5 Million Paid Members Increased in One Week... 'Amazon World' Continues in 2020

Amazon 'Prime' Membership Surges to Record High in One Week Before Year-End
10 Million Delivery Items... Overwhelming Compared to Competitor Walmart's 220,000 Items

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Minwoo Lee] The world's largest e-commerce company, Amazon, is expected to achieve strong performance again this year. This is because it maintains an overwhelming lead over competitors in terms of delivery speed and product range. With recent expansion into grocery delivery and a steadily increasing proportion of paid members, positive factors continue, leading to an analysis that Amazon's dominant position will persist for the time being.

According to Hana Financial Investment on the 4th, Amazon is forecasted to achieve sales of $330.584 billion (approximately 386 trillion KRW) and operating profit of $17.986 billion this year. Sales are expected to increase by 18% and operating profit by 33% compared to last year. Amazon's upward momentum, which saw a fourfold increase in same-day and next-day delivery orders during the 'holiday season' from late November last year to early this year compared to the same period last year, is expected to continue this year as well.

In particular, it is analyzed that the strategy of offering free one-day delivery through the premium paid service 'Prime' to expand online shopping market share has been effective. Amazon officially launched the so-called 'Prime One-Day Delivery,' reducing the free shipping period for Prime members from two days to one day, starting in April last year. In fact, the number of new and trial Prime subscribers during the one-week year-end holiday exceeded 5 million, the highest ever. The number of Prime members using grocery delivery services for the first time increased by more than 80% compared to the previous year, and grocery orders more than doubled. Jaeim Kim, a researcher at Hana Financial Investment, explained, "If the proportion of daily necessities and food purchased from Amazon increases, it can further shorten the Amazon usage cycle," adding, "Ultimately, this can lead to shopping for other items, which will have a significant impact."

As offline shopping in the U.S. rapidly shifts to online, Amazon's dominant power in delivery speed and scale compared to competitors is expected to grow even stronger. Currently, the number of items Amazon offers through same-day and next-day delivery exceeds 10 million. This is 50 to 150 times more than competitors Walmart (220,000 items) and Target (66,000 items). Free shipping is also a strength. Amazon Prime members can use next-day delivery free of charge without any purchase cost conditions. In contrast, Walmart and Target require a minimum purchase of $35.

Although investment in building the one-day delivery system may continue, profitability is expected to improve significantly this year as various costs decrease. Since the second quarter of last year, Amazon has significantly increased transportation costs and the number of employees in the cloud division's sales and marketing. Considering the base effect, profitability improvement is expected from the second quarter of this year. Researcher Kim stated, "Amazon will increase its share of the U.S. online retail market and continue its growth momentum this year," expressing the opinion that it has "high investment attractiveness." Bloomberg forecasted Amazon's stock price to reach $2,178.88. The closing price on the 3rd (local time) was $1,874.97.

This content was produced with the assistance of AI translation services.