The data analyzed by Trackr suggests that in 2021, the U.S. retail giant Amazon will hit its all-time highs, exceeding $500 billion in revenue – a yearly increase of at least 30%.
The projection is based on five fundamental factors, such as the pandemic-inspired online shopping trend, increasing number of new sellers onboarding Amazon, improving delivery and logistics processes, new COVID-19 mutations signaling the extended pandemic effects, and the ongoing Amazon revenue growth during the past 10 years.
Amazon reports a record-breaking 2020 revenue, further growth is projected
From the data, Amazon ended 2020 on a high note, reporting a record-breaking $386 billion in revenue. The company managed to increase its profits by nearly 38% and is expected to continue following the same path in the upcoming year.
One of the reasons for this is that Amazon is continually working on improving its delivery and logistics inefficiencies that lead to better customer experience, thus strengthening the online shopping trend even more.
The Trackr app’s co-founder Ernestas Petkevicius commented on growing online buying power:
“Shift to online is for sure unstoppable and has plenty of room to grow. Logistics is a big challenge for any retailer, and Amazon is not an exception as it will see more buying power coming online from stimulus checks and different social programs all over the world.”
Besides partnering with such logistics companies as FedEx, UPS, and USPS, the everything store continues building Amazon Air to ensure higher efficiency of the delivery process and testing new delivery methods, such as drones aimed at delivering orders in about 30 minutes.
Amazon was able to secure its position at the forefront of e-commerce due to the worldwide lockdowns and social distancing that increased the demand for online shopping options. It now enjoys more than 200 million monthly visitors, Prime memberships are expected to reach 153.1 million in 2022 (compared to 142.5 million in 2020), which create the perfect conditions for Amazon to thrive like never before.
Furthermore, more than a million new sellers are onboarding the platform every year, and not without a good reason. From the data, 85% of Amazon sellers are profitable, driving more than half of Amazon’s $386 billion revenue in 2020.
As the new COVID-19 mutations signal the possibility of extended pandemic effects, people are expected to continue practicing social distancing and purchase online in order to keep themselves and others safe.
Amazon already exceeded its own expectations in 2020, and such consistently growing numbers alongside the already mentioned arguments for further growth indicate that the projection of this e-commerce giant crossing $500 billion in revenue by the end of 2021 is more realistic rather than just optimistic.
Nigeria’s E-commerce, Still Has Vast Room for Growth – Coronation Merchant Bank
The demand for mobile data usage as well as increased network coverage has increased the potential of Nigeria’s e-commerce market. Based on data from the Nigerian Communications Commission (NCC), as at end-2021, mobile network coverage was estimated at 102% based on a population size of 190 million. However, internet data penetration via GSM was at 74.5%.
A thriving e-commerce market will enable small and medium-scale enterprises (SMEs) across the country benefit from increased business activity and reduction in operational costs, which would translate into increased profit margins. The role of e-commerce was reemphasized following the outbreak of the COVID-19 pandemic. There has been a visible boost to online marketplace activities.
In 2020, the United Nations Conference on Trade and Development (UNCTAD) B2C index value for e-commerce in Nigeria stood at 46.2 points (the 8th highest in Africa). The index measures an economy’s preparedness to support online shopping and takes four indicators into account. They include, (i) the percentage of the population with bank accounts or that have accounts with a mobile money service provider, (ii) the percentage of the population that use the internet, (iii) the postal reliability index, and (iv) the presence of secure internet servers.
According to industry sources, the e-commerce market in Nigeria is estimated at USD13bn (N5.4trn), with at least 87 Nigerian e-commerce platforms (including, Jumia, Jiji and Konga).
In 2021, based on ranking from Statista, Jumia was the most popular online marketplace in Nigeria, with an estimated 147 million visitors. According to Jumia’s FY 2021 financial statement, the e-commerce platform generated 34 million orders and revenue of USD177.9m (N7.4bn), compared with 27.9 million orders and a revenue of USD159.4m (N6.6bn) recorded in 2020.
Coronation Merchant Bank noted that in general, food, personal care, fashion, beauty products, and electronics were the most common items purchased online.
It is worth highlighting that logistics plays a key role in the e-commerce value chain (which includes processing, packaging and delivery of orders). This value chain generates employment for logistics personnel and services. Coronation Merchant understands that in 2021, Jumia shipped 8.3 million packages to at least c.1,500 customers. This is compared with half a million packages distributed to c.270 customers in 2020.
The latest data from the Nigeria inter-bank settlement system shows that Nigeria recorded a total of c.160 million bank accounts as at May ’20, while the number of active bank accounts stood at 111.5 million. The advent of the eNaira (a digital currency issued by the CBN) as well as the development of mobile money given the CBN’s approval of Payment Service Banks (PSB) like MOMO, Smart Cash, Money Master and 9PSB, is expected to improve financial inclusion.
The latest data on e-payment channels from the National Bureau of Statistics reveals that 3.5 billion transactions valued at N356.5trn were recorded on electronic payment channels in Q4 ’20.
For e-commerce to attain its full potential, technology infrastructure needs to be enhanced and logistical challenges need to be addressed. Furthermore, forward-thinking solutions with regards to cyber security issues are required in order to boost consumer confidence.
Amazon Emerged Best Overall Grocery Retailer In 2021 – Report
For the second year in a row, Amazon.com, Inc was ranked as the best overall grocery retailer in the United States.
A report from research firm ‘dunnhumby’ based on insights from 10,000 shoppers on 57 grocers in the U.S recognized Amazon for offering customers consistently low prices, convenience, and great selection on a wide variety of grocery items sold on the website, Amazon.com in 2021.
Amazon, in its recently released Q4 2021 results, revealed that it partnered with Affirm to offer customers even more ways to pay on Amazon. The company revealed that customers in the U.S. now have the flexibility to split the total cost of eligible purchases of $50or more into monthly payments at checkout with no late or hidden fees.
The report noted that Amazon’s net sales increased 9% to $137.4 billion in the fourth quarter, compared with $125.6 billion in fourth quarter 2020.
Also, operating income decreased to $3.5 billion in the fourth quarter, compared with $6.9 billion in fourth-quarter 2020 while net income increased to $14.3 billion in the fourth quarter.
Amazon’s Chief Executive Officer, Andy Jassy revealed that the company saw higher costs driven by labor supply shortages and inflationary pressures, adding that these issues persisted into the first quarter due to Omicron.
“Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic”, he noted.
While appreciating the company’s staff, he stated that the retail teammates have effectively operated in peak mode for almost two years.
“A big thank you to employees across Amazon who overcame another quarter of COVID-related challenges and delivered for customers this holiday season. Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years. It’s been a tremendous effort, and I’m appreciative and proud of how hard our teams have worked to serve customers”, he said.
Meanwhile, Amazon Style, Amazon’s first-ever physical store for apparel, will open this year at The Americana at Brand, a top shopping destination in greater Los Angeles.
Investors King had previously reported that the clothing store will feature women’s and men’s apparel, shoes, and accessories from a mix of well-known and emerging brands, with prices catering to a wide range of shoppers.
Amazon to Pay $2.25 Million Fine for Unlawful Price-Fixing
Amazon, an American leading e-commerce and technology company, has been asked to pay a fine of $2.5 million for price-fixing and ordered to shut down its ‘Sold By Amazon’ program by the attorney general of Washington.
On Wednesday, Bob Ferguson, Attorney General of Washington, announced that “as a result of his office’s price-fixing investigation, Amazon will shut down the “Sold by Amazon” program nationwide.”
Explaining the ‘Sold by Amazon’ program and how the leading brand fix prices of items, Ferguson said Amazon lured third-party sellers on its platform to join the ‘Sold by Amazon’ program by assuring them that they would receive at least an agreed-upon minimum payment for sales of their consumer goods in exchange for their agreement to stop competing with Amazon for the pricing of their products.
Consequently, if sales exceeded the negotiated minimum payment, Amazon and its competitors split the surplus proceeds amongst themselves. For example, if a seller and Amazon agreed to a $20 minimum payment and the item sold for $25, the seller would receive the $20 minimum price and share the $5 additional profit with Amazon, in addition to any fees.
The “Sold by Amazon” program resulted in prices for some products increasing when Amazon programmed its pricing algorithm to match the prices that certain external retailers offer to online consumers.
As a result, when prices increased, some sellers experienced a marked decline in the sales and resulting profits from products enrolled in the program. Faced with price increases, online customers sometimes opted to buy Amazon’s own branded products — particularly its private label products. This resulted in Amazon maximizing its own profits regardless of whether consumers paid a higher price for sales of products enrolled in the “Sold by Amazon” program or settled for buying the same or similar product offered through Amazon.
Prices for the vast majority of the remaining products enrolled in the “Sold by Amazon” program stabilized at artificially high levels. This is because Amazon programmed its pricing algorithm to maintain the seller’s pre-enrollment price as the price floor. This meant participating sellers had limited, if any, ability to lower the price of their products without withdrawing the product’s enrollment in the Sold by Amazon program.
For example, while sellers were once able to offer price discounts on their products, Amazon subsequently prevented many sellers from continuing to offer discounts. Sellers then bore the risk of having their products not sell in a timely manner, or at all, while still paying Amazon for things like storage fees of their enrolled products. Many sellers remained stuck with an artificially high price for their products while Amazon was able to maximize its own profits.
Following the investigation, the court, therefore, said “Amazon must stop the “Sold by Amazon” program nationwide and provide the Attorney General’s Office with annual updates on its compliance with antitrust laws. In addition, Amazon will pay $2.25 million to the Attorney General’s Office, which will be used to support the Attorney General’s antitrust enforcement, which does not receive general fund support.”
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