We are approaching the end of 2019, but the world of eCommerce is already buzzing with the anticipation of new Amazon trends that will arrive with the beginning of 2020.
Amazon, without a doubt, is the trendsetter of the eCommerce business. Over recent years, the industry has seen a monumental shift, pushing the online retail market to unimaginable heights. Amazon figures have shown that the transformative impact of the business has radically changed the dynamics of the whole eCommerce industry.
If there is one company that understands — and incites — evolution, it is Amazon. What started as an “everything store” has grown into an “everything company” in just a quarter of a century. With its impressive growth and innovation, Amazon appears optimistic as ever, with no signs of slowing down.
Recently, Amazon announced its Third-Quarter Sales to be up 24%, reaching $70 billion, showing the massive investment in free one-day shipping, which lead to more shopping. Amazon invested over $800 million in each of his second and third quarter to expand its free one-day delivery program to more products and regions.
Third-quarter results include Prime Day sales, which the company called the most significant shopping event in history. Amazon has previously said Prime Day sales surpass those of Black Friday and Cyber Monday combined, with over 175 million items sold during the 48 hours event.
For the fourth quarter, it’s been expecting to spend $1.5 billion more to expand its warehouse footprint and product selection for the holiday shopping season.
Trend #1: AMAZON is getting smarter, with the strategic use of technology
Amazon has an unrivaled bank of data on online consumer purchasing behaviour that it can mine from its 152 million customer accounts. Since many years, Amazon uses that data to analyse customer behaviors in some aspects to make predictions in other aspects of our life. Amazon will expend more the usage of his Big Data, in the years to come, since it notice that the competition is nearing closer.
Amazon’s long-term strategy is to leverage technologies across different industries and sectors to bring users to their platform through ease of use and quick delivery times.
Amazon’s Patent Growth
Amazon has different native products that the brand owns. 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 specialised services in a whole new way that attracts certain groups of customers.
Since 2010 Amazon has grown its patent portfolio from less than 1,000 active patents in 2010 to nearly 10,000 in 2019, a ten-fold increase in less than a decade.
Amazon’s patent portfolio is dominated by Cloud Computing, with the majority of the patents contributing to AWS’ current and future services roadmap. AWS achieved 41% year-over-year revenue growth in the latest fiscal quarter, reaching $7.6B in revenue.
Trend #2: Artificial Intelligence (AI) conference – Re: MARs
Artificial Intelligence, or AI, has received a lot of buzz in recent years, but it continues to be a trend to watch because its effects on how we live, work and play are only in the early stages.
While large cloud providers compete for customers with an increasing number of AI offerings, Amazon is trying to strengthen its position in the market.
In the 2nd quarter of the current year, Amazon launched its new Artificial Intelligence (AI) conference. Being ready to establish itself as the leader for AI innovations if it hadn’t yet. They called it Re: MARs, an AI event, which brings together experts in academia and industry to discuss the future of Machine Learning, Automation, Robotics and Space (MARS). While MARS intends to stimulate optimism and creative thinking, re: Mars has some more down-to-Earth goals: teaching its attendees how to apply AI and machine learning to their businesses.
Trend #3: Delivery Developments
83% of consumers say that free two-day shipping is their favorite part of Prime membership.
The visionary of quick distribution 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-day Prime Shipping is 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 fulfilment centres in North America, 40 package sortation centres, 100 delivery stations, 20 air gateways, and thousands of third-party contract workers.
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. Besides, Amazon debuted a new autonomous delivery robot, Scout, that rolls down sidewalks to bring packages straight to shoppers’ doors.
Trend #4: Amazon Voice Service
Amazon’s voice assistant Alexa made considerable gains in 2019 through the continued refinement of machine learning techniques.
In the next few years, we can expect Amazon to improve its voice search in various ways. We can expect to have it on more Amazon-produced devices and in better quality. The latter means that Amazon search algorithm will be able to suggest more useful product recommendations using data across its digital properties, increasing the of Alexa-compatible smart home devices.
Additionally, Alexa Guard, a feature that helps customers protect their home by detecting the sounds of smoke alarms, carbon monoxide alarms, and glass breaking, is now widely available across the U.S. Alexa Guard can also be connected to customers’ existing ADT or Ring alarm systems.
Trend #5: 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.
Amazon 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 will see 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.
Trend #6: Continued Growth and Optimization of Amazon Advertising
Amazon is intent on disrupting the advertising duopoly of Facebook and Google. Over 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 includes such as New-to-Brand metrics, Sponsored Brands improvements, Amazon Attribution updates, Sponsored Products targeting options, and Sponsored Display.
These added features and enhancements have helped the company chip away at Google’s and Facebook’s dominance. In 2019, Amazon has captured 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.
In 2020, we anticipate the company to continue optimizing and expanding its advertising arm to include enhanced targeting, personalisation 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.
Trend #7: More Amazon Private Labels — and Transparency
66% of brands agree that competition with Amazon’s private label products is a leading concern.
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 catalogues and that number is expected to increase in the years ahead as competition on Amazon’s marketplace intensifies.
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.
Trend #8: An Influx of Brands and Major Retailers on Amazon
72% of U.S. brands will be on Amazon in the next five years.
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.
In the year ahead, we may expect an influx of brands and major retailers on Amazon’s marketplace to maximise their reach, control their brand’s image and reputation, and drive growth in both online and physical channels.
Also, 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.
Trend #9: Amazon is Going Green
Amazon CEO Jeff Bezos says Amazon is committed to meet the goals of the Paris climate agreement ten years early.
Amazon Announces Three New Renewable Energy Projects in the US and Spain to Support Amazon’s Pledge to Reach 80% Renewable Energy by 2024 and 100% Renewable Energy by 2030.
As part of the plan, Amazon has agreed to purchase 100,000 electric delivery vans from vehicle manufacturer Rivian.
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.
Invests $100 million in reforestation projects around the world to begin removing carbon from the atmosphere now
Although trends inherently come and go, e-commerce businesses must pay attention to ones that are having significant impacts on the customer experience and conversions. While these trends may change and evolve in time, Amazon is seeing incredible returns by capitalizing on them.
So, what do you think of the trends above?
The actual trends for Amazon in 2020 are actually very much relatable to the ones of Alibaba. The best example is their Amazon Voice Service Alexa that is extremely similar to the Voice Service Tmall used by Alibaba in their hotel Flyzoo.
This article shows some very great contents summarizing what Amazon is about to release, offer to the market in the future. I am especially intrigued by the drone prototype that they use to deliver products to the customers. Innovation is limitless and Amazon is proving it. If that project comes to life, there is high chances to see this product being improved. I am very curious to see if in the future, Amazon will be able to deliver large and heavy products with either drones or other vehicles, without the intervention of a human.
From what I understand, innovation is their key of success. Therefore, I can not wait to see what other trends we are gonna see from Amazon. I am also looking forward to see what impact will they have on the hospitality field.
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Thank you! Simon for your comment.
Currently autonomous delivery is feasible, at least under particular conditions. Amazon have already performed public tests and even limited deployments of delivery robots in select markets.
Amazon has confirmed that it plans to fly drones weighing up to 25 kg within 16 km radius of its warehouses, with packages weighing up to 2.26 kg in tow, but, indeed, weight gain of the drone packages will be something that can be observed in the coming years.
However, there is a big difference between a few carefully monitored drones flying predetermined routes during the day under ideal weather conditions and potentially hundreds of drones all operating in the same general area in a variety of conditions.
The drone is still under the “pilot” phases, where regular adoption of drone delivery will involve solving significant technical and legal challenges until it’s moves to the next step of increasing wight delivery packages.
Great article, thanks Adrian. Related to their core business, i’m curious if Alibaba’s European expansion in the coming years seriously put Amazon in distress? for example, Alibaba has quickly become successful with AliExpress in Europe in the last two years. The B2C app is already one of the most frequently used shopping apps after Amazon and eBay.
Amazone voice service is one of the most needed trends right now. In addition to selling its sophistication, Amazone also develops its products in areas that provide comfort and safety to its customers.
Not surprisingly, Amazone now easily becomes “everything company” with its impressive growth and innovation. With an increasingly high crime rate, this technology can be very helpful and provide a sense of security for us when leaving home. Especially with the features that can help us detect the sounds of smoke alarms, carbon monoxide alarms, and glass breaking. This product was amazing! I hope the Amazone company can develop this product in various languages so that it can also be used in various countries outside the U.S; such as China and some other countries in Asia.
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Thank you Monica for your comment!
Amazon is definitely pioneer of e-commerce. However, due to free flow of information, all its new services and products can be intimated easily. It is a big challenge of the e-commerce giant to think how to keep competitive by introducing new products and services on the one hand, preventing imitation or copy on the other hand. Probably enhance the reliability and security of the procurement system are still the top priority for keeping customers.
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Thank you Lawrence for your comment!
It’s really exciting to see how Amazon transforms our world with the latest technology. Thank you Adrian for sharing us the newest trend led by Amazon. What amazes me the most is the voice services by Amazon, I think this can greatly improve the life quality of some disabled people.
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Thank you Charlotte for your comment!
Thank you for the very detailed and clear information about Amazon for helping us to understand better.
I can tell that Amazon never stops growing. They made our life easier and now they are trying to protect the environment became greener. I believe that the world will be better by Amazon.
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Thank you, Momoe for your interest in the article.
Indeed, for decades, Amazon has sawed quick growing, and recently it has been committed to invest even more in sustainability because it’s a win all around – it’s good for business, the planet, customers, and the community.
Thank you for your great article Adrian. Amazon is definitely on top of the e-commerce industry, and it is becoming even better every year and even promoting sustainable practices, what will assure its position in the market.