MENU
GET LISTED
GET LISTED
SHOW ALLPOPULAR CATEGORIES
  • Home
  • B2B News
  • 8 Amazon Trends for 2020: Top Forecasts & A Look into What’s Next

8 Amazon Trends for 2020: Top Forecasts & A Look into What’s Next

Category: B2B News

There is nothing bigger in ecommerce than Amazon today. One shake and the whole world feels the repercussion. If you’re active selling online, keeping up with Amazon trends is not an option: it’s downright compulsory. It doesn’t matter if you do marketing, retail or music. Bezos has his fingers in so many pies. What Amazon is doing and will be do is going to affect you one way or another.

With that out of the way, let’s dissect the most crucial Amazon industry trends and the likely scenarios for many of its ventures in the future.

amazon trends web main final

Recently, Amazon announced its second-quarter sales to be up 20%, reaching $63.4 billion. Its operating cash flow increased 65% to $36 billion from $21 billion on June 30, 2018. Furthermore, net sales have increased in the 2nd quarter by 20% to $63.4 billion compared to $52.9 billion in the same period last year.

Yes, Amazon is doing pretty well and there is no question about that. This is thanks to its aggressive style of going big in every venture.

amazon sales

Amazon also witnessed the largest shopping event in its history with Prime Day. It recorded more than 1 million deals exclusively for its Prime members. Furthermore, it launched its first AI event called Amazon Re: MARS—Machine Learning, Automation, Robots, and Space—on Jun 4th to 7th.

These highlights are just the tip of the iceberg. The second quarter was a busy one and it sheds some light on the current direction that the online commerce giant is going.

1. Strategic Use of Technologies

Also, in the 2nd quarter of this year, Amazon launched its new Artificial Intelligence (AI) conference. It is ready to establish itself as the leader for AI innovations if it hadn’t yet. They called it Re: MARs which stands for Machine Learning, Automation, Robotics, and Space. Jeff Bezos is a well-known advocate of high tech advances, especially with his Blue Origin venture. It showed at this year’s Re: MARS.

In the conference, Amazon featured talks and workshops conducted by Amazon and industry experts. Furthermore, Amazon showcased an electric adventure vehicle from Rivian that can integrate with Alexa. Also, they announced Prime Air’s new drone delivery design. This is one of the best innovations to improve transportation and delivery time. Moreover, they featured the Pegasus Drive sortation robot being used in Amazon sortation centers. All of these and many more remind us of the company’s commitment and obsession with advanced technology.

Leveraging Information

Amazon connects and uses information about customer behaviors in some aspects to make predictions in other aspects of your life. This is what makes the company different. This trend is not likely to die off soon or even for that matter as long as Amazon is still around. Amazon’s strategy is to leverage technologies across different industries and sectors to pull in users to their platform through ease-of-use and quick delivery times. This is all to increase efficiency and improve customer experience. Thus, they have become the go-to marketplace for many customers. Also, sellers almost could not afford to not be on the site.

We should expect this trend to continue in the future. Also, we should expect Amazon to use its technological breadth to dip more its fingers (or tentacles, if you prefer) into many other industries. For many, there is really no use of pushing back. Thus, the adage “If you can’t beat ’em, join ’em.” is applicable here for many.

Native Amazon Products

Furthermore, Amazon has different native products that they brand their own. The range includes iconic products such as Kindle, Echo, Alexa, and Ring, the home security system. What we can see here is that Amazon goes for breadth more than it does with depth. It takes little shares from different sectors by connecting its specialized services in a whole new way that attracts certain groups of customers.

However, all of these products work better together with native integrations even though each of them may not be the best ones among each of their groups. Thus, we can expect Amazon to continue putting out their own products that integrate well with each other in a strategic way.

There are general trends as to how technology can change how you do business in the future. However, instead of passively waiting for such, Amazon is creating waves in this department. Thus, it is a must-watch company in this regard.

amazon profit margins 4

Strategic Use of Technology Highlights

  • Amazon’s strategy of integrating different products to build core competencies will continue to increase efficiency and improve customer experience
  • It will leverage the integration between different products and services to lure customers in the Amazon funnel (this is especially with content services)
  • The company will continue to leverage its superior information and traffic to create niches and outflank its competitors

2. Online Grocery Big Player

Experts project that by 2024, 82% of online food and beverage transactions will be from grocers with omnichannel marketing. This is a staggering number compared to the projection of 15% sales coming from pure retailers and 3% from third-party marketplaces. Amazon will be a big part of the first kind as it has made aggressive moves in the sector.

Its acquisition of Whole Foods Market in 2017 is something that we should expect to be leveraged here. Also, with its current competition against Walmart, we should expect more aggressive moves from the eCommerce giant.

Currently, eCommerce only accounts for 3% of food and beverage sales around the world. However, given the competition and development in the industry, this is expected to grow to 4.5% by 2024. Amazon and Walmart are both fighting to be in the top spot for the next coming years.

Amazon vs Walmart

Walmart is Amazon’s biggest competition to date when it comes to online grocery. Thanks to its brick-and-mortar footprint, it is poised to offer curbside pickup for its 3,100 stores by the end of this year. This curbside pickup scheme allows customers to order groceries online and pick them up the next day without going out of your car.

Walmart accounts for 26% of grocery spending in the United States and it intends to keep this leadership. Furthermore, it is planning to offer unlimited same-day grocery delivery for just $98 per year. Its plan is to have this service up for 1,400 stores. Thus, it is threatening to eat up Amazon’s share in general online retail.

Now, Amazon only has less than 500 Whole Foods Market locations in the country. Also, these are located in metropolitan areas. It seems that it will have a hard time pushing back on Walmart. However, Adam Levy suggests that it has two competitive advantages that it can use for the fight: customer data and online traffic.

Whole Foods and Prime Now

Since the Whole Foods Market acquisition, Amazon introduced exclusive deals to its Prime members. Also, it offered a 5% cashback rate on co-branded credit cards to Whole Foods shops. This allowed Amazon to collect valuable data from its customers every time they use their cards for Whole Foods shopping.

Thus, with these data, Amazon knows what to recommend to their shoppers. It can then find useful suggestions on how to make shopping as convenient to its users. Thus, it can create an onboarding experience that is far more superior than its competitors. Additionally, Walmart doesn’t really have much data on customers. They attempted to replicate what Amazon can do by offering Walmart Pay, a branded mobile wallet. However, even with a 5% cashback for using this on Walmart stores for the first year, it doesn’t have as much data as that of Amazon.

Amazon’s Prime Now app boasts of 1.8 million active users per month. Also, the site gets about 200 million unique visitors monthly. This is a treasure trove of data where Amazon can find correlations and other relationships affecting buyer behaviors and preferences. We can expect this to be leveraged to push further online grocery sales.

On the other hand, Walmart has been investing in traditional advertising with Super Bowl spots and various promotions to bolster online grocery sales. It is effective yet it can be expensive. This can prove to be unsustainable in the long run compared to Amazon’s online resources. Walmart has already spent $3.5 billion this year with an increase of 400 million from last year’s spending.

Thus, expect the competition between the two big companies to be fiercer in this sector.

Online Grocery Big Player Highlights

  • Amazon is pushing back at Walmart by leveraging its superior customer data and internet traffic
  • The company uses its data to determine purchasing behaviors to help it suggest useful items in the future
  • Its Whole Foods acquisition and its delivery capacity will likely take up shares in the online grocery sector

3. Killing the Middlemen: Ad Industry Disrupt

Do you want to increase efficiency and improve user experience? One strategy that can help with this is to kill the pesky middlemen. This has been Amazon’s long-term strategy. This has helped them in various ways. Firstly, this helped them eliminate competitors when it comes to retail goods. Amazon went about this via mergers and acquisitions. Sometimes, they even instigated price wars.

However, in the advertising industry, Amazon’s share of global digital ad spend is only 3% in 2018. This doesn’t mean that it will not grow. Experts suggest that by 2023, this number will rise up to 8%. Furthermore, it seems to be supporting that growth by recruiting account managers and advertising specialists. The top two companies when it comes to digital ad spend market share are Google and Facebook.

Percentage of Ad Revenues from Total Revenues Among Online Tech Giants (2019)

94%

Facebook

85%

Google

4%

Amazon

Source: Marketing Dive

Designed by

Facebook has 94% of its total revenue from ads. It’s 85% for Google. On the other hand, Amazon only gets 4% of its revenue from ads. However, digital ad spending is predicted to dip from 17.6% of global ad spend in 2019 to just 8% by 2023. This projects a challenge for both Facebook and Google. Some experts think that this is a result of some stagnation where the digital ad market can’t expand because of global economic constraints. In other words, it has become too saturated. But what does this mean for Amazon, Google, and Facebook?

Well, it all stems out from their business models. Google and Facebook serve as referral sites to online marketplaces. People go on these search engines to get to where they can actually purchase the products and services they want. On the other hand, Amazon is one of those top marketplaces. Google and Facebook just act as its middleman. Furthermore, Amazon is actually the third most-used search engine in the world. In a sense, it already started killing its middlemen.

What does it mean for the ad industry?

Ad agencies may benefit from Amazon’s digital ad platform according to Marketing Dive. However, they would need to come up with new competencies in running campaigns for clients in Amazon’s digital real estate. Furthermore, the platform has been rolling out some self-serve ad features thus this poses a threat to agencies overall. Third-party (3P) sellers may just opt to do everything in-house with Amazon if these self-serve ad features have high usability.

Amazon’s advertising self-serve features may cut advertising agencies out of the picture.

Moreover, many advertising technology vendors may need to partner with Amazon to keep their products and services relevant. Walmart, a big competitor in online grocery, had already acquired Polymorph Labs to bolster its ad services. Also, Target has also made a move when it comes to expanding ad integrations into its properties. However, Walmart and Target have limited arrays of products and services being sold on their platforms compared to that of Amazons. Thus, the disruption that they may bring to this industry is also limited to that of Amazon.

Therefore, if you are an advertising professional or a marketer, it is time to dive deep into how you can leverage Amazon’s ad services for your firm and clients. As the digital ad industry is likely to stagnate because firms are cutting middlemen, you don’t really want to be in the middle anymore. You should consider taking sides and expand your breadth, range, and core competencies.

Killing the Middlemen: Ad Industry Disrupt Highlights

  • Amazon will be positioned as a top digital ad market next to Google and Facebook in the next few years
  • Advertising agencies will now offer Amazon ad services and products. However, self-serve ad features will allow users to circumvent ad agencies for Amazon advertising.
  • Advertisement technology companies will create Amazon-centric products. Also, some are going to partner with the eCommerce giant in the next coming years.

4. Entertainment Giant

Jeff Bezos was approached by Farrah Abraham for an Amazon deal for her biopic. Not that it is going to be a top-selling item. However, its an indicator that Amazon has big pull when it comes to entertainment. It has been producing Amazon Originals for its Prime members and has made waves in the movie and streaming industry.

Also, it recently launched Amazon Music HD for which Neil Young chimed in and was quoted to say that: “Earth will be changed forever when Amazon introduces high-quality streaming to the masses… This will be the biggest thing to happen in music since the introduction of digital audio 40 years ago.”

amazon prime members

So, if you haven’t been living in a cave, you’d know that Amazon has already been making moves in the entertainment industry. Prime Video has received 47 Emmy nominations for original programming. This includes 20 nominations for The Marvelous Mrs. Maisel plus 11 nominations for Fleabag. It is becoming a legitimate alternative to other streaming services out there. With Amazon Music HD on the music front, it will be offering media in FLAC which is a lossless format compared to Apple Musics lossy AAC format and Spotify’s very lossy MP3 filetype.

Thus, it is easy to think that Amazon will become more of an entertainment giant than it already is. Combine all of these efforts with the launching of new Echo speakers and wireless earbuds with music streaming, it seems like a surefire way to make big splashes in the entertainment industry in the years to come.

Entertainment Giant Highlights

  • Amazon’s music service will continue to eat up market shares against other services like Spotify and Apple Music
  • The company will make more original video content and will be poised to become an alternative to more specialized streaming sites like Netflix
  • Amazon will leverage the breadth of its offerings by integrating media devices and content services to work together giving users a complete Amazon experience

5. Going Green and Sustainable

Jeff Bezos has been known to say that Amazon’s vision is to be the most customer-centric company on the planet. However, he and other executives have received much pressure from workers about the sustainability of this planet. Thus, after hundreds of employees walked out of Amazon offices in San Francisco, Los Angeles, and other US cities, management has taken more urgent steps. This is not to say that they have not already.

In the 2nd quarter of this year, Amazon has already announced the completion of hosting 50 solar systems on its fulfillment and sortation center rooftops. Also, the company was already considered to be number one when it comes to the amount of corporate on-site solar facilities installed in 2018. Furthermore, Amazon has 61 operating solar and wind projects operating globally. These worldwide efforts have been expected to generate 1,044 megawatts and provide 3.1 million megawatt-hours of energy every year.

amazon going green

Additionally, Amazon India has already introduced the Packaging-Free Shipment program in 9 cities. This helps reduce waste and put this together with how they use reusable crates, is providing progress to Amazon’s vision of Shipment Zero–making all company shipments carbon-free.

Moreover, the current walkouts reached Amazon management in a drastic way. We can bet that Amazon will intensify its sustainability efforts. It has already agreed to the purchase of 100,000 electric vehicles from Rivian. Thus, this is a big step in achieving Bezo’s goal of achieving 80% of company energy use to come from renewable sources by 2024 and to zero emissions by 2030.

Going Green and Sustainable Highlights

  • Amazon will budge from internal and external pressures to deepen its commitment and hasten its efforts to become a sustainable company
  • Purchasing and using 100,000 electric vehicles from Rivian will be a big step towards zero emissions
  • Amazon is expected to have 80% of its energy use to be completely from renewable resources and be completely sustainable in 2030

6. An Influx of More Sellers

Feedvisor predicts that 72% of brands will be on Amazon in the next five years. This is not too far off because 54% of brands are already on the platform. There are many reasons to think this way and Feedvisor may be right on this one.

Consider that 44% of companies selling on Amazon, earn more than half of their total e-commerce sales on the site. Moreover, 32% of brands on the platform report that sales on the site make up to about 75% of their total online sales. What this shows is that being on Amazon gives brands a great selling potential.

Brands believe this.

More specifically, a whopping 97% of brands on Amazon and a very significant 84% of brands that are not on the site believe that by selling on the platform, they’d be able to acquire new customers. 61% of brands are seeking to develop their relationships with Amazon to be able to get in front of bigger audiences. With these beliefs, we should expect more first-party and third-party sellers to come in.

First-party sellers (1P) are those that sell their products wholesale to Amazon and for the eCommerce company to retail. On the other hand, third-party sellers (3P) are firms that sell their products retail on the site. There are also those that use a hybrid approach for their whole product portfolios. Even individual sellers can make good money by with the simple scheme of buying items on sale from Walmart and selling high on Amazon. Check the video out below.

To wit, if you are not on Amazon yet, you better consider the option. However, it will be harder to rank on the list that answers”what are the top searches on Amazon?”.  Your competitors might beat you to the race and can take up significant market shares. Thus, this is a good trend to keep up with. Also, the numbers tell us that the ecommerce industry is going to grow more in the near future.

An Influx of More Sellers Highlights

  • 72% of all brands are expected to be on Amazon in the next five years
  • 84% of brands that are not on Amazon believe that by selling on the platform they will acquire new customers
  • There will be more hybrid sellers in the future on Amazon

7. More Acquisitions

Amazon is in its apparent form is a marketplace for selling third-party items. However, it has been more than that. As mentioned, it’s also an audio-visual content creator. Also, it delivers fresh products and helps companies store data. It is truly a diversified company. It has done all these not just by in-house innovations but also with clever acquisitions and mergers.

Many have called Amazon as a monopoly. This includes the Leader of the Free World himself, Donald J. Trump. It’s not really clear how it is a monopoly. Clearly, Amazon is gargantuan but it is not that. It’s going more for breadth rather than being a monolith in one sector. There are many criticisms out there being levied against Amazon’s way of doing business. Surely, it has disrupted industries not just with its clever use of technologies but also with how it leverages its size and budget to acquire companies.

Zappos was acquired in 2009 for about $1.2 billion. The company has allegedly gone through with many price wars across industries trying to overtake the leadership position. Also, the list of its acquisition and mergers have gone through the roof with over 100 moves since its inception. This is the way it does business. It’s aggressive and leaves other firms and jobs disappear in its wake. That’s a free market for you and there’s really no argument against it being fair in that sense.

Moreover, this trend is likely going to continue in the future. It has already acquired Twitch, Whole Foods Market, and many others that can add value to its ecosystem. Thus, companies must be wary about where they stand in this regard with Amazon. It doesn’t really matter if you are a tech company or someone that does retail. When you get on Amazon’s radar and you can add value to their operations, selling could be an option. Also, if you are in their way, you should be wary of how they can leverage their breadth and budget to take you out.

amazon acquisitions

More Acquisitions Highlights

  • Amazon is known to acquire companies that can develop products that can help it ig gain competitive advantages. Thus, we should expect acquisitions motivated by this tactic.
  • We will likely see Amazon acquire more competitors in different industries. This has been a consistent strategy.
  • Also, expect the eCommerce giant to leverage its size and acquire patents in the future as well

8. Amazon Voice Service

Yes, we all can say that from voice search statistics that voice search will likely be more of the norm in the future. The global speaker market reached 20.7 million units shipped in just the first quarter of 2019. Also, Amazon became the top smart speaker brand in Q3 of 2018 worldwide with a global market share of 31.9%. Thus, we can expect Amazon to continue to do better in the future.

Top Reasons for Using Voice Assistants in the US

To control other devices monthly

%

To check news and weather daily

%

To play music daily

%

To look up information on search engines

%

To send texts or emails daily

%

To ask for quick questions daily

%

To check traffic or to navigate daily

%

To control other devices daily

%

Source: PWC

Designed by

Amazon has access to a wide variety of customer information and it leverages this to improve its voice search products. Moreover, these voice search services can be considered to be bridges for consumers to buy into the web of Amazon services. Everything Amazon does seem to pull customer into the whole Amazon services world where everything is being ordered from Amazon. Voice search services like Alexa and the Dash Wand are designed to include Amazon into the everyday life of consumers.

In the next few years, we can expect Amazon to improve its voice search in various ways. First, we can expect to have it on more Amazon-produced devices and in better quality. The latter means that Alexa and the Amazon search algorithm will be able to suggest more useful product recommendations using data across its digital properties. Second, we should also expect that it will be integrated into other AI devices like Rivian vehicles and other products and services.

Lastly, we should expect the unexpected. Amazon has always had the knack for doing unorthodox things aggressively and with many gusto. Amazon’s voice search is really close to Amazon’s strategic operations. It strives to make everything more convenient and efficient for the customer. Thus, with Alexa and Echo devices, it is likely to strive to become a part of everybody’s everyday lives; to make itself an everyday thing in all households more than it is that way today.

Amazon Voice Service Highlights

  • Expect Amazon to push its voice search services and products to be part of the daily American life
  • We should expect more eCommerce sales driven by Amazon’s voice search capabilities
  • Expect Amazon to be the worldwide leader in smart speakers sales in the coming few years

The Great Amazon Disrupt Continues

As you already know from this Amazon industry analysis report, the company has disrupted many industries from publishing to online grocery, and from advertising to space. It is really hard to pin down what the company, its subsidiaries, partners, and executives will do next exactly. However, from what we know it will always be big, aggressive, and even out of the box. This is what makes Amazon great and very interesting to follow.

But we can expect the company to continue on its strategy of taking up business real estate across different industries and sectors without really taking them over. For the most part, Amazon will continue to provide value through making buying everything way easier for its users from product search to deliveries. It will become more of a household name than it already is and it will be global.

For companies that are in their way, this can be very bad news. However, if you are willing to work with the change rather than plainly rejecting it, you can ride on the great Amazon wave. The ripples had already been felt across many industries–from advertising to online grocery. Success may all come down to how you handle Amazon’s aggressive expansion. Thus, keeping up with Amazon trends report is a good thing to do regularly.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

Leave a comment!

Add your comment below.

Be nice. Keep it clean. Stay on topic. No spam.

TOP

Why is FinancesOnline free? Why is FinancesOnline free?

FinancesOnline is available for free for all business professionals interested in an efficient way to find top-notch SaaS solutions. We are able to keep our service free of charge thanks to cooperation with some of the vendors, who are willing to pay us for traffic and sales opportunities provided by our website. Please note, that FinancesOnline lists all vendors, we’re not limited only to the ones that pay us, and all software providers have an equal opportunity to get featured in our rankings and comparisons, win awards, gather user reviews, all in our effort to give you reliable advice that will enable you to make well-informed purchase decisions.