Amazon’s dominance in the ecommerce space is so engrained in consumer culture these days that the retail behemoth has become the butt of many jokes. It is Walmart, however, that remains the top retailer in America – but for how long? A new report from ecommerce solutions firm Edge by Ascential forecasts that Amazon will become the largest retailer in the US in just two more years, and will add over $294 billion in US sales between 2021 and 2026.
Edge arrives at that conclusion by estimating online sales to account for more than 30% of total US retail sales by 2026, with Amazon taking almost 15% market share compared to Walmart at just under 13%.
While the global pandemic and inflation (not to mention soaring gas prices) have made it harder on many consumers, retail sales have been growing in consecutive months in early 2022. “…the squeeze on household incomes from inflationary pressures isn’t yet having a material impact on discretionary spending,” Andrew Grantham, an economist at Canadian Imperial Bank of Commerce, remarked to Bloomberg.
Despite Amazon suffering its first quarterly loss in seven years earlier this year, the company is poised to take advantage of the continued shift towards online shopping – Edge estimates that ecommerce in the US will exceed $1 trillion by the end of this year. For Amazon, a big part of its success is expected to be driven by third-party sales on its platform. Edge predicts that Amazon’s third-party sales will grow from 60% of its overall shopping sales to 67% in five years. The company also continues to benefit from initiatives that make it a “sticky” platform for consumers, such as its Prime membership and benefits, and services like Subscribe and Save.
According to New Media Measure®, as of the first quarter of 2022, US consumers have shopped equally at Amazon and Walmart, with 59% stating that they’ve purchased an item either online or at a physical store. A year earlier, however, Amazon had been ahead by a percentage point or two, and for a couple of quarters during 2021, Walmart moved ahead by a percentage point. This is likely to be a hard-fought battle for years, but if the retail winds continue blowing in the direction of online shopping, that’s an area where Amazon’s strengths will yield a distinct advantage.