two-day shipping on all orders and a growing list of perks for an annual fee of $79. Amazon also was busy rolling out new products of its own, including the first version of the Kindle electronic book reader in 2007.

Amazon has transformed itself into the biggest online retailer in the last decade by investing heavily in more warehouse space, better technology and through key acquisitions, Wingo says. Consider these metrics:

  • A decade ago Amazon only operated about nine fulfillment centers, including six in the U.S. and three overseas, totaling about 3.2 million square feet, according to Amazon’s 2004 annual report. But in 10 years Amazon has grown from spending about $477 million annually on fulfillment costs—about 7% of total revenue of $6.92 billion in 2004—to 2012 when Amazon spent about $6.41 billion—nearly 11% of total revenue—on fulfillment. In just over a decade Amazon has increased the amount of fulfillment square footage it owns or leases about 2100% to a projected 70 million. By this year’s holiday season Amazon is on track to operate about 102 distribution centers, including more than 50 in the U.S., Wingo told attendees yesterday in San Francisco at ChannelAdvisor’s annual user conference.
  • In 2003 and 2004 Amazon didn’t make a single acquisition, according to a check of its annual reports for those years. But since then Amazon has spent more than $2.15 billion, including about $1.70 billion in the last five years making major acquisitions such as Zappos.com, Kiva Systems, which sells robotic warehouse technology, and others.
  • 10 years ago Amazon also spent about 3%—$208 million—of total revenue on technology and content-related activities, compared with about 7.5%—$4.56 billion—of total sales in 2012.

“All of the innovation and change Amazon put into its business coming into and out of the last the recession really resonated with shoppers because they had the best deals, the most products and gave consumers a dependable and convenient online shopping experience,” Wingo says. “Those are some reasons for why they’re so dominant today.”

More on Amazon.com and other metrics and analysis is contained in The 2013 Top 500 Guide.

The 2013 Top 500 Guide is available in three formats: print, digital and as part of the all-new and completely updated Top500Guide.com. Information on how to order the brand-new 2013 Top 500 Guide is available here.

comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Holly Pavlika / E-Commerce

How a mommy blogger would rewrite online product descriptions

Technical jargon turns off young mothers, who have a lot of buying power. Here’s how ...

FPO

Hilmi Ozguc / Mobile Commerce

Seven tips for making the most of beacon marketing

Mobile commerce experts, including mobile commerce chiefs at retail organizations, say in-store use of mobile ...

Advertisement