2020 Amazon Trends and Predictions

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Introduction

E-commerce marketplace. Data powerhouse. Cloud computing platform. Advertising giant. Grocery retailer. Entertainment provider. Health care supplier — and more.

If there is one company that understands — and incites — evolution, it is Amazon. What began as an “everything store” has, in a quarter of a century, evolved into an “everything company.” Despite its astounding growth and innovation, Amazon remains ambitious as ever, showing no signs of slowing down.

Marking 25 years since its birth, 2019 was a momentous year for Amazon. Foremost, the e-commerce giant surpassed Walmart as the largest global retailer and also took the title as the world’s largest company, with a market capitalization of $797 billion.2

Amazon also saw its most successful Prime Day event yet, which for the first time spanned 48 hours. With over 1 million exclusive deals for its more than 100 million U.S. Prime members and over 175 million items sold, Prime Day 2019 sales surpassed Amazon’s combined sales total from Black Friday and Cyber Monday in 2018.3

1Everyday Power, 2019 2The Times, 20193Amazon, 2019

However, like the nature of its marketplace, Amazon as a company — as well as consumer buying patterns, sales trends, and technologies — is ever-changing. As a seller or brand on Amazon, staying abreast of these trends and transformations is not an option but an imperative.

In this e-book, we outline the top 2020 Amazon trends and predictions as well as key statistics for you to keep in mind as you map your business strategy to evolve accordingly — or otherwise get left behind.

What’s dangerous is not to evolve.

– Jeff Bezos, Founder and CEO, Amazon1“

Contents

Amazon’s 2019 Year in Review 32020 Vision: Amazon Predictions for the Year Ahead 8Amazon Stats You Need to Know 12Conclusion 13

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55% of U.S. consumers are Amazon Prime members.1

Amazon has its tentacles in countless industries and revenue streams, but its e-commerce marketplace remains the foundation of its business. With estimates of its online U.S. market share upwards of 37% in 2019, this year saw an evident increase in the number of brands and retailers establishing a presence on the platform to tap into Amazon’s massive and lucrative customer base.2

With that said, competition from retail rivals is intensifying. For instance, Walmart this year also launched free next-day delivery, without a membership fee, and rolled out a new third-party pricing initiative, the Competitive Price Adjustment Program, in response to Amazon’s new Sold by Amazon program, which gives Amazon the ability to control the prices of certain third-party goods on its marketplace.

To keep not only consumers but also brands and retailers coming to its platform, Amazon will undoubtedly continue to roll out new marketplace offerings and features to maintain its appeal and position as the No. 1 e-commerce marketplace in the U.S.

Amazon’s 2019 Year in Review

1Feedvisor, Proprietary Consumer Research, 20192eMarketer, 2019

Below are a few of our key observations of Amazon trends and initiatives from 2019, which we anticipate will continue to influence the year ahead.

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Delivery Developments

83% of consumers say that free two-day shipping is their favorite part of Prime membership.1

The pioneer of rapid delivery that has come to shape U.S. consumer expectations and shopping behaviors, Amazon this year further positioned itself as the leader of convenience and customer service with the launch of free same-day and one-day Prime shipping. The offering is available nationwide to Prime members with no minimum purchase requirement for over 10 million products.

One of the company’s most significant and anticipated announcements of the year, the initiative was made possible after years of building out Amazon’s sophisticated delivery network, which this year includes 110 fulfillment centers in North America, 40 package sortation centers, 100 delivery stations, 20 air gateways, and thousands of third-party contract workers.2

1Feedvisor, Proprietary Consumer Research, 20192Amazon, 2019

AMAZON'S 2019 YEAR IN REVIEW

Jan. 7 Amazon takes the title as the world’s largest company at a market cap of $797 billion.

Feb. 14 Amazon pulls out of its planned H2Q headquarters in NYC.

March 1 Amazon announces plans for a new grocery store chain, separate from Whole Foods.

April 25Amazon announces plans to spend $800 million during the second quarter for one-day Prime delivery.

May 14Adobe partners with Amazon to integrate its Magento Commerce branded stores for Amazon sellers.

Amazon also announced its goal of integrating a new small, electric drone model into its Prime Air delivery system by the end of 2019 — a move that would allow the company to deliver packages within 30 minutes of shoppers placing their orders. In addition, Amazon debuted a new autonomous delivery robot, Scout, that rolls down sidewalks to bring packages straight to shoppers’ doors.2

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1Feedvisor, Proprietary Brand Research, 20192Amazon, 20193eMarketer, 2019

Amazon Attribution updates: Amazon this year added a click-based social ad measurement for brands to measure the impact of their social ad campaigns and introduced bulk operations to simplify the tag generation and implementation process for Google Ads.

Sponsored Products targeting options: To help advertisers maximize campaign results, the company enhanced automatic targeting to be adjusted at any point during a campaign and updated product targeting for single products or categories.

Sponsored Display: Still in beta, Amazon introduced its new self-service advertising solution to help brands reach relevant audiences on and off Amazon with creative features that are auto-generated and optimized for performance.

In addition, Amazon this year rolled up its Enhanced Brand Content to A+ Content. The update includes new features, such as the ability to flip to preview mode and view both desktop and mobile preview on the same screen, the option to create language variations for content, and the ability to publish A+ content to many ASINs simultaneously.2

These added features and enhancements have helped the company chip away at Google’s and Facebook’s dominance. In 2019, Amazon will capture nearly 13% of the U.S. search advertising market, representing a 30% growth over last year and outpacing the 18% growth of the market as a whole.3

Advancements in Advertising

74% of brands on Amazon leverage advertising for new customer acquisition.1

Amazon is intent on disrupting the advertising duopoly of Facebook and Google. Over the course of the year, the company has steadily beefed up its slate of advertising options, enticing brands and marketers to increase their ad spend on Amazon’s platform. New Amazon Advertising offerings and features from 2019 include:

New-to-Brand metrics: Following a soft launch in late 2018, Amazon this year rolled out its New-to-Brand (NTB) metrics to help advertisers determine the effectiveness of their ad campaigns in attracting new customers versus retaining existing customers.

Sponsored Brands improvements: These include updates to the broad match feature, which now offers negative keyword targeting, variations like plurals or synonyms, and broad match modifiers. The company also introduced a new product optimization feature, allowing brands to engage shoppers with more dynamic Sponsored Brands ads.

AMAZON'S 2019 YEAR IN REVIEW

May 14 Walmart launches free next-day delivery with a goal of reaching 75% of the country by year’s end.

May 13 Amazon acquires parts of Sizmek to leverage its capabilities for personalized ads.

June 1 China tariffs go into effect on $60 billion worth of U.S. goods, impacting Amazon sellers.

June 3Amazon launches same-day and one-day Prime shipping.

June 16-19Amazon hosts its first re:Mars event for machine learning, automation, and robotics.

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Brick-and-Mortar Expansion

40% of U.S. consumers are likely to visit an Amazon Go store in the future.1

Despite its position as the go-to destination for e-commerce, Amazon over the last several years has been growing its brick-and-mortar footprint to further enhance its omnichannel presence and meet consumers where they are.

Indeed, retail e-commerce is growing rapidly at 14.8% compared to the brick-and-mortar segment at 1.9%, yet in-store shopping remains the preferred channel for most U.S. consumers. By the end of 2019, e-commerce will account for just under 11% of total retail spending across all merchants.2

In addition to its Amazon Books, Amazon 4-Star, and Whole Foods Market locations, the company in 2018 introduced its tech-forward Amazon Go convenience store and has continued to expand its footprint this year with the goal of opening up to 3,000 locations by 2021.3

1Feedvisor, Proprietary Consumer Research, 20192eMarketer, 20193Bloomberg, 2018 4Amazon, 2019

AMAZON'S 2019 YEAR IN REVIEW

New this year was Amazon’s announcement to launch a new chain of grocery stores, independent from the Whole Foods banner. The company has reportedly signed more than a dozen leases in the Los Angeles area, with several locations that could open by year’s end.

In addition, Amazon has turned to new retail partnerships to further build out its physical presence. The company launched its new service, Counter, which allows customers to pick up and return Amazon packages in-store at its partner locations.

The service is a win-win for Amazon and brick-and-mortar retailers, as it offers an added convenience for Amazon customers while also helping to drive traffic in-store. So far this year, Counter is available at Rite Aid, Kohl's, GNC, Health Mart, and Stage Stores locations.4

June 27 Amazon announces the launch of pick-up and return service Counter at in-store partner locations.

July 5 Amazon celebrates its 25th anniversary as a company.

July 15-16The most successful Prime Day yet rakes in record sales and Prime membership enrollment.

July 30Amazon launches its first B2B private label brand, AmazonCommercial.

Aug. 7FedEx ends its ground delivery partnership with Amazon.

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While Amazon has long held high standards for product quality, safety, and legitimacy, 46% of brands selling on Amazon claim that not enough is being done to prevent the sale of counterfeit products on the platform.1

This year, the company took further steps to combat counterfeit, unsafe, and illegitimate products with the launch of Project Zero, a new program that “empowers brands to help drive counterfeits to zero.”3 The program includes three tools:

Automated protections: Powered by machine learning, automated protections continuously scans stores and proactively removes suspected counterfeits.

Self-service counterfeit removal: This tool provides brands with the ability to remove counterfeit listings themselves.

Product serialization: By providing a unique code for every unit that is manufactured, the company can individually scan and confirm the authenticity of every one of a brand’s products that are purchased in Amazon’s stores.

Amazon also released an IP Accelerator program, designed to help retailers and brands expedite trademark registrations and various layers of brand protection. Designed specifically with small and medium-sized businesses in mind, the accelerator gives brands access to a detailed network of trusted IP law firms to leverage for trademark registration services.

Combat Against Counterfeits

66% of brands are taking measures to prevent the sale of counterfeit products on Amazon.1

As Amazon’s online marketplace continues to grow — and more sellers, brands, and products join the platform — so too does the epidemic of counterfeits. President Donald Trump this year ordered a crackdown on counterfeit products on third-party online marketplaces, stating that the value of global trade in counterfeit and pirated goods may rise to half a trillion dollars a year, with about 20% of this trade infringing upon U.S. intellectual property (IP).2

1Feedvisor, Proprietary Brand Research, 20192Reuters, 20193Amazon, 2019

AMAZON'S 2019 YEAR IN REVIEW

Aug. 23 China announces an additional $75 billion in tariffs on U.S. goods.

Sept. 6 U.S. launches antitrust probe into tech companies including Facebook, Google, and Amazon.

Sept. 25Amazon launches 14 new Alexa-powered devices and integrations at its annual hardware event.

Oct. 1Amazon launches its IP Accelerator program to enhance brand protection in its stores.

Oct. 2-3Amazon hosts its first AdCon event to help businesses use Amazon Advertising.

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For a company that has stakes in so many industries and initiatives, the possibilities for Amazon’s next steps are seemingly endless. However, based on the recent trends that have surfaced over the past year, we have compiled a roundup of 2020 predictions to help you prepare, modify, or optimize your Amazon strategy for the coming year.

2020 Vision: Amazon Predictions for the Year Ahead

1Feedvisor, Proprietary Consumer Research, 20192eMarketer, 20193Feedvisor, Proprietary Brand Research, 2019

Continued Growth and Optimization of Amazon Advertising

66% of consumers go to Amazon to start their search for new products.1

Amazon has made tremendous gains in the digital advertising arena over the last year, solidifying its position as the No. 2 search player in the U.S. market. While Google remains the industry leader with 73.1% market share in 2019, Amazon is poised to further chip away at Google’s lead over the next two years, capturing 15.9% market share, while Google’s will shrink to 70.5%.2

Indeed, Amazon has a unique advantage over rivals like Google and Facebook in that it is already a shopping destination — and a starting point for the majority of consumers’ purchase journeys.

As such, Amazon Advertising has become an essential component to brands’ digital marketing strategies to drive discoverability, connect to its high-value Prime customer base, and capitalize on the growing Amazon demand.

In 2020, we anticipate the company to continue optimizing and expanding its advertising arm to include enhanced targeting, personalization features, mobile optimizations, and more — all supported by attribution and ROI metrics to reinforce marketers’ increased investment. In 2019, 57% of brands currently pay for advertising on Amazon and that number is poised to grow.3

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More Amazon Private Labels — and Transparency

66% of brands agree that competition with Amazon’s private label products is a leading concern.1

Over recent years, there has been an evident migration to the private label sector as these products grant brands and sellers the opportunity to drive incremental revenue while avoiding direct competition.

A majority (62%) of Amazon sellers in 2019 have private label products in their catalogs and that number is expected to increase in the years ahead as competition on Amazon’s marketplace intensifies.2

Amazon, too, has been expanding its line of private labels, which in 2019 includes more than 400 brands and 23,000 products. Though its private labels account for just 1% of its total sales, Amazon has fallen under scrutiny, with speculation around the data the company uses to inform its private label strategy.3

Indeed, a majority of brands are concerned about competition with Amazon’s private label products and this year the Federal Trade Commission began an antitrust probe into the company around its competitiveness.

2020 VISION: AMAZON PREDICTIONS FOR THE YEAR AHEAD

1Feedvisor, Proprietary Brand Research, 20192Feedvisor, Proprietary Seller Research, 20193Marketplace Pulse, 2019

As such, we expect Amazon in 2020 to increase transparency into its private label strategy to abate public and seller concerns and reinforce the opportunity that exists for private labels and brands on its platform.

With that said, and given Amazon’s ambitious nature, the company can be expected to continue rolling out private label brands across multiple categories, in the same way a traditional retailer launches its own store brands to compete with national brands.

A dynamic pricing and advertising strategy will continue to be a necessity for private label brands selling on Amazon in order to compete with growing competition.

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2020 VISION: AMAZON PREDICTIONS FOR THE YEAR AHEAD

An Influx of Brands and Major Retailers on Amazon

72% of U.S. brands will be on Amazon in the next five years.1

Amazon’s dominant role in consumers’ purchase journeys has led to a growing imperative for brands to join the platform to meet consumers where they are. Nearly three-quarters (74%) of consumers go to Amazon when they are ready to buy a specific product, yet just 41% strongly agree that they are satisfied with the number of brands they know on the platform.2

1Feedvisor, Proprietary Brand Research, 20192Feedvisor, Proprietary Consumer Research, 2019

In addition, consumers are increasingly beginning their purchase journeys on Amazon, regardless of whether they ultimately make a purchase in-store, seeking everything from product details and price comparisons to customer reviews and brand credibility.

In the year ahead, we can expect an influx of brands and major retailers on Amazon’s marketplace to maximize their reach, control their brand’s image and reputation, and drive growth in both online and physical channels.

A whopping 97% of brands on Amazon and 84% of brands that are not on the platform agree that the biggest draw to selling on Amazon is new customer acquisition.1 With that, we should expect more first-party and third-party sellers to enter the marketplace.

In addition, Amazon’s efforts to combat counterfeits and black hat tactics — such as fake seller reviews and product listing manipulation — offer companies on the platform more control and protection of their brand image and credibility.

As the overwhelming majority (89%) of consumers agree that they are more likely to purchase products from Amazon than other e-commerce sites, it is crucial that brands ensure their products are properly represented on Amazon.2

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The Decline of Desktop

42% of millennials buy products most frequently on their smartphone.1

As technology continues to evolve and the customer shopping experience continues to advance, so too does consumer behavior. Nearly half (48%) of consumers buy products online weekly or more and over half (58%) do so most frequently from their desktop computers.1

However, mobile penetration is growing, and sellers and brands are increasingly implementing mobile optimizations to their online strategies to enhance their presence across all consumer shopping channels.

For instance, millennials — with $600 billion in annual spending power that is projected to reach $1.4 trillion in 2020 — have a stronger penchant for their mobile devices compared to older generations.2 Although the majority of millennials are still inclined to make their online purchases via a desktop, an increasing amount of millennial traffic for online shopping derives from mobile devices.1

With 94% of millennials making purchases on its platform at least once a month, Amazon has been optimizing its mobile app to enhance the mobile shopping experience.1 In 2019, the company launched a new tool, StyleSnap, which enables users to upload a photo of a fashion look they admire and then receive similar product recommendations from Amazon's apparel assortment.3

In addition, the use of voice-control technology is growing rapidly in the U.S., where adoption of voice assistants — including Amazon Alexa — is increasing faster than experts had previously anticipated. More than two-thirds of consumers with a voice-activated device (VAD) in 2019 said they would consider using it to voice order a product in the future.1

While desktop will likely remain the leading device consumers use for online shopping in the immediate future, we anticipate its dominance to decline in 2020 as Amazon, as well as sellers and brands on its platform, continues to optimize its mobile and voice experiences to appeal to this critical consumer base.

2020 VISION: AMAZON PREDICTIONS FOR THE YEAR AHEAD

1Feedvisor, Proprietary Consumer Research, 20192Accenture, 2019 3Amazon, 2019

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Consumers

55% of consumers are Amazon Prime members.

89% of consumers visit Amazon at least once a month.

48% of consumers visit Amazon a few times a week.

89% of consumers are more likely to buy products from Amazon than other sites.

83% of consumers say their favorite Prime benefit is free, two-day shipping.

46% of consumers have used a VAD to buy a product.

82% of consumers agree that price is a very important factor when selecting a product.

48% of consumers buy products online weekly or more.

Brands

72% of brands will be on Amazon in the next five years.

54% of brands are currently selling on Amazon.

97% of brands selling on Amazon say the most compelling benefit is new customer acquisition.

81% of 1P brands want to expand to Amazon’s 3P channel.

57% of brands currently advertise on Amazon.

66% of brands are taking measures to prevent the sale of counterfeit products on Amazon.

69% of brands see voice ordering as a key component of their future sales strategy.

66% of brands agree that competition with Amazon’s private label products is a leading concern.

66% of consumers go to Amazon to start their search for new products.

40% of consumers are likely to visit an Amazon Go store in the future.

41% of consumers strongly agree that they are satisfied with the number of brands they know on Amazon.

58% of consumers buy products most frequently from their desktop computers.

42% of millennials buy products most frequently on their smartphone.

94% of millennials make purchases on Amazon at least once a month.

Sellers

62% of Amazon sellers have private label products in their catalogs.

44% of Amazon sellers say their leading concern is direct competition with Amazon.

74% of Amazon sellers promote their products with pay-per-click advertising on Amazon.

72% of sellers say ratings and reviews are very important.

55% of sellers do not think that Amazon cares about their business.

65% of sellers say catalog expansion is their top business goal.

25% of sellers have catalogs that are 100% private label.

70% of sellers grew their revenue and 56% grew their profits on Amazon over the last year.

*Feedvisor, Proprietary Research, 2019

Amazon Stats You Need to Know

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Amazon’s dominance in the U.S. e-commerce arena will undoubtedly continue for years to come, given its ability to adjust its strategies, invent new offerings, and anticipate consumer needs.

The dynamic nature of not only Amazon’s marketplace but also sales trends and consumer behavior requires close attention, ongoing optimization, and flexibility.

With Amazon at the forefront of consumers’ purchase journeys — from awareness and consideration to conversion and retention — it is crucial that sellers and brands fine tune and evolve their strategies to remain relevant.

By understanding Amazon’s latest initiatives, optimizations, and growth projections, as well as consumer preferences, technological advancements, and sales trends, you will be well-positioned to adapt — or reinvent, if necessary — to keep up with the evolving market demands, which will poise you for success in the year ahead and beyond.

To optimize your end-to-end e-commerce strategy, get in touch with us at feedvisor.com/connect

Conclusion

1Everyday Power, 2019

One of the only ways to get out of a tight box is to invent your way out.

– Jeff Bezos1

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Feedvisor's platform and team of experts offer best-in-class, patented pricing technology, strategic advertising campaign optimization, brand and content management, and intelligence. Together, these features drive demand, profit, and revenue growth on the Amazon marketplace.

The “AI-First” Optimization and Intelligence Platform for Large Sellers and Brands on Amazon

Pricing. Advertising. Brand Management. Intelligence.

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