According to its latest “Amazon & The Retail Rainforest” report, Wells Fargo explained that pandemic-fueled changes in shopping behavior drove 15 percent growth in the e-tailer’s online clothing and footwear business across both its own sales and those of third-party merchants.
“Notably, traditional retailers struggled mightily in 2020 amid the pandemic, but the channel shift to e-commerce was dramatically accelerated (to Amazon’s benefit),” research analysts Ike Boruchow, Tom Nikic, Will Gaertner and Lauren Frasch wrote in the report.
The 15 percent increase may seem modest, but “we believe that overall demand for apparel was stifled by the pandemic,” they continued, “and Amazon’s customers were more focused on ‘essential’ items and/or items that catered to the newfound work-from-home environment.”
In other words, Amazon’s uptick in sales, driven by basics and ath-leisure clothing, loomed larger against an overall clothing landscape that was depressed during quarantines and lockdowns.
Ultimately, the growth represented an increase of more than $5 billion, Wells Fargo figures, handing Amazon a total of more than $41 billion and leaving big box giants Walmart, Target and others in its wake. In fact, the e-commerce platform outperformed Walmart, the number-two retailer, by 20 to 25 percent.
Walmart Inc. expects full-year sales and profit growth to slow as it reinvests in its business.
Now Amazon owns an 11 to 12 percent share of all U.S. apparel retail and more than a third of all apparel sold online, at 34 to 35 percent. Amazon’s empire has become so vast that it also lifted other apparel companies, including partnerships with a growing spate of fashion brands, as well as retail players. For instance, Kohl’s Amazon returns partnership drove 2 million new customers to its stores in 2020.
The momentum is not expected to subside, even if the coronavirus does.
Wells Fargo pegs 2021 sales growth in apparel for Amazon at 10 percent — a modest rate that factors in the return of shopping in physical stores, as more people get vaccinated and restrictions ease. But it’s far from a backslide, amounting to another $5 billion in estimated sales, for a total of more than $45 billion.
The analysts, led by Boruchow, also pointed to a Wells Fargo survey of 1,000 U.S. Amazon shoppers, which indicated that some of these trends will persist after the pandemic.
“Once the pandemic is in the rearview, the largest portion of respondents expect that their spending will not change versus their pandemic spending (46 percent) — suggesting that a significant portion of the acquired market share will prove to be ‘sticky,’” they said.
But there’s one data point that the e-commerce company will want to keep an eye on: For apparel/footwear specifically, a greater share of participants in this survey expect to revert back to pre-pandemic shopping habits (30 percent) than for general Amazon shopping (22 percent).
That means Amazon’s clothing sales could face at least some “normalization” in the future.
Across all categories, apart from Whole Foods, Amazon saw gross merchandise volume in the U.S. hit $290 billion last year, a $9 billion gain over 2019. And, according to Wells Fargo, it reached $180 billion growth in addressable market.
With that, the analysts said, “Amazon accounted for ~50 percent of the market’s sales growth in 2020.”