Amazon is on track to overtake Walmart as the largest U.S. retailer in 2022, according to JPMorgan research released Friday.
Amazon’s U.S. retail business is the “fastest-growing at scale,” according to the company’s analysts. Between 2014 and 2020, Amazon’s U.S. gross merchandise volume, or GMV — a closely watched industry metric used to measure the total value of goods sold over a certain time period — has grown “significantly faster” than both U.S. adjusted retail sales and U.S. e-commerce, the analysts said.
Neither Amazon nor Walmart break out GMV in their quarterly earnings results, but JPMorgan estimates Amazon’s GMV is growing faster than its largest retail competitor. JPMorgan analysts said Amazon’s GMV in 2020 climbed 41 percent year over year to $316 billion, while Walmart’s GMV is estimated to have grown 10 percent year over year to $439 billion in 2020.
“Based on current estimates, we believe Amazon could surpass Walmart to become the largest U.S. retailer in 2022,” J.P. Morgan analysts Christopher Horvers and Doug Anmuth wrote Friday.
Horvers and Anmuth highlighted a few factors they believe are driving Amazon’s top-line growth, including an expansion into “large and under-penetrated categories” such as grocery and apparel, strong growth of third-party seller sales and the “Prime flywheel.” Amazon CEO Jeff Bezos said in April the company now has more than 200 million Prime subscribers, up from 150 million at the beginning of 2020.
The coronavirus pandemic rapidly accelerated the adoption of e-commerce and cemented Amazon’s dominance in the retail space. Stuck-at-home consumers turned to Amazon for a plethora of goods ranging from toilet paper to workout gear. They also relied on Amazon for services they might not have otherwise considered, such as online grocery delivery.
Amazon’s pandemic-fueled sales surge has helped it grow its slice of the e-commerce market. JPMorgan estimates Amazon expanded its share of the U.S. e-commerce market to 39 percent in 2020, up from 24 percent in 2014.
The accelerated adoption of e-commerce has also provided a lift to other areas of Amazon’s business.
Amazon is on track to “become one of the largest delivery companies” in the U.S., analysts at Bank of America wrote in research published Tuesday.
Amazon is estimated to deliver 7 billion packages in 2021, surpassing the roughly 6 billion packages UPS is expected to deliver in the U.S. this year, the analysts wrote, citing figures from MWPVL International, a supply chain and logistics consulting firm.
In recent years, Amazon has quietly built a shipping operation that rivals the likes of UPS, FedEx and the U.S. Postal Service. It maintains an ever-increasing network of warehouses and last-mile delivery stations, and a sprawling logistics operation with airplanes, trucks and vans.
This has allowed Amazon to deliver most of its own orders. Amazon currently delivers packages for other businesses in the U.K. and could one day expand that service to the U.S.
MWPVL estimates Amazon handled about 5 billion of the 7.35 billion packages it shipped in 2020. UPS and USPS handled the other 1.25 billion and 1.1 billion, respectively, according to Bank of America analysts.
Jumia Launches Integrated Warehouse in Kenya to Improve Logistics Operations
Nigeria and Africa’s leading e-commerce store Jumia, has launched an integrated warehouse and logistics network facility in Nairobi to improve operations in Kenya
Nigeria and Africa’s leading e-commerce store Jumia, has launched an integrated warehouse and logistics network facility in Nairobi to improve operations in Kenya.
This new warehouse will transform Jumia’s logistics operations by ensuring faster product delivery and subsequently improving customers’ shopping experience.
The 11,000-metres squared warehouse and network facility is strategically positioned and centrally located along Mombasa road, which is closer to the airport as well as the city center, according to the company.
It allows Jumia to leverage on the new Nairobi Expressway to enhance delivery time and improve efficiency. Because of the proximity, the newly built warehouse will eliminate the need to transport items from warehouses to sorting centers, reducing the operational cost and gas emissions of first-mile deliveries.
Speaking on the newly launched warehouse, the CEO of Jumia Kenya Juan Seco stated that the facility will enable the company to be more efficient and meet future needs as the company grows.
In his words, “The new integrated facility has enabled us to converge our multiple warehouses and network operations under one roof.
“This will help us to improve our fulfilment operations to be more efficient and scalable thus taking care of our future needs as the business continues to grow. We shall be able to offer more products across different categories and deliver them faster to our consumers”.
Jumia’sintegrated facility also provides improved working conditions for employees, such as more workspace and a more convenient location in terms of accessibility.
Speaking on how the facility will improve Jumia’s sustainability practices, Jumia Services Country Manager, Ankur Agarwal, said: “The convergence of our operations has helped us to reduce up to 15 truck trips per day, enabling us to reduce carbon emissions significantly. We will continue to look for opportunities to contribute positively to the environment.”
NGOs Urge EU to Reject Amazon’s Proposal to End Anti-trust Charges, Citing Loopholes
A group of 11 non-governmental bodies has urged the EU regulators to reject Amazon’s proposal to halt anti-trust charges, citing loopholes.
The NGOs who wrote the EU, disclosed that the proposals were too vague, which leaves room for evasion and abuse by the e-commerce company.
They further urged the EU to force Amazon to split its marketplace from its retail and logistics operations in order to address concerns about its dominance and control over interrelated services.
The statement reads “We urge the European Commission to reject Amazon’s commitments outright and in full, and instead continue vigorously to pursue its antitrust cases against Amazon, imposing remedies and penalties (on the Commission’s own terms) as necessary.
“They are weak, vague, and full of loopholes, leaving too much room for evasion and abuse by Amazon. Moreover, the proposed limitation of these commitments to five years, or indeed any time horizon at all, is unjustifiable”.
The European Union (EU) had earlier charged Amazon with anti-trust charges, where it disclosed that the e-commerce platform misused its position to compete against third-party businesses by misusing seller data.
In a response to the charges filed against the company, it has been consistently making some significant commitments in an attempt to escape fines from the EU as a result of its breach of seller data.
The company admitted to claims from the EU and has pledged to avoid using private seller data in situations where there’s competition with Marketplace shops, whether it is obtained through automated tools or employee access.
Amazon trying to leave no stone unturned has also promised “non-discriminatory” terms for third parties selling to Prime subscribers, including a choice in delivery and logistics services.
The e-commerce platform through one of its commitments, vowed “equal treatment” when ranking sellers in the Buy Box section that will enable consumers to quickly purchase goods.
The European Commission is asking for public feedback on Amazon proposals that theoretically give third-party sellers a better chance of competing with Amazon’s direct sales.
Comments on the proposals will remain open until September 9th. Whatever conditions the EU accepts, will remain effective for five years with oversight by a trustee reporting to the Commission.
Jumia Partners Zipline To Start Using Drones For Delivery Services
Jumia has partnered with a drone logistic company Zipline to integrate the use of drones in its delivery
After a successful pilot program in Ghana, Africa’s largest e-commerce company, Jumia has partnered with a drone logistic company Zipline to integrate the use of drones in its delivery.
Thousands of items will be available for delivery, from fashion products to health, electronics, and beauty items. This method is expected to help Jumia to deliver its products more conveniently and efficiently, Investors King understands.
The service will be available for rural and remote areas in Africa which could be hard or impossible to reach through conventional methods.
The pilot program which was carried out a few months ago covered approximately 2,500 kilometers (1,553 miles) with several products being successfully tested for delivery. Many items were delivered at a distance of up to 85 kilometers(Approximately 60 miles) in less than one hour.
According to Daniel Marfo, senior vice president of Zipline, “ (this partnership) will make shopping on Jumia even more convenient, sustainable and accessible for its customers.”
Jumia has an extensive logistic network in 11 African countries consisting of more than 30 warehouses and more than 3,000 drop-offs and pick-up stations.
Zipline is a drone delivery company headquartered in California, United States. It uses advanced and sophisticated technology for delivery services.
In the second quarter (Q2) of this year, Jumia delivered 60% of physical goods within a day, up from 57% in the first quarter. The growth has been made possible by the company’s increasing fleet of delivery vehicles and warehouses. Last month, it launched ’20-minute deliveries’ in Lagos, Nigeria to deliver groceries and food.
When the Jumia drone delivery service becomes operational, it will change the face of logistics in Africa, particularly in Ghana and Nigeria where Jumia has its largest market bases. Most importantly, it will give Jumia the leverage to better serve its customers and subsequently increase the company’s revenue.
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