In its second-largest acquisition, Amazon buys the company for $970 million.
Why online retailing may still morph into Amazon and everyone else.
Am I alone in wondering if it’s Amazon and then everyone else in the online retailing market these days?
I didn’t think so. The numbers and projections just keep piling up that Amazon may be head and shoulders above the rest of the industry. Here’s some of the latest data and forecasting:
- Europe. European sales for Amazon.com will increase to $12.45 billion in 2010, up 33.3% from an estimated $9.34 billion in 2009. That figure is based on an analysis by veteran Amazon observer and ChannelAdvisor CEO Scot Wingo that Europe now represents about 80.8% of Amazon’s estimated 2010 foreign sales of up to $15.41 billion and an estimated 80% of $11.68 billion in overseas sales in 2009.
- Total sales. Amazon.com, No. 1 in the Internet Retailer Top 500 Guide, is expected to grow web sales 39.9% to $34.29 billion from $24.51 billion, estimates J.P Morgan in a new report. J.P. Morgan also projects total revenue for Amazon.com will reach an estimated $44.9 billion in 2011 and $56.39 billion in 2012.
- Profits. Just a few years ago Wall Street analysts were convinced Amazon didn’t care enough about profitability and only about growing the top line as it bought more companies, expanded into new merchandising categories and developed programs such as Amazon Prime. (Consumers who subscribe to Amazon Prime pay a $79 annual fee for free standard shipping on all purchases made directly from Amazon.com.) But J.P. Morgan estimates net income for Amazon will grow 28.6% to $1.16 billion in 2010 from $902 million in 2009 and rise to $1.7 billion and $2.24 billion, respectively, in 2011 and 2012.
A year ago Walmart.com in uncharacteristic fashion began taking verbal swings at Amazon.com and telling the market it had what it takes to eventually usurp Amazon as the biggest online retailer. Now Walmart.com has become strangely quiet, the executive who made the statements—Walmart.com CEO Raul Vazquez—is out of e-commerce and running Wal-Mart’s newly created Wal-Mart West offline division, and Amazon.com keeps rolling along.
As the industry consolidates, I predict the online retailing market will see plenty of “have or have not” dramas unfold. Amazon, obviously, will be in the “have” column. We are only just now beginning to tabulate this year’s new Top 500 rankings, but I can tell you now nobody is going to knock Amazon off the top rung, although it will get interesting for everyone else we rank in the Top 10 (stay tuned).
So why blog about the numbers that predict Amazon will remain head and shoulders above everyone else? Where Amazon goes, the online retailing market goes, and that’s up. Everyone’s chasing Amazon.com and almost everyone emulates eventually the features and functions Amazon rolls out (personal product recommendation is a great example).
I say relax and concentrate on growing your brand and your niche. You aren’t going to catch Amazon now. But you can still go along for the ride and, if you are smart, innovative and create a great user experience you’ll be fine. There’s still plenty of opportunity and growth to go around.