Although Amazon does not break out revenue by-product category, Simeon Siegel of research firm Instinet found that the e-tailer’s apparel sales likely made up between 10 and 20 percent of its revenue, based on an analysis of data from peers like Wal-Mart and certain brands that Amazon sells.
By using this mix of “science and art,” Siegel found Amazon’s global apparel sales in 2016 were likely between $18 billion and $36 billion, putting it well within range of Wal-Mart and Macy’s, which sold $25 billion and $22 billion worth of apparel sold, respectively.
Considering its recent fashion push and some new tie-ups with the likes of Calvin Klein, Nike and Drew Barrymore, among others, there seems to be only growth on the apparel front for Amazon. Siegel said apparel sales are likely to fall between $45 billion and $85 billion by 2020, if revenue increases at the expected rate. Revenue for 2017 is estimated at $176.67 billion, while 2018 is expected to come in at $224.84 billion, according to Instinet data.
“This is very real,” Siegel said when asked if Amazon was benefiting from too much hype in the financial community.
“Any retailer or brand or grocer or health care provider or delivery service, anyone who doesn’t have Amazon as a topic in their boardroom discussions, is putting their head in the sand in a very dangerous way,” he added.
As for projections that Amazon will likely be the first company valued at $1 trillion, Siegel struck a similar note, saying these estimates aren’t being made “just because it sounds good.”
As of Wednesday afternoon, the company’s stock was up 0.33 percent to $1,145.39 and its market capitalization stood at $551.93 billion. The stock hit an all-time high Nov. 27, Cyber Monday, of $1,195.83. The company later that week confirmed that this year’s Cyber Monday was its “single biggest shopping day ever.”
Keeping with custom, Amazon didn’t get into specific amounts, but sales from its 30-hour Prime Day shopping event in July were touted then as the company’s best ever. Analysts estimated sales were around $1 billion.
Amazon’s method in retail so far has been to not only take market share from existing retailers, Siegel said, but to expand upon it. This means there’s much more room for it to grow, even though it may seem large already.
One of the best things Amazon has going for it, outside of convenience and competitive pricing, is that it’s taken shape as one of the only retailers to be without some sort of socioeconomic stigma behind it.
Siegel said this is a “particularly relevant and potentially underappreciated factor when selling fashion, and one that influences decisions of both revenue-generating shoppers and the participating brands.”
But Amazon is not a destination for luxury or even mid-priced products, which could change, but it’s unlikely to be in the immediate future.
The company’s apparel business as it stands is “awash in basics,” Siegel said, with Levi’s, Adidas and Under Armour on the upper end of the spectrum for most popular men’s brands and a “much more fragmented” picture for women’s.
This leaves plenty of room for Amazon’s private label group to grow, which is still small in terms of revenue but gaining ground. Its label Lark & Ro was said in October to be nearing $10 million in sales for the previous 12 months.
“Growing the company’s own brands would fit perfectly into amazon’s desire to grow higher margin segments,” Siegel added.
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