Amazon.com Inc. (NASDAQ: AMZN) had about 40% of all annual e-commerce sales in the United States entering the coronavirus recession. That translated into about 6% of all retailer sales in American. Amazon may well have 10% of all U.S. retail sales (brick-and-mortar and online sales) as the downturn continues.
Few retailers have gained revenue and market share has the economy has been beaten down. Walmart Inc. (NYSE: WMT) is one of them. Its massive store network and e-commerce presence have driven that. Kroger Co. (NYSE: KR) has done well as the need for groceries has risen. However, dozens of the nation’s largest retailers have closed their stores entirely, which will push their sales down to breathtakingly low levels.
While Amazon remains open for business, it says it will hire 100,000 to keep its warehouse and distribution centers running at full capacity. Management says some Prime members (that is, members of Amazon’s loyalty program) may not get deliveries of their orders for a month. Demand for Amazon inventory is that high.
The list of retailers that may have their sales knocked toward zero includes Macy’s, Nordstrom, Gap (including Banana Republic and Old Navy), Kohl’s, Best Buy and GameStop. Their decisions have closed literally thousands of stores. Some continue to have curbside pickup. Macy’s Inc. (NYSE: M) had $20 billion in sales last year. Best Buy Co. Inc. (NYSE: BBY) had $43 billion. Much of this revenue will go elsewhere.
Malls also have closed, taking thousands of more stores out of the market.
No one knows how long these chains will close, but estimates range as far out as September. Then it will take some time to get them completely open and operating again.
As the locations of these major retailers remain closed, customers need to go elsewhere. Amazon is among the few places shoppers can actually go.
How large could Amazon become in the next two or three quarters? Its North American business posted revenue of $170 billion last year. That was up 21% from 2018. It will take away from closed retailers, and the revenue number could double to $340 billion. Total U.S. retail sales last year were $3.7 trillion.
Amazon is already considered the most powerful retailer in the United States, with the possible exception of Walmart, which had U.S. retail sales of $331 billion last year. Could Amazon match that Walmart number in 2020? It would be wise not to bet against it.