Every year, a group of new companies try to outperform Amazon. Ten years ago, it was eBay, followed by Walmart and Google. Although Amazon has remained unchanged on the surface, there have been many changes inside and around it.
Next, just follow SellerSprite, from the four perspectives of Amazon's global market general situation, the platform's development and changes, Amazon sales distribution, as well as its Chinese sellers, to get an insight into the ever-changing Amazon and determine a new direction for going global in 2024.
● How will Amazon respond to the rise of new competitors?
● Amazon's expansion has been suspended, and how has its existing market performed?
● The sales of third-party sellers keep growing, among which Chinese sellers perform outstandingly.
● Chinese sellers are no longer focusing on the US Website and shifting their attention to Europe.
Interpretation of Image-Texts
🌟01 Amazon's Global Market General Situation
As of April 2023, Amazon is by far the most popular online market in the world, with an average monthly traffic of approximately 4.8 billion sessions. The second most-visited shopping website is eBay, with approximately 1.2 billion sessions.
And the new competitors from China, SHEIN and Temu, are also on the rise. SHEIN, Temu, and AliExpress now have a total of over 1 billion monthly web page views, which is about half of Amazon in the United States and twice as many as Walmart.
But most of SHEIN and Temu's sales are driven through their apps rather than websites. Therefore, even if merged together, their GMV is one order of magnitude smaller than that of Amazon, but this number should not be underestimated.
Amazon is the largest clothing retailer in the United States, including both online and offline retail. It charges a 17% commission to sellers, along with additional fees for delivery and advertising, making clothing one of Amazon's most expensive categories to sell.
SHEIN's GMV in 2023 exceeded $40 billion, less than 10% of Amazon's. But most of this $40 billion comes from clothing, making SHEIN the largest online local clothing retailer.
Faced with competition from SHEIN, Amazon has also responded. It reduces the commission on clothing products priced below $15 from 17% to 5%. For products priced between $15 and $20, the commission will be reduced from 17% to 10%. And the commission of expensive goods remain at 17%.
Take a look at Amazon from its overall performance in the US market.
Amazon accounts for 4% of the US retail market (including all physical stores). In the e-commerce industry (including stand alone websites, online auctions, and other forms of e-commerce activities), Amazon holds 40% of the market share, and on e-commerce platforms, it holds 80%. It is still the leading platform in the industry.
Currently, Amazon is the mainstream platform for cross-border e-commerce, both in the global market and in the United States.
But from the perspective of online platforms used by global consumers, the rise of other shopping platforms has given consumers more choices. The multi platform layout will definitely be the trend for future development. Faced with the competition from AliExpress、SHEIN、Temu and TikTok Shop, Amazon will surely make changes as well.
🌟02 Amazon's Development and Changes
Amazon originally planned to open new websites in Chile, Colombia, Nigeria, and South Africa in 2023. But actually it didn't. Belgium is the last new website launched by Amazon in October 2022. Currently, Amazon has a total of 21 websites worldwide.
Amazon's is quite cautious about global expansion as it requires high fixed investments to explore new markets through FBA. It can utilize existing pan-European infrastructure (and sellers) to establish new markets there, but in countries such as South Africa or Chile, it must start anew. By contrast, Temu has accessed markets of 48 countries in 2023 as it does not require local physical infrastructure.
Amazon will eventually land in South Africa in early 2024 and has started recruiting sellers for the market.
The US website remains Amazon's most important site, accounting for 46% of its total sessions in 21 global markets. Since 2019, 8 new websites have been launched, including the United Arab Emirates (UAE), Singapore, the Netherlands, Saudi Arabia, Sweden, Poland, Egypt, and Belgium, accounting for only 2% of Amazon's total web traffic.
Compared to December 2022, the web traffic of its most websites has been on the decline. The web traffic of Canada, Mexico, Australia, Turkey, the Netherlands and UAE is increasing.
Brazil, Mexico, and Australia are the fastest-growing international markets among all Amazon sites. Within three years, Amazon's web traffic in Brazil has almost increased to three times, while in Mexico and Australia it has more than doubled.
Amazon's traffic structure is also constantly changing.
Mobile phones dominate the global digital commerce website traffic and contribute the largest online orders. In the fourth quarter of 2023, smartphones accounted for approximately 78% of global retail website traffic, generating two-thirds of online shopping orders.
This further indicates that the traffic is gradually tilting towards the mobile end. More and more people prefer to browse and shop on their phones, and it is particularly important for retail websites to adapt to mobile ends.
From the perspective of social media traffic sources, in December 2023, YouTube was the social media platform that drives the highest traffic to Amazon, accounting for more than half of referral traffic. Facebook ranks second, with traffic accounting for slightly over 10%, followed by Twitter with approximately 9.76%.
During the two days of the Amazon shopping activity, videos with tags including #primeday, #primeday2023, and #amazonprimeday2023 were viewed at least 400 million times on TikTok within 48 hours. In the past few years, this number has doubled every year. In 2019, it was almost zero. Consumers are increasingly fond of obtaining shopping information on social media.
However, TikTok earned zero revenue from hundreds of millions of PrimeDay views. The conversion rate is also very poor because few posts directly link to Amazon. So TikTok is launching its own e-commerce platform within its application — TikTok Shop.
Amazon also launched Inspire, a product similar to TikTok, in December 2022, but the results were not satisfactory. Although attempts at social commerce have failed, Amazon has found a different opportunity.
It collaborates with Facebook and Instagram, allowing users to associate their accounts with Amazon and place orders directly on social media platforms without redirecting pages or switching login accounts.
This collaboration will greatly increase Amazon's overall traffic and order volume, and promote an increase in e-commerce conversion rates on Meta social platforms.
Whether it is the "e-commercialization" of social platforms or the "socialization" of e-commerce platforms, the ultimate goal is to use powerful social traffic to guide e-commerce business and achieve a full closed-loop from socializing to shopping.
🌟03 Distribution of Amazon Sales Volume and Sales Revenue
Amazon's total sales have continued to grow in the last five years.
The sales of Amazon International in the fourth quarter of 2023 were $40.24 billion, a 17% increase from $34.46 billion in the same period last year. The annual sales revenue increased by 11% from $118.1 billion in 2022 to $131.2 billion in 2023.
The sales of Amazon North America in the fourth quarter of 2023 were $105.51 billion, a 13% increase from $93.36 billion in the same period last year. The annual sales revenue increased by 12% from $315.87 billion in 2022 to $352.83 billion in 2023.
This is Amazon's global net revenue in 2023, calculated quarterly, which is sourced from online and offline stores, retail third-party seller services, subscription services, AWS, and other (advertising, etc.) revenue.
Among them, retail third-party seller services include Amazon commissions and related fulfillment and delivery fees, as well as other third-party seller services;
Subscription services include annual and monthly fees related to Amazon Prime members, as well as digital videos, audio books, digital music, e-books, and other non AWS subscription services;
Other mainly includes revenue from advertising services such as search ads, display ads, and video ads, as well as a small portion of sales related to various other products, such as healthcare services.
The net revenue for the whole year of 2023 reached $574.78 billion, exceeding the $513.97 billion in 2022, with a growth rate of 12%.
This chart is a stacked bar chart of Amazon's global net revenue in 2023, which provides a visual representation of Amazon's revenue proportion across various sectors. Among them, online stores and retail third-party seller services account for the largest proportion of revenue.
Amazon Percent of Units by third-party sellers in 2023 reached 61% in the fourth quarter of that year, an increase of 3.4% from 59.0% in the same period last year, hitting a new high.
In the previous forecast for Amazon's e-commerce sales revenue from 2018 to 2027, Amazon's e-commerce sales were expected to reach $764.8 billion in 2023.
Among that, first-party sellers will account for $272.9 billion, while third-party sellers will account for $491.9 billion. It is expected that the sales revenue of these two business models will continue to grow in the coming years, with the growth rate of third-party business model being much faster.
For many years, Chinese sellers have been increasing their market share on Amazon. But by November 2020, possibly due to lockdowns, supply chain issues, account suspensions, and Amazon FBA inventory restrictions, American sellers reversed this trend and began to gain market share.
However, this reversal stopped in March 2022 and returned to the original trend. Afterwards, Chinese sellers regained their lost market share and reached new highs in recent months. By the end of 2023, nearly half of the top third-party sellers on Amazon come from China.
However, only 48 percent of the top third-party sellers on Amazon US are US enterprises. US sellers' market share is at a record low.
While Amazon shocked the market by shutting down hundreds of top Chinese sellers on a massive scale in 2021, new marketplaces like SHEIN and Temu also offer a new way out for Chinese sellers. But Chinese sellers have not withdrawn from Amazon, and they still enjoy the largest GMV on Amazon. Therefore, "Made in China, Sold on Amazon" is still the norm.
This chart is subdivided by the year in which the seller entered the market and expressed as a share of total sales. For example, sellers who joined Amazon in 2022 currently account for approximately 10% of total sales.
Amazon continues to expand its market through the participation of new sellers and the continuous development of long-term sellers. Under constantly changing conditions, old sellers did not show an obvious escape, and new sellers did not lose interest.
Today, approximately 5% of Amazon's sales in the US come from sellers who joined more than a decade ago, and the same 5% come from sellers who joined last year. The old and new sellers in the market have always maintained a balance.
More than half of the sales in the Amazon US market come from sellers who started selling more than 5 years ago. At the same time, new sellers are also seeking opportunities and bringing incremental market growth. Every year, there is a certain proportion of growth among newly participated sellers, even in categories where mature sellers seem to dominate. The continuously expanding overall market GMV enables new sellers to grow without reducing the sales of existing sellers, thus avoiding market saturation.
Next is the expenditure proportion of Amazon sellers.
The sellers fees charged by Amazon now account for over 50% of their revenue, compare to 40% five years ago. The increase in seller spending is due to Amazon's increased delivery fees, and advertising spending is inevitable.
According to the profit-and-loss statement provided by the sample of sellers selling and using FBA on Amazon.com, a typical Amazon seller is required to pay a 15% commission, 20-35% Amazon delivery fees (including warehousing and other fees), as well as up to 15% advertising and promotional fees on Amazon.
With the launch of Amazon's supply chain, Amazon will convert more seller costs into revenue. But Amazon also provides corresponding value for these fees, so whether the costs are too high or rising too fast is subjective.
In 2023, Amazon gradually publicly display product sales volume on search pages. For sellers, is it going to aggravate price wars, or to force sellers to put their focus back on the product?
Anyway, a publicly available sales volume means more intense competition. This measure also indicates that Amazon is increasingly valuing the refined operations of sellers and will find ways to guide sellers to improve their level of refinement.
This chart shows the sales volume distribution forecast for some categories in 2022 and 2027, as well as Amazon's fastest-growing product categories from 2022 to 2027.
From 2022 to 2027, fashion and apparel is expected to become Amazon's fastest-growing product category, with sales expected to grow at a compound annual growth rate (CAGR) of 12.4%. The health and beauty category follows closely behind, with an expected CAGR of 12.1%, followed by office products and electricals, with a CAGR of 11.6%.
In Amazon's shopping activities, according to a survey of over 1000 brands sold on Amazon, the main activity driving sales growth is Black Friday, with one-third of respondents considering it the most influential event.
Black Friday is followed by Prime Day, and 17% of brands reported an increase in sales during this event.
This is the top 10 most popular categories on Amazon Prime Day in 2023.
On Amazon Prime Prime Day in July 2023, the most popular category was home goods, purchased by nearly 30% of Amazon Prime users in the US. Apparel and shoes rank third, purchased by 24% of users.
Among the hot categories on Amazon Prime Day in the US, the beauty and personal care category saw a 35% growth in sales in July 2023 compared to the previous year, with the largest rate of increase. The health and household followed closely behind, with sales increasing by 26% year-on-year. The average growth rate of all categories is 8%.
🌟04 Amazon Sellers and Categories Data
According to the statistics of SellerSprite's Reverse ASIN tool, the top 5 websites that Amazon's Chinese sellers are most interested in are: the US, the UK, Germany, Canada, and France.
Chinese sellers are no longer always focusing on the US site, and their proportion of clicks on the US site has decreased from over 50% in the past two years to around 25%. In contrast, the proportion of that on sites such as the UK, Germany, and Canada has significantly increased, and sellers are shifting their focus to Europe and Canada.
We further compared the proportion of clicks on websites in 2022 and 2023, and it can be seen more intuitively that, on the basis of clicks on all websites have increased, the focus on websites of Chinese sellers have become more diversified.
In addition to a significant decrease in the proportion of clicks on the US site, the Japanese one is also on the decrease, while the sites of five European countries and Canada have all increased significantly, with the most significant growth being on the Canada, which increased from 4.7% in 2022 to 12.9% in 2023.
This is the product ratings of the four major sites that Chinese sellers are most concerned about, including the US, the UK, Germany, and Canada sites, which is actually the number of products on sale under each of the first level categories on these sites. (Please download the complete version of the PPT to view the data of the UK, Germany, and Canada sites)
The supply-demand relationship reflected by the number of products on sale and the search volume of core keywords of the category provide important reference data for product research.
These categories are arranged in descending order according to the number of products on sale. As of January 1, 2024, the total number of products on Amazon US is close to 850 million, with the highest number of products still being clothing, shoes & jewelry, accounting for over 30%. In other words, over 30% of the products on Amazon US market belong to clothing, shoes & jewelry.
We also used SellerSprite's Reverse ASIN tool to count the categories of the top 100 ASINs with the highest number of seller clicks, and obtained the top 10 categories that Chinese sellers focus on the US, UK, Germany, and Canada sites in 2023, as well as the average prices of these categories. (Please download the complete version of the PPT to view the data of the UK, Germany, and Canada sites)
The top 10 categories that Chinese sellers are most concerned about on the US website are:
Home & Kitchen, Beauty & Personal Care, Clothing, Shoes & Jewelry, Arts, Crafts & Sewing, Sports & Outdoors, Automotive, Tools & Home Improvement, Industrial & Scientific, Office Products, Toys & Games.
We selected Under-Bed Storage products in the Home & Kitchen category and analyzed the market and users by Shulex-VOC.
By comparing the proportion of products with different storage capacities and their corresponding sales volume trends, it is found that products with a capacity of 60L, which accounts for 7% of the products in the Under-Bed Storage market and occupies the second market share, indicating that this specification of storage is a "hot selling" product in this market segment.
The main problems of such products are still about quality, such as thin materials, zipper issues, and fragility. There is also some feedback that the product is hard to stack and lacks structural support. The unmet needs include bottom support, larger size options, etc. These all can provide entry suggestions for sellers who are new to this market segment and improvement suggestions for sellers who are deeply rooted in this market.
The above are only the results of part of insights into users. For more content and categories, please use Shulex for in-depth analysis; SellerSprite members can use the Shulex plugin version for free. Click here for a try.
The following part is the ratio of Chinese sellers on Amazon. This chart shows the number of stores with orders for each product under the first-class category of Amazon's sites as of 2023.
The proportion of Chinese sellers with boosted sales in the US, the UK, Japan, and Europe has exceeded 50%, with the highest proportion in Mexico at 72.6%. (Note: Since seller addresses on the Canada site are not available to public, it is impossible to accurately determine the seller's location. Historical data is only retained for reference.)
The number of Chinese sellers has significantly risen on many sites in 2023. The US site has witnessed the largest increase, with an increase of 56.8% compared to 2022.
We have summarized the status quo of Chinese sellers on Amazon globally by analyzing their sales and quantity ratios on various sites collected by SellerSprite.
About 55% of the US sites are composed of Chinese sellers, accounting for 58% of the market share, which is currently the best performing site of Chinese sellers on Amazon's global market. The performance of the Mexico and France sites is also impressive, with 72% and 60% of Chinese sellers occupying over 50% of the market share, respectively.
The final part is the province and city distribution of Amazon's Chinese sellers compiled by SellerSprite.
Nearly 30% of Chinese sellers are located in Guangdong Province, followed by Zhejiang, Fujian, Henan, and Jiangsu. Among them, the cities with the highest number of Chinese sellers are Shenzhen, Guangzhou, Dongguan, Shanghai, and Hangzhou.
The above is all the sharing of Amazon's 2023 annual data report. Thanks for watching ♥️
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