The Power of Amazon EMarketer

SEP 2021
Suzy Davidkhanian, Blake Droesch, David Morris,

Nicole Perrin, Lisa Phillips, Jillian Ryan, Jaime Toplin,
Paul Verna, Sara M. Watson, Yoram Wurmser
The Power
of Amazon
How 19 Business Divisions Fuel Amazon’s Flywheel
Contributors: Grace Broadbent, Daniel Keyes

The Power of Amazon: How 19 Business Divisions Fuel Amazon’s Flywheel
When Amazon starts a new business, competitors scrap business plans and markets shudder. We examined 19 of
Amazon’s divisions to help parse how the company fuels its flywheel to keep driving the virtuous cycle.
How dominant is Amazon?

Amazon Revenues Worldwide, by Business Type,
Amazon joined the $1 trillion market cap club in early 2020 2015-2020
and has the first-mover advantage for several businesses, billions
most notably as a commerce platform and a marketing $21.45
powerhouse. It also created a loyalty program that other $45.37
businesses now try to emulate. We forecast that Amazon’s $25.21
share of US ecommerce sales in 2021 will be 41.4%; next $14.09
$10.11 $35.03 $80.46
in line is Walmart with a 7.2% share. According to CNBC,
$19.21
Amazon’s revenues per minute were $837,330.25 in Q1 $4.65
$25.66 $16.23
$14.17 $53.76
2021; Apple was next with $691,234.57 per minute. $4.47 $9.72 $17.46
$2.95 $42.75
$7.88 $17.19
$6.39 $31.88 $17.22
$1.71 $12.22
Why look at the power of Amazon in 2021? $22.99 $197.35
$16.09 $5.80
$141.25
The global pandemic accelerated several digital trends $91.43 $108.35
$122.99
$76.86
where Amazon excels, including ecommerce, delivery
services, cloud computing, digital payments, home security, 2015 2016 2017 2018 2019 2020
streaming entertainment, and online advertising. Online stores (1) Subscription services (4)
Physical stores (2) AWS
How many consumers participate in Amazon Prime, Third-party seller services (3) Other (5)
the loyalty program that keeps customers using Note: (1) includes product sales and digital media content where revenue gross is recorded;
digital media content is available in both physical and digital format, such as books, music,
multiple divisions? videos, games, and software; product sales include digital products sold on a transactional
basis; (2) includes product sales where customers physically select items in a store; (3)
includes commissions, related fulfillment and shipping fees, and other third-party seller
We forecast that well over half (63.4%) of all US households services; (4) includes annual and monthly fees associated with Amazon Prime membership,
as well as audiobook, ebook, digital video, digital music, other non-AWS subscription
will use Amazon Prime this year. To put that in perspective, services, and digital product subscriptions that provide unlimited viewing or usage rights; (5)
we estimate that in 2016, just 35.6% of US households includes sales not otherwise included above, such as certain advertising services and
Amazon's co-branded credit card agreements
subscribed to the service. Source: Amazon company reports, May 26, 2021
268046 eMarketer | InsiderIntelligence.com
WHAT’S IN THIS REPORT? Our analysts evaluated 19 of

KEY STAT: Amazon has seen significant revenue growth
Amazon’s business divisions, assessed how each drives the
from both old and new business lines over the past few
business, and forecast where each will be in five years.
years—reaching over $386 billion in revenues worldwide
in 2020.
Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 2

The Power of Amazon Amazon Revenues Worldwide, by Business Type,
2015-2020
Retail and tech giant Amazon started as an online billions
$21.45
bookseller in 1994 and now sits alongside other tech
$45.37
behemoths such as Alphabet, Apple, and Microsoft. As
$25.21
the largest online retailer in the US, it has steadily added $14.09
$80.46
divisions and business lines to create a powerhouse $10.11 $35.03
$19.21
that spans multiple industries. $4.65
$25.66 $16.23
$14.17 $53.76
$4.47 $9.72 $17.46
$2.95 $42.75
$7.88 $17.19
Amazon joined the “$1 trillion market cap club” in early $1.71
$6.39 $31.88 $17.22
$12.22
2020. In Q2 2021, it reported its third consecutive quarter $22.99 $197.35
$16.09 $5.80
with more than $100 billion in revenues, despite missing $122.99
$141.25
$91.43 $108.35
analysts’ estimates. It has a first-mover advantage in several $76.86
of its business divisions, most notably as a commerce
2015 2016 2017 2018 2019 2020
platform, a marketing powerhouse, and a loyalty program
Online stores (1) Subscription services (4)
that most retailers try to emulate. Physical stores (2) AWS
Third-party seller services (3) Other (5)
Why look at the power of Amazon in 2021? Note: (1) includes product sales and digital media content where revenue gross is recorded;
digital media content is available in both physical and digital format, such as books, music,
videos, games, and software; product sales include digital products sold on a transactional
The global pandemic accelerated several digital trends in basis; (2) includes product sales where customers physically select items in a store; (3)
includes commissions, related fulfillment and shipping fees, and other third-party seller
which Amazon excels: ecommerce, delivery services, cloud services; (4) includes annual and monthly fees associated with Amazon Prime membership,
as well as audiobook, ebook, digital video, digital music, other non-AWS subscription
computing, digital payments, home security, streaming services, and digital product subscriptions that provide unlimited viewing or usage rights; (5)
includes sales not otherwise included above, such as certain advertising services and
entertainment, and online advertising. It has even begun to Amazon's co-branded credit card agreements
Source: Amazon company reports, May 26, 2021
explore healthcare.
Amazon is no stranger to public scrutiny. In H1 2021

Whenever Amazon announces that it is entering a market,
alone, Amazon faced federal antitrust investigations as
competitors start gaming out what it means for their own
well as legislation that suggested the company has taken
business. How will the dynamics shift? How will Amazon
advantage of its market power. One bill proposed that the
leverage its other divisions to gain an advantage? How will
company sell off Fulfillment by Amazon (FBA)—one of the
this change Amazon’s business model?
most sophisticated logistics networks in the world—which
powers the retail ecommerce giant’s operations. Additionally,
Our analysts—who closely follow the industries in which
a lawsuit lodged by the attorney general of Washington,
Amazon operates—examined the company’s various
DC, alleged that Amazon forbade its third-party sellers from
divisions and where they are currently. We assessed how
offering goods on competing sites at lower prices, ultimately
the divisions complement and reinforce one another to
driving up the cost of products for consumers. It’s also been
retain both shoppers and businesses within the Amazon
reported that Amazon has used third-party seller data to
ecosystem, often doing so by banking on tech-driven
develop and market its own private-label merchandise.
convenience and consumer centricity.
The Amazon flywheel has been defined as “a series of

interconnected elements that are internally reinforcing
and competitively exclusionary,” said Matthew Ball,
managing partner of venture fund Epyllion and former global
head of strategy at Amazon Studios. “The classic Amazon
flywheel, for example, said that improvements in selection
drives better customer experiences, which then attract
more sellers, which improves selection.” This results in a
“virtuous cycle.”

One of Amazon’s key advantages is its ability to use US Amazon Prime Households, 2018-2025
its various business divisions to support and drive the millions, % change, and % of total households
growth of other divisions. And a major component 90.2
86.6 88.4
of that strategy is its Prime loyalty program, which it 81.4
84.3
77.6
introduced in the US in 2005.
67.1
60.7
65.3% 66.6% 67.3% 68.0%
63.4%
Amazon Prime 60.4%
52.2%
47.5%
At the heart of the flywheel is Amazon Prime—a
subscription service that includes a wide variety of perks
such as discounts on select items, expedited shipping, and 13.6% 10.6%
15.7%
online videos, games, and music, to name a few. In fact, in 4.8% 3.7% 2.7% 2.1% 2.0%
June this year, J.P. Morgan estimated the value of a Prime
subscription (which costs $119 annually) at approximately 2018 2019 2020 2021 2022 2023 2024 2025
$1,000. Amazon Prime users % change % of total households
Note: households with a paid membership to Amazon Prime, where at least one person of
any age in the household signs in to the account at least once during the calendar year
Amazon launched Prime in 2005 with the offer of Source: eMarketer, May 2021
unlimited two-day shipping for $79 per year on a wide 268598 eMarketer | InsiderIntelligence.com
selection of products housed on the retailer’s site. Six years

later, Amazon added Prime Video, giving subscribers access The following sections of this report evaluate which of
to ad-free movies and TV shows. Amazon’s business divisions are truly forces to be reckoned
with; which of those divisions leverage Amazon’s market
In 2014, the company raised Amazon Prime’s price to $99 dominance to establish themselves in new industries; and
and started experimenting with adding more services— which are experiments that help Amazon test, learn, and
some of which, like Prime Pantry and Prime Now, were iterate to improve other parts of the flywheel.
aimed at facilitating repeat household item purchases but
have been discontinued as standalone services. Then, in What Is the ‘Power Rating’?
2015, Amazon created its own shopping holiday, Prime Day,
Our power ratings assess 19 of Amazon’s business divisions
now a multiday event that generated $11.19 billion in sales
based on five factors: maturity/iteration; disruption; integration;
worldwide for the company in 2021, according to Digital
leverage; and prediction for a five-year outlook. A business
Commerce 360. division with a higher rating is one we’ve identified as dominant
or having the potential to become so, and with the ability to
We forecast that the number of US Amazon Prime continue to feed into the flywheel. A business division with a
households will reach 81.4 million in 2021, up 4.8% year lower rating is one that is either still figuring out its business
over year (YoY). Put another way, nearly two-thirds model or is a maturing business whose importance to Amazon is
(63.4%) of all US households will have an Amazon Prime waning. The final power rating for each division is an average—
membership this year. To put that in perspective, we calculated by finding the total of all five factors’ ratings and
estimate that in 2016, 44.8 million US households—35.6% dividing that sum by five.
of all households—had Amazon Prime. We forecast that The scale used to give each business unit its power rating is:
those numbers will grow to 90.2 million and 68.0% by 2025. Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
As Amazon adds more services to its platform and looks to Disruption: 1=Developing business plan, 3=New approach,
6=Forcing out incumbents
offer even faster shipping via its Prime Air drone delivery
service, we expect more households to sign up for Prime in Integration: 1=Standalone, 3=Dependent on two or more
the coming years. divisions, 6=Drives business to all divisions
Leverage: 1=None, 3=Established relationships with key clients,
6=Supports multiple divisions and/or clients to maximize scale
Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth

For maturity/iteration, we looked at what stage of Maturity, Iteration, and Market Sizing
development the division is at, whether it was well established
or just in its early stages, and how it compares with competitors. Amazon’s online retail sales are growing faster than
For disruption, we looked at how Amazon’s business model total ecommerce sales in the US. By our estimates,
changed the ways in which others in the space did things, Amazon’s US retail ecommerce sales—including both
whether it copied another’s business model, iterated on it, or first-party and third-party sales—will total $386.40 billion in
changed the way most players have to conduct business. For 2021, accounting for more than 40% of the nearly
integration, we considered how reliant the success of the $1 trillion in online retail sales this year. That will make
division was on being part of Amazon. For leverage, we looked
Amazon bigger than the next 14 retailers combined,
at whether the clients or users of this specific Amazon division
and nearly six times larger than the No. 2 competitor in the
were also required to establish relationships across other
online space, Walmart. Amazon’s conversion rates in March
parts of the company. The 5-year outlook takes all of these
aspects into account, as well as our analysts’ knowledge of the 2021 were also stronger at 8.96%, compared with Walmart’s
competitive landscape for each division. 6.78%, according to Similarweb data.
US Amazon Retail Ecommerce Sales* vs. Total

Retail Ecommerce Retail Ecommerce Sales, 2019-2021
billions
$933.30
$791.70
$598.02 $546.90
$482.22
$380.15
$386.40
$309.48
$217.87
2019 2020 2021

Amazon* Non-Amazon
Note: includes products or services ordered using the internet, regardless of the method of
payment or fulfillment; excludes travel and event tickets, payments such as bill pay, taxes, or
money transfers, food services and drinking place sales, gambling, and other vice goods
sales; *represents the gross value of products or services sold on Amazon.com (browser or
app), regardless of the method of payment or fulfillment; excludes travel and event tickets,
Amazon Web Services (AWS) sales, advertising services, and credit card agreements
Source: eMarketer, May 2021
Disruption, Integration, and Leverage

What started as an online bookstore in 1994 is now the
largest online retail business in the US. J.P. Morgan
projects that Amazon will overtake Walmart as the
largest US retailer in 2022, when measured by gross
merchandise value (GMV). Amazon’s road to dominance
has been full of trial, innovation, and acquisition.

In 1999, Amazon moved from the traditional retail model In addition to making vendors fight for eyeballs—and, in
of selling only owned (first-party) inventory to opening its turn, wallets—Amazon is thought to favor sellers that use
doors to other sellers, a risk-free way to offer consumers its fulfillment and marketing arms, thus raising antitrust
more products without the carrying costs. This change didn’t concerns. It’s assumed that sellers pass these costs
happen instantaneously; founder Jeff Bezos iterated on on to consumers to offset the more expensive logistics
the model several times before landing on an integrated Amazon provides.
interface offering both first- and third-party products
in a single storefront. Today, Amazon faces new risks The 5-Year Outlook
as it bears responsibility for fake reviews and counterfeit
products on its marketplace. By virtue of being so big, and so far ahead of everyone
else, Amazon has a stronghold on the retail market. And
According to Amazon, third-party sellers accounted for just for that, it gets a strong rating—especially since it excels
3% of its sales in 1999. This year, we estimate that 60.1% in everyday purchases. Amazon has also been working
of Amazon’s total retail ecommerce sales will be from tirelessly on its grocery strategy, which saw a boost in online
its third-party marketplace, totaling $232.06 billion and sales during the pandemic that we believe will likely continue
growing at a slightly faster rate than its first-party business. through 2021 and beyond.
Once Amazon understood how to effectively create the Still, while Amazon created the marketplace retail channel
endless aisle in the “everything store,” it turned its attention and is thought to be the place where many consumers start
to creating its loyalty program, Prime, which was originally their product searches, it now faces concerns over potentially
tied to convenience with free two-day shipping. Prime has anticompetitive behavior, as well as new competition from the
also gone through several iterations since launching in 2005, flurry of rising platforms, like Shopify.
and it now offers same-day, one-day, and two-day shipping,
as well as digital content. Over 70% of people shop on Amazon has been at the forefront of innovation to meet
Amazon for fast, free shipping, according to a 2021 Convey customer needs and follow market trends. However, it’s
survey. The Prime program is at the core of Amazon’s unclear whether consumers will accept that Amazon is
flywheel, as it amplifies stickiness. trying to be more than an easy and convenient place to
shop. Shoppers typically don’t use Amazon for discovery
Over the years, Amazon has either purchased or created and inspiration, and the platform isn’t designed to facilitate
new businesses within its retail ecosystem that align with impulse purchases. As a result, it’s hard to foresee its
market needs and consumers’ changing habits. At the livestream shopping platform (Amazon Live) or its lifestyle
same time, it remains focused on its brand ethos of product images feature (Amazon Posts) having the same
convenience and reliability by offering a huge selection, impacts as Instagram or Pinterest.
competitive prices, and speedy delivery. Amazon has
now turned its attention to the high-end market with Try as it might, Amazon isn’t a cool, fun, curated experience.
Amazon Luxury Stores, which features luxury fashion and It is not retail as entertainment, nor is it a social
beauty brands—though the jury is still out on whether it’ll be experience. Additionally, its brick-and-mortar presence is
able to crack that niche market. nonexistent in most product categories, although if Amazon
enters the department store space as it has recently been
The endless aisle is also part of Amazon’s strategy. reported, that may change. It should be noted that while
Vendors pitted against each other on the same product online retail sales are growing at a faster clip than non-
search pages differentiate themselves by price and by ecommerce sales, physical stores still make up the vast
paying to be at the top of the list via sponsored ads. majority of retail sales in the US. Amazon is also fighting
Unsurprisingly, first-party market brands are less profitable. hard to counter the perception that it’s unfriendly to small
A 2020/2021 Feedvisor survey of US brands discovered businesses and lacks environmental consciousness.
that 80% of those that sold on Amazon exclusively via
first-party wanted to become third-party sellers.

On top of being the first place that many people—especially Leverage: 1=None, 3=Established relationships with key clients,
Amazon Prime members—search for goods, Amazon does
have a few other advantages that will take time for its Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth
competition to replicate. Its voice assistant, Alexa, has a high
adoption rate, allowing voice commerce to grow naturally
for the online retailer. The Amazon Prime loyalty program
discounts subscription purchases, making shopping for Maturity, Iteration, and Market Sizing
essentials easy. Additionally, given its market dominance Amazon’s online payment system, Amazon Pay, allows
and the sheer volume of sales it powers, Amazon has users to make purchases using the credentials stored
access to a lot of customer data. And, of course, it has in their Amazon accounts on both Amazon’s platforms
multiple revenue streams that allow it to try, iterate, and fail and other ecommerce sites. It debuted in 2007 and is
as needed to make its commerce business bigger and better available worldwide.
than the rest.
Amazon has integrated many payment options
across currencies:
Amazon Pay ■ On its own site, the “etailer” accepts payment cards—
including general-purpose credit and debit cards;
store-branded cards; gift cards—which customers
can add money to using Amazon Reload; government-
distributed electronic benefits transfer (EBT) cards; and
credit card points.
■ Amazon also accepts cash via Amazon Cash and

Amazon PayCode, where customers can top up
accounts with cash at brick-and-mortar partners.
(US retail ecommerce sales will hit $933.30 billion this

year, according to our forecast. And Amazon’s US retail
ecommerce sales are projected to reach $386.40 billion
this year—accounting for 41.4% of all US retail
ecommerce sales.)
This has given its buy button wide reach: In 2016, Amazon
reported that 33 million people in 170 countries used
Amazon Pay to make a purchase.
The service likely appeals to active users, and it’s quite

popular among teens: In March 2021, 13% of teens had used
Amazon Pay in the past month, according to a Piper Sandler
report—a figure below those of Apple Pay and PayPal but
above those for Google Pay and Shop Pay.

Amazon Pay’s seamless one-click checkout reduces
Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature shopper friction, thereby improving convenience,
Disruption: 1=Developing business plan, 3=New approach, 6=Forcing cutting into cart abandonment, and growing sales. It
out incumbents
can make payments a nonissue for users—allowing Amazon
Integration: 1=Standalone, 3=Dependent on two or more divisions, to emphasize other parts of its growth strategy—while also
6=Drives business to all divisions
tightening relationships with customers even when they
aren’t shopping with Amazon.

Amazon’s in-store and EBT options, which are fairly nascent popular third-party offerings like PayPal’s checkout button
across ecommerce, are particularly important in that or major mobile wallets like Apple Pay, which may lead some
regard. They each help Amazon reach consumers who have consumers to shop elsewhere if they’d strongly prefer to
limited access to digital payments, bringing the 7.1 million pay via a service Amazon has not integrated with. However,
US unbanked households and 38 million people receiving the Affirm deal represents a major tie-up that could
Supplemental Nutrition Assistance Program (SNAP) or foreshadow a wider opening down the line.
other government benefits into its purview.
■ Externally, Amazon Pay is competing with other buy
By bringing its frictionless purchasing to other merchants, buttons and wallets, which may cut into volume—
Amazon can bring more sellers into its orbit and gain a especially if other retailers, and larger sellers in
touchpoint in transactions occurring on third-party partners’ particular, don’t want to give Amazon any real estate on
sites, which can strengthen ties with consumers. Third-party their checkout pages. That could hinder Amazon Pay’s
partnerships also give Amazon more insight into external opportunity to garner new partners.
transactions and more reach into merchant data.
Lastly, the payments processing service is lucrative

for the ecommerce giant: Amazon Pay charges a 2.9%
Non-Ecommerce Retail
domestic processing fee with a $0.30 authorization
fee—rates competitive with the industry, helping it garner
revenues from transactions on its own site and at third-
party partners.
5-Year Outlook
Amazon’s current slate of payment options and commitment
to adding more will allow it to provide an easy and inclusive
purchasing experience on and off its site. As digital payment
options become more popular, expanding Amazon Pay
should become easier, especially within Amazon’s own
properties—including connected devices integrated with
Alexa—and that expansion will boost volume.
This is particularly true in light of its recent embrace of buy

now, pay later (BNPL), which is quickly gaining popularity.
In the past, Amazon had been toeing slowly into the space
in Australia, India, and Japan, and through a partnership
with Citi in the US. In August, the etail giant, which had
offered some limited installment loans of its own, dove in
headfirst through a new partnership with Affirm. The deal
will allow “select customers” to pay for purchases over $50
in installments, with plans for a broader rollout to come that
will allow Amazon to benefit from the provider’s growing user
base, which we expect to reach 6.0 million this year.
However, one weakness in Amazon’s approach to payments

is its apparent insistence on controlling many of its Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
payment options. Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
out incumbents
Amazon has not generally partnered with existing third-party Integration: 1=Standalone, 3=Dependent on two or more divisions,
payment providers to build out its payment acceptance 6=Drives business to all divisions
options. This prevents it from accepting payments through

Leverage: 1=None, 3=Established relationships with key clients, Long term, Amazon will likely use its physical stores to
bolster its ecommerce efforts and to draw more value from
Prediction for 5-year outlook: 1=Out of business, 3=Leader, its Prime members. The company has been using Kohl’s
6=Massive growth
physical locations to offer users in-store returns for goods
purchased on Amazon.com. Now nearly every Amazon-
owned location provides in-store pickup and returns. As
Maturity, Iteration, and Market Sizing consumers continue to adopt omnichannel shopping habits,
Amazon operates close to 600 physical stores in the US, Amazon will likely focus on expanding hybrid offerings like
the majority of which are locations of grocer Whole Foods click and collect and leveraging its Prime members to build
Market, which Amazon acquired in 2017. The rest are customer loyalty for physical stores as it has done online.
Amazon-branded stores, including Amazon Fresh (grocery),
Amazon Go (cashierless convenience stores), Amazon
4-star (featuring products with a four-star rating or higher The 5-Year Outlook
on Amazon.com), Amazon Books (carrying books and
After years of exploring different retail formats, Amazon
electronics), and Amazon Pop Up (shopping center locations
seems finally ready to scale up some of its physical stores—
that highlight various brands and trends).
particularly those involving grocery—but much of its retail
The ecommerce giant has cast a wide but shallow net in strategy will still be dedicated to experimentation. That’s
physical retail. It has explored several retail concepts over not to say Amazon doesn’t have the potential to be a major
the years, but the Whole Foods acquisition remains its most player in the brick-and-mortar space, but it will take longer
serious investment to date. Amazon’s multifaceted approach than five years to get there.
makes its competitors in the brick-and-mortar space
In March 2021, Bloomberg reported that Amazon plans to
everyone from big-box retailers, like Walmart and Target, to
open at least 28 additional Amazon Fresh stores in the US, a
grocery chains, department stores, and electronics retailers.
significant expansion for its physical grocery business. These
But its brick-and-mortar presence is still too small to be
new stores will let it build on offerings like click and collect,
a serious threat in physical retail.
which will help the company stay competitive in the battle for
Amazon’s brick-and-mortar business makes up a small digital grocery dominance.
percentage of its overall retail sales. In its Q1 2021 earnings
The expansion may even lure some Prime members away
release, the company reported $52.90 billion in online
from big-box retailers and grocery stores, particularly with
first-party sales that quarter, while its physical stores
members-only discounts at Amazon Fresh and Whole Foods
generated just $3.92 billion. The company doesn’t break
locations. Nonetheless, Amazon’s Fresh and Whole Foods
out figures for Whole Foods Market alone, but given the
stores combined will still be a tiny blip compared with its
comparatively few Amazon-branded stores, it’s safe to
main grocery competitors’ physical footprints in the US:
assume that most of Amazon’s physical store sales come
Walmart with more than 5,000 locations; Kroger with nearly
from Whole Foods.
2,800; and Target with more than 1,900.
There is a similar case for Amazon’s advancements in retail

Disruption, Integration, and Leverage technology. The Just Walk Out autonomous checkout
Sales, however, have never been at the center of solution, which has been tested in Amazon Go convenience
Amazon’s brick-and-mortar business model. Originally, stores since 2018, will roll out at a larger scale after arriving
its Books and Pop Up stores acted mainly as marketing in select Amazon Fresh locations for the first time this year.
vehicles for Amazon-branded electronics. Amazon stores And earlier in 2021, two concession stands powered by Just
have also served as testing grounds for omnichannel Walk Out opened inside Boston’s TD Garden sports arena.
shopping integration and new technology. For example,
Amazon 4-star draws on the company’s trove of online
reviews to inform inventory decisions, while Amazon Go
and Amazon Fresh stores are used to deploy new retail
technologies, such as store sensors that enable cashierless
checkout, smart grocery carts, and biometric payments.

These advancements have the potential to make Amazon Grocery
an industry leader in retail tech, particularly as a service
provider for other retailers. But it’s far too early to tell
whether such services will become a new, sizable revenue
stream for Amazon. Not only does Amazon lack the physical
footprint to widely apply the new technology, but most
retailers are also many years away from outfitting their
stores with technology this advanced—and could choose to
develop services of their own in the meantime.
In the next five years, it’s likely that Amazon will continue
finding new ways to use ecommerce data to inform inventory
at its Pop Up and 4-star locations. Reports have surfaced
that the company explored opportunities in the opposite
direction: opening physical stores to offload home goods
and electronics inventory at discounted prices. Amazon will
also continue to introduce new retail concepts—recent
reports indicate that Amazon has plans to open its own
department stores—and it will test new technology, like it
has with the augmented-reality-powered Amazon Salon,
which opened recently in London.
While these concepts may never generate the level of

revenues brought in by Amazon’s ecommerce business,
they will continue to serve as discovery platforms for
the products and services available through Amazon,
whether in-store, online, or somewhere in between.
Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature

Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
out incumbents
Integration: 1=Standalone, 3=Dependent on two or more divisions,
6=Massive growth

Maturity, Iteration, and Market Sizing Disruption, Integration, and Leverage
Amazon has experimented with several grocery formats Free and fast shipping is the focal point of Amazon’s digital
over the past decade, but its current offerings include: grocery business. The company removed its $14.99 delivery
fee for grocery orders in 2019 and now offers the service at
■ Amazon.com: Nonperishable grocery items can be no additional cost with Amazon Prime. For the more than
purchased on the main Amazon website. half of US households that are already Prime members, this
has been a huge incentive to shop for groceries via Amazon.
■ Amazon Fresh: Founded in 2007 as a grocery delivery However, Amazon recently announced a $9.95 Whole Foods
service, Amazon Fresh is available in most major US delivery fee in several cities, raising questions about the
metropolitan areas with 2-hour delivery that’s free for company’s ability to profitably scale these services as
Prime members. The first physical grocery store opened demand for them continues to grow.
last year, and Amazon Fresh has now expanded to 18
locations, with the majority in California and Illinois. In addition to leveraging its massive Amazon Prime
subscription base, the company’s vast fulfillment
■ Whole Foods Market: The largely organic grocery
infrastructure has also driven growth. Big-box retailers and
store, which Amazon acquired in 2017, currently
grocery chains can use physical locations to fulfill online
operates over 500 locations. Whole Foods offers the
orders, but Amazon’s network of warehouses lets the
same online delivery options as Amazon Fresh, though
company offer competitive shipping speeds despite its
availability varies by region.
smaller brick-and-mortar footprint.
■ Amazon Go: Amazon’s checkoutless convenience
stores first opened in 2018, and the company now has Its limited physical presence, however, puts Amazon
more than 20 locations. at a disadvantage in the click-and-collect space,
which is a key growth area for its big-box and grocery
Its main competitors in the grocery space are big-box chain competitors.
retailers and grocery chains with omnichannel offerings.
More recently, delivery apps like Instacart, DoorDash, and Grocery overall is another pitfall for Amazon since most
Uber Eats have also emerged. Not only do these platforms grocery dollars are spent offline. Amazon has used Prime
offer grocery delivery from local stores, but they also create membership discounts to lure some in-store shoppers to
partnerships with retail chains that want to expand into Whole Foods locations, but its customer base is limited
digital but don’t have a delivery infrastructure. For instance, mainly to niche shoppers in urban areas.
grocery conglomerate Albertsons recently partnered with
DoorDash to offer 1-hour delivery from nearly all of its
2,000-plus locations. The 5-Year Outlook
We estimate that Amazon’s US grocery ecommerce sales We forecast that US grocery retail ecommerce sales will
will grow 12.9% this year to $29.12 billion, amounting to nearly double over the next four years, growing from
23.8% of all digital grocery sales. It’s the second-largest $122.39 billion in 2021 to $243.67 billion in 2025. Given
digital grocer after Walmart, which will capture 25.3% of Amazon’s placement as an ecommerce powerhouse, it is
digital grocery sales this year (and 28.9% when including its primed to generate a large chunk of this growth.
subsidiary Sam's Club).
The company has been aggressively converting closed
In the US, digital sales are still only a small portion (9.6%) of shopping malls to fulfillment centers over the years—and
overall grocery sales, and Amazon’s grocery business isn’t it’s dedicating some of its newest facilities solely to Amazon
nearly as competitive offline. Fresh and Whole Foods fulfillment. Amazon also plans to
hire an additional 75,000 warehouse and delivery workers
in the US and Canada, many of whom will likely support
its growing grocery business. These investments could
expand the speed and reach of Amazon’s grocery
delivery offerings, which will keep it competitive on the
digital front.

However, despite the growth of digital grocery, online sales Just Walk Out
will amount to just 16.8% of overall grocery sales in 2025,
per our estimates. Offline is the area where Amazon will
continue to struggle, as it would have to open hundreds of
Amazon Fresh and Whole Foods locations each year for the
next five years to establish a physical presence that’s on par
with its competitors, such as Walmart, Kroger, and Target.
While an expansion on that scale doesn’t seem feasible

within a five-year window, Bloomberg reported that Amazon
currently has plans to open nearly 30 additional Amazon
Fresh stores, and we expect that it will continue expanding
in the coming years. Amazon will likely use these locations
to refine its retail technology and omnichannel shopping
experiences; for instance, it may expand its click-and-collect
offerings, in addition to its in-store deals and other perks for
Amazon Prime members.
Another potential growth area for Amazon’s grocery

business is its private-label portfolio, which it has been
growing quietly for several years. In addition to its “365 by
Whole Foods Market” brand, the company now has nearly
20 brands that cover most of the grocery landscape. Given
Amazon’s reputation for creating private-label products
that compete with third-party items on its marketplace, it’ll
likely place more emphasis on its own grocery brands as the
category grows in sales.

out incumbents
6=Massive growth
Maturity, Iteration, and Market Sizing

In stores, Amazon is turning its payment ambitions to
autonomous checkout technology dubbed “Just Walk Out.”
The technology is composed largely of computer vision, AI,
and sensors. It allows consumers to identify themselves
when they enter a store—via a payment card, QR code,
or biometric—select items, and leave without stopping
to checkout, with charges sent to a linked account
soon after.

The etailer has positioned itself as a major player and early 1 The etailer is competing with numerous firms like AiFi,
mover in the autonomous checkout space. Amazon opened Grabango, and Standard Cognition, which provide
its first public-facing store using the tech in 2018, ahead retailers with alternatives to working with Amazon.
of peers like Standard Cognition and Grabango. While Merchants may be hesitant about using Just Walk Out
the industry is small—most autonomous checkout firms technology and potentially giving Amazon access to
have a handful of retail partnerships and stores—it has the their sales data, since Amazon can be their competitor,
potential to be deployed worldwide in the future. limiting Amazon’s ability to recruit retailers.
Since its debut, Amazon has expanded Just Walk Out to 2 Amazon has yet to retrofit an existing store with its Just
more than 20 locations, including larger grocery formats. It Walk Out technology, which competitors aim to do.
created Amazon Dash Carts, smart carts that use similar Amazon will need to begin the process of installing Just
technology to speed up checkouts at Amazon Fresh stores. Walk Out in retailers’ current stores, so it can expand
its reach to new, specialized locations. Even though
Amazon has ambitions for Just Walk Out beyond its own Amazon is at the forefront of the industry—and boasts
stores. It has licensed the technology to travel retailers retail expertise and ample funding—Just Walk Out
OTG and Hudson and will likely try to lead the space as may struggle to scale at the rate of its competitors.
it develops.
Amazon Pharmacy
Amazon’s push into autonomous checkout technology is a
departure from its history of focusing on ecommerce, but it’s
eyeing brick-and-mortar for good reason. The vast majority
of US retail sales are still made offline—ecommerce is
expected to make up only 15.3% of US retail sales this year.
By licensing Just Walk Out to physical retailers, Amazon can

potentially get a cut of in-store sales and collect in-store
shopping data. That means Just Walk Out could bolster
the ecommerce giant’s already impressive revenues
and enable it to learn more about consumers, possibly
allowing it to better personalize customers’ experiences
when they shop with Amazon online.
5-Year Outlook
Autonomous checkout firms should be able to convince
retailers to adopt the technology in the coming years:
According to a February 2021 Piplsay survey, 57% of US
consumers ages 18 and older said they would be excited to
see an Amazon Go or similar store in their neighborhood.
And with 89% of Amazon Go shoppers surveyed rating their
experience as excellent or good, it’s likely that consumers
enjoy the speedy checkout experience, perhaps because
they avoided long checkout lines.
But Amazon faces two potential obstacles in the

autonomous checkout space: Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
out incumbents

Integration: 1=Standalone, 3=Dependent on two or more divisions, ■ In June 2021, Bloomberg reported that Amazon had
begun offering Prime members six-month prescriptions
Leverage: 1=None, 3=Established relationships with key clients, starting at $6 for medications for common ailments
such as high blood pressure or diabetes. Because most
insurance companies offer three-month prescriptions at
6=Massive growth
most, this benefit targets both the uninsured and those
who are insured but choose to pay cash due to high
out-of-pocket prescription costs or high deductibles
Maturity, Iteration, and Market Sizing associated with their plans, according to the report.
Amazon joined the pharmacy business relatively recently,
with the November 2020 launch of Amazon Pharmacy. But The US market for pharmaceuticals makes for an
that much-anticipated move came more than two years after attractive target. US prescription drug spending reached
the company’s June 2018 acquisition of PillPack, an online $369.7 billion in 2019, a 5.7% increase over 2018, according
pharmacy startup targeted to patients with complex, chronic to the Centers for Medicare & Medicaid Services (CMS). A
health conditions. record $67 billion was paid out of pocket for all prescriptions
filled in retail pharmacies in 2019, according to IQVIA, up
Amazon’s first foray into the pharmacy space catered from $61 billion in 2015. The Organisation for Economic
largely to patients with chronic conditions. But that’s Co-operation and Development (OECD) pegged US
still a sizable cohort: Six in 10 US adults have one chronic pharmaceutical spending at $1,376 per person in 2019.
disease, according to the Centers for Disease Control and
Prevention (CDC), and four in 10 have two or more.
Nearly half (48.6%) of US adults surveyed between
Amazon’s moves into the pharmacy space have proved
2015 and 2018 took at least one prescription drug in the
disruptive, at least at first. When the PillPack deal was
preceding 30 days, according to the CDC. Nearly one-
announced in June 2018, established pharmacy retailers
quarter said they took three or more each month—typically
including Walgreens, CVS Health, and Rite Aid collectively
to manage a chronic condition; more than one in 10 used five
shed $11 billion in market value, while Amazon shares
or more prescriptions.
added more than $19.8 billion, according to a CNBC report.
At the time of Amazon Pharmacy’s late 2020 launch, all Within months, shares recovered as Amazon continued
US Prime members were automatically enrolled in the to operate PillPack as a separate service, albeit on its
Prime prescription savings benefit. Amazon.com platform.
■ Prime members can receive a discount card that can The day after Amazon Pharmacy’s debut in November
now be used at 60,000 pharmacies, including CVS 2020, shares of those rivals dropped again by a combined
Health, Costco Wholesale, Target, and Walmart. $10 billion, according to Forbes. As of mid-July 2021, each
company’s share price had recovered, at least somewhat.
■ Free two-day delivery on orders from Amazon
Pharmacy is included for Prime members. Amazon is counting on its Prime members’ loyalty to boost
its (undisclosed) share of pharmacy sales, and those
■ Amazon also promised members would receive members are notably loyal to the channel. We estimate that
discounts up to 80% off generic and 40% off brand- in 2021, there will be 151.9 million US Amazon Prime users,
name medications when paying without insurance. or 58.2% of the population. By 2025, those numbers will
reach 168.3 million users and 62.4% of the population.
■ In May 2021, Amazon introduced a price-
transparency tool so Prime members can compare
the cash price of drugs available through Amazon
Pharmacy with the price they would pay using their
health insurance plan’s copay.

US Amazon Prime Users, 2021-2025 Fulfillment by Amazon
millions and % of population
165.0 168.3
157.4 161.7
151.9
60.9% 61.7% 62.4%

58.2% 59.8%
2021 2022 2023 2024 2025

Amazon Prime users % of population
Note: individuals ages 18+ who have an Amazon Prime account and sign in at least once
during the calendar year
The launch of Amazon Pharmacy, along with the new

Prime prescription benefits, simply added another
category for members to try, and it may create even
more shopper loyalty.
Competitors haven’t sat still as Amazon moved into the

online pharmacy space. Brick-and-mortar rival Walmart
introduced a discount prescription plan, Walmart+ Rx, as an
add-on to its Walmart+ membership program that launched
in September 2020. Those members can now access
select medications at zero cost and thousands of additional
prescriptions at up to an 85% discount. Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
out incumbents
The 5-Year Outlook Integration: 1=Standalone, 3=Dependent on two or more divisions,

We don’t expect Amazon to dominate the online prescription Leverage: 1=None, 3=Established relationships with key clients,
drug market within the next five years, but we do expect that 6=Supports multiple divisions and/or clients to maximize scale
prescription drugs will account for a growing share of its online Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth
sales in the US. Shoppers will undoubtedly be enticed to try
this service, with Amazon giving Prime members and other
shoppers the ability to research and order medications online,
compare Amazon’s cash-only price with their insurance copay, Maturity, Iteration, and Market Sizing
and compare the Prime prescription savings benefit price. As Amazon’s online business took off, it realized that
fulfillment—not only shipping but also returns, warehousing,
We also expect that Amazon will make moves internationally, and inventory management—was an integral part of its
having filed “Amazon Pharmacy” trademarks or patents in retail operations.
the following markets: Canada, the UK, Australia, Brazil,
China, Egypt, the EU, India, Israel, Japan, Mexico, Singapore,
Taiwan, Turkey, and the UAE. While that doesn’t indicate
imminent moves, it does signal Amazon’s intention to
scale its online pharmacy beyond US borders.

The more control Amazon has over fulfillment, an often The 5-Year Outlook
forgotten but friction-inducing part of the consumer journey,
the more likely it is to meet consumers’ expectations of FBA minimizes risk for retailers by offering them services
convenience and maintain its brand ethos while adding to its that control inventory planning, storing, and shipping to
bottom line. Amazon Prime’s success also led the company eliminate or minimize inefficiencies, thereby allowing for
to bring its fulfillment capacity in-house to offer customers on-time delivery. It strongly encourages sellers to use
a multitude of shipping and fee combinations. Today, free these services—reportedly at a premium compared with its
two-day shipping is the gold standard—table stakes for competitors—adding another reliable revenue stream
retailers to be part of consumers’ consideration set. for Amazon.
Amazon operates its logistics service, Fulfillment by While Amazon doesn’t force sellers to use this service, some
Amazon (FBA), like all other business units—using sellers have said they feel strong-armed into using the
technology to try to remove friction for customers, and add-on to secure a better position on product page search
then iterating. For example, its Key by Amazon service results. For context, nearly 85% of Amazon’s biggest
lets Amazon deliver packages inside customers’ garages or sellers use its FBA service.
homes. To reach the elusive last mile, Amazon is also tapping
As a result, Amazon is drawing attention from critics who
into the gig economy with its Flex program, which allows
say it engages in anticompetitive practices; under one
contractors to deliver packages using their own cars.
recently proposed bill, Amazon could be forced to sell off its
It’s hard to estimate FBA’s market size since it includes logistics division.
different parts of the logistics and transportation
Amazon will continue to make investments in its
ecosystem. But in its Q1 2021 earnings call, Amazon
transportation network, which is a mix of owned and
said it increased spending on fulfillment by 43.4% YoY to
outsourced services, to help mitigate on-time delivery risk
$16.53 billion. After a 2013 holiday season saddled with
for Amazon itself.
shipping delays caused by inclement weather and high order
volumes, Amazon began to dedicate even more resources
As a predominantly online retailer, one of Amazon’s
to fulfillment. In 2020, Bank of America Global Research
biggest weaknesses is the physical return of goods.
estimated that Amazon had spent $39 billion since 2014 to
To better compete with omniretailers, Amazon not only
build a connected delivery network. That investment figure is
partnered with retailer Kohl’s—thus adding over 1,100 points
even higher when other costs, such as aircrafts, are included.
of return—but also developed Amazon Hub, strategically
placed self-service lockers for returns and pickups.
Disruption, Integration, and Leverage Despite all these costly initiatives and infrastructure
Amazon has expanded the idea of a warehouse beyond just investments, Amazon has more to do when it comes to
being a place where bulk goods are stored. Its fulfillment closing the physical footprint gap. UBS estimates that
centers feature different facilities for receiving goods, Amazon’s delivery stations are now within 1 hour of 77%
sortable pick and pack centers for small items, and areas of the US population. For context, Walmart and Target
dedicated to large items, to name a few. stores are within 1 hour of 99% and 94% of the US
population, respectively.
Separate from its logistics prowess is the
transportation network Amazon has built. Amazon is the As global climate change and sustainability concerns heat
fourth-largest transportation network in the US, according up, Amazon’s biggest uphill battle will be addressing its
to Bank of America Global Research. It shipped 415 million image as an environmentally unfriendly business. In addition
packages in July 2020 alone, delivering 66% of its own to its newest leadership principles, Amazon is reportedly
packages during the month, an increase of 12 percentage exploring alternative fuels, purchasing electric delivery
points YoY, per ShipMatrix. This demonstrates Amazon’s vehicles, and investigating new technologies to facilitate
commitment to creating an end-to-end fulfillment/ delivery, like drones.
shipping arm—one that third-party sellers generally feel
obliged to use to be more successful on the platform,
despite its higher costs when compared with other suppliers.

Additionally, while it’s unlikely that competing retailers will Leverage: 1=None, 3=Established relationships with key clients,
use Amazon’s logistics and delivery services, there may be
an opportunity for Amazon to sell these services to other Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth
noncompeting businesses.
Warehouse workers’ efforts to unionize is another wild card

in Amazon’s future. While an April 2021 unionization effort in Maturity, Iteration, and Market Sizing
an Alabama warehouse failed, if such efforts are successful Amazon will net $26.31 billion worldwide and $20.47 billion
in the future, it could bring about a new cost structure for in the US this year in advertising revenues, we forecast.
Amazon to grapple with. It’s hard to estimate how that would Amazon’s advertising business has been expanding rapidly
affect consumer sentiment toward the brand—but if it’s for years, and growth accelerated recently because of the
negative enough, it could trickle into sales. pandemic and the associated step change in the share of
retail transactions conducted online.
Amazon’s advertising business has several facets:

Advertising
■ Advertisers that sell products on Amazon (either as
first- or third-party sellers) can buy impressions based
on cost per click (CPC) on Amazon’s retail properties.
The ad types that Amazon offers these advertisers
include Sponsored Products, Sponsored Brands,
and Sponsored Display. Most of these ads meet our
definition of search advertising because they are
targeted primarily in response to user query activity.
We estimate that the majority of Amazon’s net US ad
revenues come from these types of placements.
■ Amazon DSP is a demand-side platform (DSP) that

allows advertisers, including nonendemic brands, to buy
display impressions across Amazon’s retail properties;
its nonretail properties like Twitch and IMDb TV; and the
programmatic web.
■ Amazon Publisher Services provides header bidding

integrations for publishers to access both Amazon
demand and demand coming through other supply-side
platforms (SSPs).
We estimate that Amazon’s US ad revenues skew

heavily toward search, but as the company continues to
roll out more video ad offerings—including on video-oriented
properties like Twitch—and other ad products that have
mid- or upper-funnel goals, the share of revenues coming
from display will grow.

out incumbents

There are big attractions to advertising on Amazon or
using its tech to advertise elsewhere. When it comes to
on-property ads, they give the advertiser an
opportunity to connect with consumers at the very
bottom of the funnel, when consumers have expressed
strong intent and plan to make a purchase soon. Plus,
as Amazon’s ad loads have increased and more search
results are sponsored rather than organic, brands and sellers
that don’t advertise their products risk losing market share
to competitors.
Amazon’s troves of actual shopping and buying data

are what make its ad products so effective. Not only
does Amazon have massive scale among logged-in users,
but it also has some of the most commercially important
information about what and when those users may buy, and We estimate that Amazon will net 19.0% of US search ad
what will influence them to do so. It can use that data to revenues this year, compared with 56.8% going to Google
place ads on its own properties, as well as across the web, and 5.3% to third-place Microsoft, which owns Bing.
and target the ads to users based on their Amazon activity.
This data advantage helped Amazon become the No. The 5-Year Outlook
3 digital ad seller in the US in 2018, when it surpassed
both Verizon Media and Microsoft in its share of digital Amazon is well positioned to continue growing its ad
ad revenues, per our estimates. Since then, the ecommerce revenues strongly, as well as to keep gaining share of the US
giant has widened its lead on the fourth- and fifth-place digital ad market.
players, while closing the gap with market leaders Google
and Facebook. We estimate that Amazon’s net US ad revenues will more
than double between 2020 and the end of our forecast
In its rise to becoming a member of the digital advertising period in 2023, when they will reach $31.97 billion. Our latest
triopoly, Amazon revolutionized the search ad market, forecast, published in March 2021, represents a significant
which has long been dominated by Google. Google still nets upward revision from our previous estimates in October
the majority of US search ad revenues, but it’s Amazon—not 2020. And based on its Q1 2021 earnings report, the
another general search engine, such as Bing—that has company outperformed our expectations at the beginning
taken significant share of the market at Google’s expense. of this year as well—which means that we are likely to make
(And other retailers like Walmart have since had success another upward revision as part of our next forecast update
with similar products.) in the fall.
While we expect search will make up the lion’s share

of Amazon’s ad business for the foreseeable future,
we also anticipate growing interest in mid- and upper-
funnel-focused ad formats, especially those that include
video. Amazon’s investments in entertainment properties
and content suggest a lot of long-term potential for highly
targeted and integrated ad and content experiences, where
advertisers can combine contextual relevance, audience
targeting, and the ability for shoppers to make purchases
quickly and easily (for example, through the click of a remote
control or through voice commands). In fact, Amazon
featured shoppable video ad formats in its presentation at
the 2021 Interactive Advertising Bureau (IAB) NewFronts.

Amazon’s trove of customer data will also become even Maturity, Iteration, and Market Sizing
more valuable in the future, especially when compared with
advertisers’ other options. The eventual deprecation Amazon’s B2B marketplace platform, Amazon Business, will
of third-party cookies in browsers, along with other net $27.59 billion in product sales in the US this year, per our
regulatory and pseudo-regulatory changes to marketers’ July 2021 estimate. This is 43.5% YoY growth from 2020,
access to data, will drive more advertisers to turn to when Amazon Business saw $19.23 billion in US revenues.
Amazon and its ability to both target ads and measure
Since the launch of Amazon’s B2B marketplace in 2015, our
their effectiveness with proprietary first-party data.
forecast indicates very strong YoY growth. In 2016, the first
year in our forecast period, the division netted $2.96 billion
in the US. The next year, it nearly doubled, increasing to
Amazon Business $5.87 billion. Growth has been stable ever since, rising
by roughly 50% each year.
US Amazon Business Product Sales, 2016-2025

billions, % change, and % of US B2B ecommerce site
sales
98.2% $59.03
$51.39
$43.05
$35.68
49.2%
44.9% $27.59
51.5%
$19.23
43.5%
20.7% 19.4%
$13.27
29.3% 14.9%
$8.89
0.4% $5.87
$2.96 0.6% 0.8% 1.1% 1.4% 1.7% 2.0% 2.2% 2.3% 2.4%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Amazon Business product sales
% change % of US B2B ecommerce site sales
Note: represents the gross value of products sold on Amazon Business (browser or app),
regardless of the method of payment or fulfillment; excludes travel and event tickets,
Amazon Web Services (AWS) sales, advertising services, and credit card agreements;
includes direct and marketplace sales
Source: eMarketer, July 2021
Amazon’s first foray into B2B commerce came in 2012

with the launch of AmazonSupply.com, a standalone site
that initially had over 500,000 SKUs for office equipment
and industrial supplies. After growing its inventory to more
than 2.25 million products, AmazonSupply.com was
Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature replaced in 2015 by Amazon Business, a B2B offering
Disruption: 1=Developing business plan, 3=New approach, 6=Forcing that was integrated into the existing Amazon.com
out incumbents site experience.
6=Massive growth

Today, Amazon Business sells in nine countries: the US, The pandemic accelerated demand for digital buying and
Canada (the most recent international expansion), the procurement when in-person buying methods were limited
UK, Germany, France, Italy, Spain, Japan, and India. More in many sectors. Amazon Business was well positioned
than 5 million businesses currently use Amazon Business to offer a ready-made solution for buyers and sellers.
worldwide. And in the US, more than 80 companies within Amazon Business’ integration with the bigger Amazon
the Fortune 100 use Amazon Business. (For comparison, flywheel helps since it’s part of the same site that supports
only 55 used the platform in 2019.) Companies that sell retail ecommerce transactions, making it familiar to both
on Amazon Business typically pay Amazon a recurring buyers and sellers ranging from SMBs to enterprises.
fee to list products, along with a small percentage on
each transaction. In 2019, Amazon began selling its own private-label items
on Amazon Business under its AmazonCommercial brand.
Amazon Business continues to grow, but it holds only These goods—which include items like cleaning supplies
1.7% of the overall US B2B ecommerce site sales market, and furniture—effectively compete with those from third-
according to our estimates. For context, we forecast that US party sellers on Amazon Business.
B2B ecommerce site sales will hit $1.583 trillion in 2021.
In April 2020, The Wall Street Journal reported that Amazon
There’s no denying this is a small fraction of US B2B used data gathered from independent sellers on its platform
ecommerce; B2B marketplace sales make up a very small to develop competing products, as well as price and market
piece of the overall B2B ecommerce market at just 3.5% in them. (In a statement, Amazon said such behaviors would
2021, per Digital Commerce 360. contravene its own policies, and that it would launch an
investigation into the matter.)
Amazon Business is certainly not a leader in overall B2B
ecommerce, but it does dominate within the marketplace Independent sellers can get similar information through
subsector. Its major competitors are Alibaba.com, an analytics dashboard offered by Amazon. But, if true,
Thomasnet.com, and other office supply and niche industry the strategy reported in the Journal could aid Amazon’s
marketplaces like Office Depot, Staples, Faire, and The private-label efforts on Amazon Business and help
Home Depot. the company compete with third-party sellers on its
own platform.
Disruption, Integration, and Leverage One way sellers can combat this is by paying for Amazon
Advertising search ads—which also benefits Amazon’s
B2B marketplaces are increasingly being adopted by both bottom line.
buyers and sellers:
■ The number of B2B marketplaces has grown from 70 to

250 in the past two years, according to June 2021 data
The 5-Year Outlook
from Digital Commerce 360. We estimate that US Amazon Business product sales will
approach $60 billion by 2025, nearly doubling in size from
■ The percentage of US small and medium-sized 2021. Growth, however, will slow with each passing year,
businesses (SMBs) that placed and processed B2B declining to 14.9% YoY in 2025.
orders through a digital marketplace increased during
the pandemic, going from 21% in December 2019 to Amazon Business’ share of the overall US B2B ecommerce
35% in September 2020, according to Alibaba. site sales market will still increase to 2.4% by 2025. But
even as it gains share, Amazon Business will have only a
■ Sixty-three percent of US manufacturers offered an
very small piece of the overall B2B ecommerce pie.
online marketplace as a sales channel, per December
2020 research from Sana Commerce.
B2B marketplaces are a small but transformative part of
the market. Amazon Business has been responsible
for much disruption in B2B product sales, which have
historically been mostly analog and manual. B2B ecommerce
site sales will account for only 10.3% of total B2B product
sales this year, per our estimates.

With its strong foothold in marketplaces, Amazon Business Maturity, Iteration, and Market Sizing
will change how B2B buyers purchase and pay for goods
over the next five years and beyond. And sellers may find Growth in Amazon Business—the company’s business unit
it easier (and tempting) to work with Amazon Business to dedicated to purchases by companies and organizations—
meet those new expectations—without the hassle of setting should flow through the titan’s B2B payments business.
up their own ecommerce portals. Amazon’s enterprise buyers can currently make purchases
with general-purpose credit and debit cards or through
personal and business bank accounts.
Business Payments But Amazon Business offers six proprietary B2B

payment options. Though not every dollar flows through
these tools, they provide a powerful mix of financing, cost-
savings, and convenience that set a high industry bar.
1 The Amazon.com Store Card provides promotional

financing options, like 6-, 12-, and 24-month payment
plans at 0% annual percentage rate (APR).
2 The Amazon Prime Store Card helps Amazon sell

Business Prime memberships: Only members can take
advantage of the additional 5% cash-back offering on
Amazon purchases.
3 The Amazon Business American Express Card lets

cardholders opt for rewards and earn 3% back on their
first $120,000 spent on Amazon each year, as well
as 2% cash back at restaurants, gas stations, and on
wireless phone service. Or they can opt for financing
and receive 60 days to pay without interest.
4 The Amazon Business Prime American Express

Card offers even better benefits: Cardholders opting
for rewards can earn 5% back on their first $120,000
spent on Amazon each year, while those opting for
financing receive an industry-leading 90 days to pay
without interest.
5 The Amazon Business Line of Credit functions much

like a charge card, but payment terms are extended to a
very generous 55 days with no interest or fees.
6 Pay by Invoice offers 30-day payment terms (and up to
Disruption: 1=Developing business plan, 3=New approach, 6=Forcing 60 days for Business Prime members) without interest
out incumbents
or fees. Businesses can also set up multiple buyers,
track spending, and gain access to analytic tools,
including transaction data itemized to product-level
6=Supports multiple divisions and/or clients to maximize scale detail and integration into in-house enterprise resource
planning (ERP) systems.
6=Massive growth

Disruption, Integration, and Leverage 5-Year Outlook
With businesses placing high value on suppliers that offer Amazon Business’ popularity as the starting point for the
flexible payment terms, Amazon’s mix of traditional cards purchasing process grew from 11% in 2020 to 16% in
and credit lines positions it as a highly competitive 2021, per a June 2021 Avionos report—and we expect the
player. Even though some of its options compete with other platform to continue capturing more transaction volume as
B2B payment products, they remain holistically unmatched, it grows. But it will largely benefit from aggressive US B2B
with the 60-day no-fee, no-interest offerings serving as a payment digitization. According to a June 2021 survey of
particular differentiator. financial decision-makers conducted by Opinium Research
for American Express, 46% of US businesses said they plan
As Amazon becomes more like a full-suite business solutions to begin automating or further automating payments over
provider, it’s aligning itself more with B2B payment platforms the next 12 months.
and service providers than with the average B2B etailer.
These figures are reflected in our forecast, which shows
■ Most B2B ecommerce providers offer branded credit electronic B2B payment volume growing from a 43.5% share
cards and promotional financing. For example, Staples in 2017 to 55.0% this year—and Amazon is ripe to cash in
provides corporate cards that compete with Amazon’s, on this digitization as businesses appreciate its choice,
but no general-purpose offering. And though it has control, simplicity, and ease of integration.
itemized billing, purchase tracking, and enhanced
spending controls, it can’t match Amazon’s grace period. We estimate that Amazon will have 151.9 million US Prime
users by the end of this year, giving it a wide base of
■ But Amazon’s value proposition that combines an customers who may turn to a trusted brand for business
array of products with a diverse set of benefits puts purposes. And with B2B card payments on the rise, it’s likely
it in rarefied air. For example, retailers seldom provide many customers will seek card payment options and turn to
analytics or in-house invoicing integration to the Amazon’s suite of services out of convenience and appeal.
degree Amazon Business does. The absence of these
in-demand features has historically been a major pain Amazon’s ability to drive customers to its payment and
point for smaller and midmarket sellers—especially in lending tools helps bring the company closer to an all-
the wake of pandemic-driven digital transformation. In in-one solution for businesses. Diverse payment options
offering those features, Amazon can meet a key need tie businesses closer to the company, with rewards that
and position itself to compete more with B2B payment encourage spending. But they also offer Amazon access
players like WEX, which offers an array of B2B payment to spending insights that can be used to create more
and fleet management solutions, or Bill.com, which tailored recommendations that then translate into future
recently moved further into online invoicing. It may also sales gains. Meanwhile, better benefits for Business Prime
let Amazon set up for a deeper foray into business members may entice customers to upgrade, drumming up
payments beyond its platform down the line. subscription revenues.

Amazon Web Services AWS’s more than 200 services range from core computing
and storage to AI tools and low-code or no-code solutions
for product and app developers. Amazon says AWS is
currently offered in 25 regions worldwide, with plans to
expand to seven more countries.
While the cloud market has become increasingly

competitive over time, it has plenty of room to grow.
Pandemic constraints on budgets and in-person operations
only accelerated cloud adoption.
In April 2021, Gartner estimated worldwide spending

on public cloud services would grow 23.1% this year to
$332.3 billion.
Public cloud adoption is wide but not necessarily

deep. Enterprises are still in a period of transition and
experimentation. According to a November 2020 Virtana
survey conducted by Arlington Research, the majority of IT
decision-makers (66%) in the US and UK said that only 5%
to 50% of their organizational applications were operating in
the cloud.
Over the past 15 years, AWS has become a $54 billion

annual sales run rate business, per Amazon. Revenue growth
had slowed quarter over quarter since Q1 2019, but it ticked
back up to 32% YoY in Q1 2021.
Though AWS created and dominated the market,

Microsoft, Google, and now Alibaba are catching up.
Canalys estimates AWS owns a 32% share of the market for
cloud infrastructure services spending worldwide, followed
Disruption: 1=Developing business plan, 3=New approach, 6=Forcing by Microsoft Azure (19%) and Google Cloud (7%), as of
out incumbents
Q1 2021. Synergy Research Group suggests market share
losers have been smaller cloud providers, such as IBM and
Oracle, which were slower to market.
6=Massive growth Disruption, Integration, and Leverage
The cloud has been the backbone of Amazon’s growth,
innovation, and agility across all its lines of business from
Maturity, Iteration, and Market Sizing nearly day one. AWS is now Amazon’s highest-margin
Amazon brought Amazon Web Services (AWS), its public business by far: It accounted for just 12% of the company’s
cloud infrastructure and computing service, to market in net sales in Q1 2021 but more than half of the company’s
2006. It has defined the on-demand IT resources cloud operating profits. AWS’s operating margins hover around
market since. 30% and arguably subsidize loss-leading and low-margin
business units.

Early cloud adopters were drawn to scalable, dynamic cutting into the cloud’s economies of scale. Regulators
infrastructure with a low barrier to entry: A startup founder worldwide are also closely watching AWS to ensure it
need only put down a credit card and pay for what they used. complies with an increasingly complex patchwork of
Now AWS’s growth relies on longer-term contracts with local laws governing international data transfers.
massive-scale clients and with protracted agreements that
look a lot more like traditional IT procurement. That comes
■ Margin pressures: Even venture capitalists are starting
with benefits and drawbacks of scale and consistency: to question the true costs of operating in the cloud.
The current average remaining contract commitment is Some have suggested that startups lose the chance to
three years. maximize their market capitalization due to increased
cloud operating costs as they scale and mature. As
AWS has played a role in leveraged negotiations across Sarah Wang and Martin Casado, partners at venture
Amazon’s lines of business, most notably when it was capital firm Andreessen Horowitz put it, “You’re crazy if
reported that WarnerMedia offered to extend its AWS you don’t start in the cloud; you’re crazy if you stay on it,”
contract to get its HBO Max streaming service on Amazon suggesting startups plan for “cloud repatriation.” That
Fire TVs. But these negotiating tactics have come under could put pressure on cloud services like AWS to lower
antitrust scrutiny. their prices.
Although Amazon’s goal was to convert everyone to its

vision for the cloud, the reality is that clients’ demands Amazon One
are more complicated and require support for alternative
cloud architectures like hybrid, multicloud, and on-premises
offerings. As a result, AWS has had to diversify, introducing
products that allow it to interoperate in any environment—
even those belonging to competitors.
The 5-Year Outlook

AWS faces a number of looming risks and challenges to its
business that could make its outlook a little more turbulent:
■ Outages: High-profile outages are still AWS’s greatest

liability. It’s never a good day for Amazon when “US-
East-1” makes the headlines. Some observers warn that
the internet’s reliance on shared cloud infrastructure
could pose a systemic economic risk with highly
networked companies that are “too interconnected
to fail.”
■ Antitrust: Competitors and regulators are building

the case that Amazon unfairly gleans insights from its
clients’ cloud data. In contrast, Microsoft has said it
won’t compete with its cloud customers. AWS clients
are becoming wary of vendor lock-in and exposing
their mission critical operations. The threat of breaking
up Amazon along business lines becomes more real
as heightened antitrust scrutiny, enforcement, and
legislative reforms progress.
■ Data regulation: Digital sovereignty and data Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
localization requirements demand that infrastructure Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
in places like Jakarta comply with local data regimes, out incumbents
putting pressure on Amazon’s capital expenses and

Integration: 1=Standalone, 3=Dependent on two or more divisions, Down the line, the company plans to license the technology
to other interested parties, including retailers, office
Leverage: 1=None, 3=Established relationships with key clients, buildings, and stadiums. This could bring in a new revenue
stream. And moving beyond retail could preview a push into
identity verification more broadly—something that payments
6=Massive growth
processor Stripe has pursued recently as well.

5-Year Outlook
Amazon’s latest payments foray is Amazon One, a
biometric-based payment terminal that allows customers Amazon One’s launch conditions are fairly favorable.
to authenticate in-person transactions with a palm scan. Contactless payments surged when the pandemic made
Amazon One launched in September 2020, and then customers more health-conscious and touch-averse.
expanded into Seattle and New York locations, including Increased familiarity with payment options like mobile
some Whole Foods Market stores, in late winter and early wallets could make customers even more willing to test other
spring 2021. new platforms, particularly if they offer even less contact
than a phone.
Biometric payment authentication is expanding.
Fingerprint and facial ID have already become commonplace Further, the quick addition of new Amazon-owned locations
on smartphones and to verify wallet transactions. using Amazon One could indicate that there’s at least
Competing technologies like FinGo, which leverages vein some shopper uptake and interest, especially since 37%
mapping to verify identity, are hitting the market. And major of customers worldwide said they were comfortable with
banks worldwide are deploying biometric payment cards biometric payments, per a May 2021 Mastercard study.
that allow customers to authenticate transactions with Amazon One may also appeal to merchants by reducing
embedded fingerprint readers. contact and hastening checkouts, which can boost sales
and allow sellers to reassign staff to customer service or
Amazon hopping into the ring now should give it an other activities.
early-mover advantage, especially since there isn’t much
specifically like Amazon One on the market yet. But the But while some customers are comfortable, the Mastercard
move may also signal to rivals that interest is mounting and study found the same margin (36%) remain wary—indicating
accelerate industrywide technology development. that Amazon still needs to increase customer awareness
and build comfort with using biometric payment tech.
The company could offer incentives to those who test the
technology to garner adoption. (In August, it was reported
Disruption, Integration, and Leverage that Amazon was offering $10 in promotional credit to
Amazon is initially looking to expand the technology customers who enrolled their palm prints.) And offering
within its own retail network. That could drive customer prominent placement at Whole Foods—its largest physical
engagement with its apps (where these transactions retail property—may help build up familiarity.
are authenticated), improve loyalty, and grow sales
within its proprietary business. Amazon One also
complements Amazon’s physical retail presence, which
distinguishes itself with a high-tech shopping experience.
Amazon is notorious for using new technology as fuel for
future projects—so if Amazon One doesn’t take off, the
technology could feed other innovation.

However, Amazon could face merchants that are hesitant Leverage: 1=None, 3=Established relationships with key clients,
to adopt Amazon One. Retailers outside of the titan’s
portfolio could be reluctant to let a rival into their stores Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth
and give it access to valuable real estate or data that may
be used to lure customers away down the line. Regulation
may also pose a challenge; in August, several US senators
requested information about Amazon’s privacy and Maturity, Iteration, and Market Sizing
security practices related to Amazon One. These barriers Amazon purchased smart home security company
could stymie Amazon’s potential in the space—especially Ring in 2018, which it did to gain market position in the
if viable alternatives emerge from existing players or space, according to emails made public during recent US
new competitors—no matter how large its footprint and government antitrust hearings. At the time, Ring’s offerings
technical advantage. complemented Amazon’s existing smart home devices,
and the ecommerce giant has continued to expand the
Ring product line since then.
Ring Home Security The Ring lineup now includes a range of interior and exterior
cameras, doorbells, security systems, and lighting. Since the
acquisition, the brand has successfully maintained its leading
position in the smart home security device market.
We estimate that 67.8 million people in the US will use smart

home security devices at least once per month in 2021, and
that the user base will grow to 113.2 million by the end of our
forecast period in 2024.
Ring is a leader in several product categories, but it

doesn’t necessarily have the dominant position that
Echo, for instance, has in smart speakers. According to
Strategy Analytics, Ring led the global home surveillance
camera market as of December 2020, but with only a slim
market share of units sold.
It accounted for a slightly higher percentage of global video

doorbell sales last year, at 17.9%, more than any other brand,
per Strategy Analytics. Google’s Nest is Ring’s biggest
competitor in video doorbells, with a 6.9% share of units sold
worldwide in 2020. In surveillance cameras, Nest came in
fourth in terms of units sold.
Ring’s recent performance builds on its long-standing lead

in the video doorbell market. A November 2019 survey by
Strategy Analytics found that among US smart home device
owners who had video doorbells, 40% said they were using
Ring doorbells, while 24% reported using Nest devices.

out incumbents

Disruption, Integration, and Leverage Echo and Alexa
Ring fits neatly into Amazon’s smart home strategy.
Ring products are now fully integrated with Alexa-supported
devices, meaning they can respond to commands made
to the voice assistant. Similarly, some Alexa devices can
connect to Ring cameras and speakers for two-way audio or
video conversations, either with visitors at the front door or
with people in different parts of the home.
Amazon has also integrated the Ring devices with its cloud
computing service, AWS, which stores video and other
information from the devices and could potentially analyze
the data. As Ring begins to enter the commercial market,
it will provide additional opportunities for Amazon to
lock businesses into AWS for a whole range of services.
Ring’s products—in concert with other connected devices—

constitute the new Amazon Sidewalk wireless mesh network.
The service connects private Wi-Fi networks of nearby
homes via Ring, Echo, and other Alexa-integrated devices.
Amazon claims the Sidewalk network will provide users with
extra broadband and redundancy for their home networks. It
also gives Amazon’s devices more opportunities to connect
to the internet over a larger area, expanding the range of
internet of things (IoT) devices beyond the periphery of
individual private networks.
The 5-Year Outlook

Ring continues to be a leader in the home security system Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
market, and it is increasingly moving into other smart home Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
device categories that are seeing growth among both out incumbents
consumers and businesses. The integration with Alexa Integration: 1=Standalone, 3=Dependent on two or more divisions,
gives Ring an advantage over its competitors. Ring also 6=Drives business to all divisions
has numerous untapped opportunities around biometrics Leverage: 1=None, 3=Established relationships with key clients,
and other areas within the home that could benefit from
remote monitoring and communication. Prediction for 5-year outlook: 1=Out of business, 3=Leader,
6=Massive growth
We expect demand for home security products will grow

steadily over the next five years, and it is a good bet that
Ring will remain at the top of this market.

Maturity, Iteration, and Market Sizing US Amazon Echo Users, 2019-2025
millions, % of voice-enabled speaker users, and % of
Although the Alexa virtual assistant and Amazon’s Echo
population
smart speaker devices are bundled together here, they
67.9 68.9
operate in slightly different markets. The family of Echo 65.5 66.8
62.7 63.9
smart speakers is mature, dominant, disruptive, yet still
possesses a strong five-year outlook in its category of home 53.6
smart speakers. The Echo, however, is part of a broader 70.9% 71.3% 69.2% 68.1% 67.6% 67.3% 67.0%
strategy centered on voice assistant Alexa—which has a less
dominant position within the voice assistant marketplace
and faces strong competition from Apple’s Siri, Google
Assistant, and even Microsoft’s Cortana.
19.4% 19.7% 19.9% 20.0%

Both Echo and Alexa debuted in late 2014 at a time when 16.2% 18.8% 19.1%
smart speakers were a novelty, and other voice assistants,

such as Siri, were still defining a nascent market. The Echo, 2019 2020 2021 2022 2023 2024 2025
however, was an immediate success and launched the smart Amazon Echo users
% of voice-enabled speaker users % of population
speaker market on a steady growth path. Since then, the
Note: individuals who use an Amazon Echo at least once per month
Echo has morphed into a variety of forms, including the Source: eMarketer, June 2021
low-end Echo Dot (released in 2016) and the Echo Show 267494 eMarketer | InsiderIntelligence.com
(released in 2017 and the first Echo device with a screen),

which now comes in a variety of models. Although all Echo users interact with Alexa, not all Alexa
users own Echos. Alexa can be accessed via a slew of
We estimate that in 2021, 63.9 million people in the US, other Amazon products, from devices operating Fire TVs
or 19.1% of the population, will use an Amazon Echo at and Fire tablets to a range of Echo-branded wearables.
least once per month. That’s more than twice the number Amazon has reached agreements to embed Alexa into
who use the No. 2 product in the smart speaker market, other companies’ devices—including Lenovo laptops,
Google Home (30.1 million users). Echo users, in fact, will Facebook’s Portal, Motorola smartphones, appliances
represent over two-thirds (69.2%) of smart speaker from companies like GE and Kenmore, and particularly
users in 2021, although many Echo users also use cars, which represent a largely untapped opportunity for
competing smart speakers. We project that Echo’s commerce and cloud-based services. For example, Amazon
share of smart speaker users will remain above two-thirds has reached agreements with BMW and GM to install
through at least 2025, when 20.0% of the US population Alexa as the built-in system, and it also has deals with other
will use an Echo. Amazon has a dominant position in this automobile companies, such as Ford, to offer Alexa as an
market with no signs of losing it, particularly since it is option. Additionally, Amazon offers Alexa technology to auto
content with razor-thin profit margins, or even losses manufacturers (and others) as the basis for their own voice
per Echo sold, in the hopes of gaining users for the assistants. Fiat Chrysler was the first automaker to sign up
Alexa ecosystem. for this offer.
Unlike Amazon’s dominant position in the speaker

market, Alexa does not hold such dominance in the
voice assistant space. We estimate that in 2021,
135.5 million people in the US will use a voice assistant, and
117.8 million will connect with one through their smartphone.
Obviously, many smartphone users will also connect with a
smart speaker, and some smartphone users will use Alexa
as their default assistant. But Amazon still faces stiff voice
assistant competition in the smartphone market, where
Apple’s Siri and Google Assistant have strong positions.

A new front in the voice assistant battle will be in smart for users to connect their smartphone to a car’s dashboard
earpieces, or hearables. Amazon introduced Echo Buds in system, and both enjoy widespread use. On the other hand,
2020, but they remain a small player next to Apple’s AirPods Amazon leads Apple and Google in smart home devices,
and their Siri integration. Amazon also sells Echo Frames, connected TVs (CTVs), and home security—all of which
eyeglasses with a speaker connection to Alexa. tie into the Alexa ecosystem.
Amazon continues to explore and invest in alternative

Disruption, Integration, and Leverage gateways for Alexa. With widespread integration across
Amazon products and devices, Alexa has a good shot at
Amazon created a new market with the Echo, in part to becoming a leader among voice assistants and establishing
gain a foothold in the nascent market for voice assistants. itself as the core of a connected ecosystem serving up
Echo also integrates with other parts of the smart commerce opportunities. But competition will be fierce.
home, where Amazon continues to invest, notably with
the 2018 purchase of smart home security camera
company Ring.
Kindle and Fire Tablet
Amazon’s big play, however, is to turn Alexa into one of the
primary portals to the internet. This entails connecting Alexa
to more parts of the smart home, smart city, and connected
vehicles—and importantly, Amazon seeks to turn Alexa
into a primary search and discovery tool.
Amazon is already the biggest threat to Google’s search

dominance. With $14.53 billion in US search ad revenues
in 2021, per our estimates, Amazon will earn about a third
of what Google will earn from search. Neither Amazon nor
Google offer paid voice search ads in their assistants yet
(both query and answer in voice), but they may do so in
the future.
The ultimate goal is to turn voice into a gateway for

commerce. That segment of the market is still small:
We forecast that, at least once this year, 11.9% of digital
buyers will make a purchase via a smart speaker, and
14.2% of digital shoppers will research or add items to a
cart from a smart speaker. But as voice assistants become
more ubiquitous, Amazon hopes that Alexa will be a
prime interface that will funnel users to Amazon products
or services.
The 5-Year Outlook

We expect Amazon to continue to dominate the smart
speaker market in the US (although perhaps less so in other
countries). But the company will face stiffer competition in
the voice assistant market.
out incumbents
Unlike its chief competitors, Amazon does not have its
own smartphone operating system, which puts it at a 6=Drives business to all divisions
disadvantage vis-a-vis Apple and Google. Even in cars,
Apple CarPlay and Google’s Android Auto offer simple ways

Prediction for 5-year outlook: 1=Out of business, 3=Leader, Amazon is not selling the Kindle and Fire tablet with the
6=Massive growth primary goal of making money per unit. Instead, it is intent
on creating platforms that will lead to sales in other
product categories within the Amazon ecosystem. This
Maturity, Iteration, and Market Sizing legacy goes back to the original Kindle, which was always
priced at an affordable level to turn it into a gateway for
Amazon launched its Lab126 research and development
Amazon ebooks.
division in 2004 to develop consumer electronic devices.
Its first product was the Kindle ereader, which debuted
In the early years of the Kindle, there’s no question that it
in 2007, followed by the Kindle Fire tablet in 2011, which
was a huge disruptive force. The fact that a third of book
allowed users to read ebooks and also connect more broadly
sales are currently ebooks demonstrates the extent to which
to the internet. Current versions of the Fire tablet are fully
Amazon revolutionized the book market.
integrated into other parts of Amazon’s ecosystem and run
Fire OS, the same Android-based operating system found
Fire tablets have a fuller range of services and can help
on Amazon Fire TV devices.
Amazon sell other digital products, including Audible
audiobooks and Amazon TV media. They can also serve as a
These two product lines have become dominant devices
portal to Alexa. On the other hand, their relatively small share
for reading ebooks and transformed book publishing
of the tablet market, as well as their lower level of sales next
along the way.
to other devices that carry Alexa and Fire TV, make them
less disruptive devices.
The Fire tablet sits at the lower end of the broader tablet
marketplace. We estimate that 52.3% of the US population,
Fire tablets do, however, fill a niche for lower-end tablets and
or 175.2 million people, will be tablet users in 2021.
give Amazon presence on the higher end of ereaders. They
also fill out the Amazon digital media player product line, so
Fire tablet’s share of that broader tablet market is relatively
they are important—if relatively unheralded—cogs in the
small, however. IDC estimated that Amazon shipped
company’s digital media strategy.
3.5 million Fire tablets in Q1 2021, an 8.7% share of the
global market that put it fourth among tablet brands. That
represented an increase from Q1 2020, when it held a 5.6%
share. For comparison, Apple shipped 12.7 million iPads in The 5-Year Outlook
Q1 2021 for a 31.7% share. The overall tablet market has plateaued. We expect the
number of tablet users in the US to increase by just under
In the US, Apple’s share of the market is even bigger. We a million between 2021 and 2025. During this time frame,
estimate that the iPad holds a 47.8% share of tablet users in the penetration rate of Apple’s iPads among tablet users will
the US. We have no equivalent estimate for Fire tablet, but increase slightly.
StatCounter estimated that Apple held a 58.1% share of the
US tablet market in May 2021, with Amazon a distant third The Kindle and Fire tablets will remain important products
at 14.7%. for Amazon, but their period of rapid growth is likely
over. The Kindle is becoming less crucial to Amazon’s
Ebook readers and low-cost tablets get people to buy ebook business as Amazon has added Kindle apps for
ebooks, which in 2020 accounted for a third of book sales in smartphones and other devices.
the US, according to Statista.
Fire tablets are more important for Amazon’s overall strategy
than the Kindle, since the product line will contribute to the
expansion of Fire TV, Alexa, and ecommerce—but other
Amazon devices, such as Fire TV and Echo, will play a
larger role.

As a result, we expect that the Kindle and Fire tablets will Maturity, Iteration, and Market Sizing
have a decreasing relative contribution to Amazon’s bottom
line in coming years. Amazon Fire TV launched in April 2014 as a single device
and has since expanded to a large array of products. The
main variants include several models of Fire TV sticks that
plug directly into the TV via an HDMI port and come with a
Fire TV remote; the Fire TV Cube that also includes a speaker and
hands-free connection for TV controls and interacting with
Alexa; and smart TVs and sound bars that include the Fire
TV operating system.
We project that 85.5 million people in the US will connect to

the internet via Amazon Fire TV this year, most through an
HDMI Fire Stick. Altogether, 34.1% of digital video viewers
and 40.0% of CTV users will use Fire TV in 2021.
More CTV users in the US will use Fire TV than either Apple
TV (27.9 million users) or Google Chromecast (31.1 million
users) this year. But there will still be more Roku users
(109.7 million) and smart TV users (132.0 million) than Fire
TV users.
Amazon, however, is encroaching on Roku, particularly in the

global market where Roku has less of a foothold. In March,
research firm Strategy Analytics estimated that Amazon
shipped 13.2 million Fire TV devices globally in Q4 2020, the
largest share (12.1%) of any manufacturer and more than
twice the number of devices that Roku shipped.

Amazon is not the creator of the CTV device market or
the current leader, but it has an array of advantages that
make it a powerful player in both the US and abroad. It has
created a diverse collection of devices and partnerships that
put the Fire TV operating system in a large portion of US
homes. It also sells the devices at cost with the goal of
out incumbents
monetizing via its services instead, a strategy that Roku
also is pursuing.
Like Roku, Amazon demands up to 30% of ad sales on
6=Supports multiple divisions and/or clients to maximize scale Fire TV or a cut of subscription revenues as a carriage
Prediction for 5-year outlook: 1=Out of business, 3=Leader, fee. Accordingly, it can make money even from its putative
6=Massive growth competitors in the media business. Amazon also collects
information about its viewers that helps its commerce
and advertising businesses by letting it better target
ads and attribute results, even when users aren’t on
its properties.

Amazon has been able to attract a wide selection of media Video
services to Fire TV, including NBCUniversal-owned holdout
Peacock, which joined in June 2021. In much the same
way that Amazon wins in commerce even when selling
other retailers’ items in its marketplace, Amazon wins
when competing streaming services are delivered via
its devices.
Fire TV devices also have voice-control options that connect

with Alexa, so the device works as an alternate host to
Alexa and its controls over the smart home ecosystem that
Amazon is building. Users can ask Alexa questions and
operate lights, Ring security devices, and other devices
directly through their remote, Fire TV Cube, or smart TVs
with built-in Fire TV OS.
The 5-Year Outlook

Amazon continues to promote Fire TV devices heavily during
its annual Prime Day sales event and other promotional
periods. It also continues to expand on the number of
devices that contain the Amazon TV operating system,
so it will remain a leading player—though not a singularly
dominant one—in the CTV space.
We expect that the number of Fire TV users in the US will

reach 104.1 million by 2025. Although Fire TV’s penetration
rate among CTV users in 2025 (45.3%) will still place it
behind Roku, that gap will narrow by 2 percentage points.
Fire TV’s gains in the US, and its growing presence globally, Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
will help Amazon in its long-term strategy of being a portal Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
out incumbents
to the internet, its media properties, and commerce from
anywhere. Without a smartphone OS of its own, Amazon Integration: 1=Standalone, 3=Dependent on two or more divisions,
has relied on building alternate portals with Echo, Fire
TV, and other smart home devices, and ties them all 6=Supports multiple divisions and/or clients to maximize scale
together with Alexa. This strategy will continue to build
advantages of scale over the next five years. 6=Massive growth

Maturity, Iteration, and Market Sizing Although Unbox predated both the launch of Hulu and
Netflix’s pivot to streaming from mail-order DVD rentals,
Amazon is a major player in the US digital video space, Amazon Prime Video experienced slower growth than either
with a powerful mix of original film and TV content; an of those competitors since their respective launches through
over-the-top (OTT) service that ranks a close third in users 2021. There are still fewer Amazon Prime Video users than
behind Netflix and Disney’s portfolio of services; a growing Netflix users or Disney+ and Hulu users combined. That
ad-supported video on demand (AVOD) component via means that, despite its pioneering position as a video
IMDb TV; and licensing of sports streaming rights. streaming platform, Amazon Prime Video has not
managed to lead the online video market in its 15-year
Amazon’s video content business includes the trajectory in the space.
following areas:
Similarly, Amazon Studios—the retailer’s TV and film
■ Amazon Prime Video production subsidiary—started making original content in
■ Amazon Studios 2010, a few years before Netflix, but has lagged Netflix in
major awards and nominations.
■ Live sports licensing
Amazon Studios’ content budget is smaller than those
■ IMDb TV of Disney and Netflix, according to a 2021 estimate from
Wells Fargo cited by video industry newsletter State of the
Amazon launched video download service Unbox, the
Screens. However, Amazon outspends Discovery, Apple,
predecessor to Prime Video, in 2006, barely a year after
Facebook, and other digital players that have ventured into
the introduction of the Prime program itself. That gives
original programming. Further, Amazon’s proposed
an indication of both the maturity of Amazon’s video
$8.45 billion purchase of the storied MGM Studios (subject
business and the extent to which it’s integrated into the
to approval by the Federal Trade Commission) shows that
company’s huge and growing member rewards program.
the company is willing to spend lavishly on existing libraries.
We estimate that there will be 81.4 million Prime households
and 146.5 Amazon Prime Video viewers in the US in 2021.
Amazon is also moving more aggressively than its
digital counterparts in sports licensing. While Facebook,
US Amazon Prime Video Viewers, 2021-2025 Twitter, and YouTube all partner with major US sports
millions and % of population leagues, they have mostly pivoted to sports-related
160.5 163.9 nongame content, while Amazon has doubled down on
152.6 156.8
146.5 full-game streams. Amazon recently expanded its deal with
the NFL for Thursday Night Football (TNF), which it has
simulcast through Prime Video and Twitch since 2017—the
year it outbid Twitter, the original streaming partner for TNF.
However, Amazon’s new agreement with the NFL, which
47.6%
goes into effect in 2022, will mark the first time a digital
46.2% 47.0%
43.8%
45.2% provider is the only place to watch an NFL game.
Despite Amazon’s success in outplaying its digital

competitors, the sports video market is still dominated by
2021 2022 2023 2024 2025
legacy TV networks, most of which are increasingly shifting
Amazon Prime video viewers % of population
content to their digital platforms. This makes Amazon a
relatively small player in this space.
Note: individuals of any age who watch Amazon Prime Video via app or website at least once
per month
IMDb TV is a fairly young entrant in the AVOD realm, having
launched in 2019 as Freedive before rebranding. Fox’s Tubi
and ViacomCBS’ Pluto TV started several years earlier,
as did the Roku Channel and virtual multichannel video
programming distributors (vMVPDs) that deliver live TV
under a hybrid subscription/advertising model.

Disruption, Integration, and Leverage The 5-Year Outlook
Although Amazon’s video units are in different stages of Barring a catastrophic downturn in Amazon’s business,
maturity and market size, and operate under different which is almost impossible to envision given its size and
business models, they benefit from integration with diversification, its video units should only gain strength
Amazon’s massive CTV business through Fire TV in the next five years. We expect Amazon Prime Video to
devices. On a more general level, Amazon’s video content continue to be one of the top three OTT services in the US,
divisions also get leverage from being part of one of just as we expect the company to increase its investments
the world’s largest companies by revenues and market in entertainment content through its Amazon Studios unit.
capitalization. Not only does Amazon have a hoard of In addition, Amazon’s sports programming and its IMDb
cash to spend on video content and distribution, but the TV unit should continue to feed the company’s advertising
company also has the luxury of not needing to monetize business, which we expect to undergo the largest market
video directly, as long as it supports the Prime program share increase of any major US company through 2023.
through new memberships and increased engagement.
This means that, unlike most of its competitors, Amazon

can afford to run its video business as a loss leader. Prime Audio
members not only pay roughly $120 per year for the
program, but they also spent an average of $1,400 a year on
Amazon as of June 2018, compared with $600 for Amazon
customers who weren’t part of the membership program,
according to data from Consumer Intelligence Research
Partners (CIRP).
Assuming current incremental spending by Prime members

is consistent with CIRP’s 2018 data, we estimate that Prime
could generate close to $75 billion in revenues in the US
alone in 2021—$3.50 billion more than in 2020. If Amazon
can continue luring customers to the Prime program by
bundling access to its video library, then its 2021 content
investments—which Wells Fargo estimated at $9 billion on a
cash basis—are close to an order of magnitude smaller than
the value of the program.
Amazon’s giant footprint across ecommerce, physical

retail, devices, web services, and advertising gives it
unprecedented market leverage over competitors that also
have multiple revenue streams—such as Apple, Google,
and Facebook. But that advantage is especially marked
over rivals with “pure-play” models, like Netflix, legacy TV
networks’ streaming services, and “skinny bundle” providers
like Sling TV. Those companies all need to calibrate their
subscription prices against their content expenditures—
something that Amazon doesn’t need to do.
It’s also worth noting that at least two of Amazon’s video

businesses, IMDb TV and sports programming, generate Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
substantial ad revenues. Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
out incumbents

US Amazon Music Listeners, 2021-2025
millions and % of population
55.8 56.8
6=Massive growth 54.4
52.5
49.8

Amazon’s audio content business consists of three
general areas: the Audible audiobooks platform, the
Amazon Music streaming service, and a burgeoning
podcast operation anchored by the company’s recent
acquisitions of production company Wondery and hosting
and monetization platform Art19. 14.9% 15.6% 16.0% 16.3% 16.5%
2021 2022 2023 2024 2025

Audible was founded in 1995 and was acquired by Amazon
Amazon Music listeners % of population
in 2008. It is a mature business that's important to Amazon’s
Note: internet users of any age who listen to Amazon Music on any device at least once per
overall audio strategy, similar to the role Twitch plays in month; includes Amazon Music Unlimited and Amazon Prime Music
Amazon’s gaming division. Audible is the 800-pound gorilla Source: eMarketer, Feb 2021
in digital audiobooks, controlling up to 90% of the market in
some verticals, according to Publishers Weekly.
In the podcasting space, Amazon is following in the
footsteps of its competitors by acquiring established
Amazon Music launched as Amazon MP3 in 2007, starting
companies that should quickly give it a strong market
out as a download store and eventually pivoting into
presence. Amazon’s decision to buy Wondery and Art19
subscription-based streaming. Amazon has been in the
mirrored similar moves by Spotify (Gimlet, Ringer, and
music market for roughly as long as its main competitors:
Megaphone), Pandora (Stitcher), iHeartMedia (Triton
Apple (2003) and Spotify (2006). Amazon has more
Digital), and The New York Times (Serial Productions).
longevity in this business than Google, which recently
consolidated its music streaming efforts around the YouTube
While Amazon hasn’t provided details of what it plans to
Music brand after fumbling with different brands and
do with Wondery and Art19, or with podcasts in general,
business models.
it’s widely assumed that it will integrate podcasting into its
broader audio portfolio, including music and audiobooks.
Amazon Music will stand at No. 3 among US services, with
Amazon hasn’t disclosed the purchase price of either
49.8 million listeners in 2021, we estimate. That will put it
acquisition, but The Wall Street Journal reported that
behind market leader Spotify and second-ranked Pandora,
Wondery’s value was pegged at more than $300 million
though by 2022 we expect Amazon Music to surpass
in negotiations. That figure is less than a third of what
Pandora and stay in second place throughout our
Amazon earned each day in 2020, so the company has the
forecast period ending in 2025, at which time Amazon
purse power to go way deeper in the podcasting space if it
Music will have grown to 56.8 million listeners.
chooses to.

Audiobooks, in some form or another, date back to the
1930s, so Amazon didn’t invent this category. However, the
company pioneered a digital market for both downloads and
streams through its Audible imprint. Today, Audible is the
industry standard in audiobooks.

In the music business, Amazon hasn’t been particularly that it has beaten Apple at the game the computer maker
disruptive. It followed Apple into the space as a paid pioneered when it launched the iTunes Store in 2003.
download destination but was somewhat more agile in
pivoting to subscription-based streaming. That change was Podcasts are more of a question mark for Amazon,
aided by its use of a freemium model where Prime users considering its late entry into the space. However, Amazon
had free access to a limited version of Amazon Music with a appears serious about integrating podcasts into its audio
larger catalog and an enhanced experience coming with an strategy, and there’s no reason to think it won’t succeed. For
additional subscription fee. That said, neither Amazon nor a company of its size, the podcast business is a rounding
Apple is currently a leader in music streaming as measured error, so it’s unlikely to exit the business even if it doesn’t
by subscribers. That position belongs to Spotify, which saw achieve market leadership or standalone success.
the potential for subscription-based streaming before its
competitors and has the largest user base in the US.
Similarly, Amazon is a follower rather than a leader in the Gaming

podcasting business. It’s too early to gauge its success in
this space, but it’s clear that direct competitors, including
Apple and Spotify, were quicker to recognize, and capitalize
on, the growing podcast market.
Nevertheless, Amazon has similar integration opportunities

and market advantages in audio as it has in other forms
of entertainment. Audio content—including books,
music playlists, and podcasts—is tightly woven into
Amazon’s Echo smart speaker and Alexa voice assistant
technologies and is also marketed through Amazon’s
retail storefront.
Further, Amazon’s vast spending power and leveraged

business give it a market advantage in the audio industry,
especially compared with Spotify, which has a relatively
simple business model that depends on directly monetizing
music streams and podcasts through subscriptions and
ads. That means Amazon can afford to operate its audio
businesses at a loss as long as they boost its Prime program,
its line of smart speakers, or other related businesses.
The 5-Year Outlook

Although Amazon’s audiobooks, music, and podcast
businesses have different dynamics and are at varying levels
of maturity, their collective outlook is positive.
In audiobooks, it’s hard to argue for a scenario in which Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature
Amazon loses its market leadership in the next five years. Disruption: 1=Developing business plan, 3=New approach, 6=Forcing
The company is simply too entrenched in that business to out incumbents
face significant competitive threats. Integration: 1=Standalone, 3=Dependent on two or more divisions,
In music, we expect Amazon will become the No. 2 player Leverage: 1=None, 3=Established relationships with key clients,
in the US in 2022 and maintain that position through at 6=Supports multiple divisions and/or clients to maximize scale
least 2025. While Amazon will continue to lag Spotify, it’s Prediction for 5-year outlook: 1=Out of business, 3=Leader,
notable that the retailer is on track to leapfrog Pandora and 6=Massive growth

Maturity, Iteration, and Market Sizing Twitch operates on multiple business models, including
subscriptions, video ads, merchandise, and the proprietary
Amazon’s gaming business is a tale of contrasts. On one digital currency Bits. The advent of legalized sports
side, its Twitch subsidiary is a pioneer and category leader gambling in the US represents another potential revenue
in game-oriented streams and is expanding into a broader stream for Twitch, as users can bet on esports and
social video platform. On the flip side, Amazon Games game streams.
(formerly Amazon Game Studios) has underperformed as
a game developer and has steered clear of creating its own In contrast with Amazon’s success with Twitch, its
console—in contrast with companies like Microsoft, Sony, Games unit has not produced a genuine hit since the
and Nintendo, which have built business empires around launch in 2012. In April 2021, Quartz documented Amazon
the convergence of high-budget games and state-of- Games’ long string of failures, including at least five major
the-art consoles. Amazon Games has instead focused on development projects that were either scrapped before
cloud-based gaming, which could be a good fit given the launch or pulled from the market soon after their release
parent company’s leadership in cloud computing through its because of poor performance. These included the free-
AWS unit. to-play shooter game “Crucible,” racing game “The Grand
Tour” (inspired by the TV series of the same name), and a
Twitch was founded in 2011 as a spinoff of the Justin.tv multiplayer game based on “The Lord of the Rings.”
livestreaming service. From its inception, Twitch focused
on gaming streams and esports, which had been especially Amazon Games may also be missing an opportunity by
popular on Justin.tv. Amazon acquired Twitch in 2014 sitting out the “console wars.” Given its deep pockets
following a failed bid by YouTube to purchase the company. and expertise with other hardware products including the
Kindle ereader, the Fire TV set-top box, and the Echo smart
We estimate that Twitch will have 31.4 million US users speaker, Amazon theoretically has the capacity to build
in 2021, growing its base to 36.7 million by 2025. Like gaming hardware to rival Sony’s PlayStation and Microsoft’s
other parts of Amazon’s business, Twitch benefited from Xbox franchises.
pandemic-induced lockdowns that boosted home-based
entertainment activities such as gaming. In September 2020, Amazon announced the cloud gaming
service Luna, which costs $6 per month. Players can
US Twitch Users, 2021-2025 purchase the optional $70 Luna Controller or use controllers
millions and % of population from Xbox One or PlayStation 4. The platform is designed to
36.7 interface with Fire TV devices, Windows PC, Mac, and web
35.6
33.2
34.6 apps for iPhone, iPad, and select Android phones. Luna also
31.4 integrates with Twitch.
Although cloud gaming could be a lucrative venture for

Amazon—especially given its ability to host games through
its AWS division—other companies have had mixed results
in this business.
Google, which launched its Stadia platform in 2019, decided

10.2% 10.4% 10.7%
in early 2021 to stop developing games for it. While it did not
9.4% 9.9%
shut down the unit outright, Google’s decision suggested
2021 2022 2023 2024 2025
that revenues from subscriptions ($10 a month for Stadia)
Twitch users % of population
did not justify the development costs.
Note: internet users of any age who watch video content on Twitch via any device at least
once per month
Source: eMarketer, Feb 2021 Apple also launched a subscription-based gaming platform,
Arcade, in late 2019. It’s been successful at attracting users
by reissuing popular iOS-based titles like “Angry Birds” and
bundling the $5 per month subscription with other Apple
services and devices—something Amazon is able to do
with Luna.

Disruption, Integration, and Leverage On the more traditional side of gaming, despite Amazon’s
lackluster results so far, the company has the potential to
While Twitch and Amazon Games have catered to different leapfrog competitors thanks to its cash-rich position, its
audience segments and existed mostly independently expertise in developing other entertainment content, its
of each other, Amazon is beginning to integrate the unparalleled retail infrastructure, and its track record with
two units while also weaving them into broader devices such as ereaders, TV interfaces, and smart speakers.
entertainment experiences that include influencer That all could play into plans to develop a console along the
culture and social video. lines of industry-leading products from Sony and Microsoft if
Amazon chooses to go in that direction.
Amazon ended 2020 with cash reserves of $90.1 billion—
fourth behind Apple, Alphabet, and Microsoft, per Investor’s
Business Daily. This liquidity gives Amazon significant
market leverage to outbid competitors for entertainment Read Next
properties and technologies, including games, cloud-based
platforms, and consoles. Ad Targeting 2021
Mcommerce Forecast 2021
As with other parts of the entertainment spectrum, Amazon
also has the capacity to further integrate gaming into Payments and Digital Commerce Platforms
its Prime franchise. For example, in June 2021, Amazon Sustainability in Ecommerce 2021
offered Prime users a free one-week trial of the Luna
Amazon Delivers Healthcare
service. That means that, even if Twitch and Amazon Games
don’t produce substantial revenues on their own, they Prime Day 2021 Recap
could contribute to the Amazon ecosystem by generating Prime Day Preview
new Prime subscriptions or increasing engagement with US Ecommerce Forecast 2021
the program.
US Sports Video 2021
US Time Spent with Media 2021
The 5-Year Outlook Privacy as a Competitive Advantage
Game streaming isn’t going anywhere but up, and the same Influencer Monetization 2021
can be said of Twitch. This Amazon business unit helped US Digital Ad Spending 2021
give rise to esports and will increasingly benefit from the
The US Gaming Ecosystem 2021
growing popularity of game streams and the influencers
who create them. The service’s “Just Chatting” feature—a US Ecommerce by Category 2021
catchall venue where creators can talk about their work in Publishers and Commerce 2021
casual streams—became its most-watched category in Q3
US Digital Ad Spending 2021
2020 and has continued to grow since then, illustrating the
engagement that the Twitch community can generate. Social Commerce 2021
The Payments Ecosystem
Twitch should also be able to tap new revenue opportunities
Voice Assistant and Smart Speaker Users 2020
from legalized sports gambling. It’s hard to envision a
scenario where, five years from now, Twitch isn’t an even Search Marketing 2020
stronger player than it is today. Amazon Advertising 2020

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The Power of Amazon EMarketer

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SEP 2021

Suzy Davidkhanian, Blake Droesch, David Morris,

Contributors: Grace Broadbent, Daniel Keyes

How dominant is Amazon?

WHAT’S IN THIS REPORT? Our analysts evaluated 19 of

Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 2

Amazon is no stranger to public scrutiny. In H1 2021

The Amazon flywheel has been defined as “a series of

Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 4

$1,000. Amazon Prime users % change % of total households

selection of products housed on the retailer’s site. Six years

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US Amazon Retail Ecommerce Sales* vs. Total

2019 2020 2021

Disruption, Integration, and Leverage

Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 6

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■ Amazon also accepts cash via Amazon Cash and

(US retail ecommerce sales will hit $933.30 billion this

The service likely appeals to active users, and it’s quite

Disruption, Integration, and Leverage

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Lastly, the payments processing service is lucrative

This is particularly true in light of its recent embrace of buy

However, one weakness in Amazon’s approach to payments

options. This prevents it from accepting payments through

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There is a similar case for Amazon’s advancements in retail

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While these concepts may never generate the level of

Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature

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While an expansion on that scale doesn’t seem feasible

Another potential growth area for Amazon’s grocery

Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature

Maturity, Iteration, and Market Sizing

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By licensing Just Walk Out to physical retailers, Amazon can

But Amazon faces two potential obstacles in the

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60.9% 61.7% 62.4%

2021 2022 2023 2024 2025

The launch of Amazon Pharmacy, along with the new

Competitors haven’t sat still as Amazon moved into the

The 5-Year Outlook Integration: 1=Standalone, 3=Dependent on two or more divisions,

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Warehouse workers’ efforts to unionize is another wild card

Amazon’s advertising business has several facets:

■ Amazon DSP is a demand-side platform (DSP) that

■ Amazon Publisher Services provides header bidding

We estimate that Amazon’s US ad revenues skew

Maturity/Iteration: 1=Nascent, 3=Growth, 6=Mature

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Amazon’s troves of actual shopping and buying data

While we expect search will make up the lion’s share

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US Amazon Business Product Sales, 2016-2025

Amazon’s first foray into B2B commerce came in 2012

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■ The number of B2B marketplaces has grown from 70 to

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