That’s according to a recent report from Edge by Ascential’s market research arm, Retail Insight. By 2025, Amazon’s gross merchandise value (GMV) sales will reach $631.6 billion--a 14% compound annual growth rate between 2020 and 2025. The GMV metric, which is the standard to measure the size of third-party marketplaces, includes online and offline sales. Amazon’s third-party marketplace will grow from 60% of its GMV sales in 2020 to 66% by 2025, the report found.
Walmart, which will fall to the No. 2 spot by 2025, will reach GMV of $523.3 billion, with a CAGR of 3.9%. Supermarket chain Kroger is projected to remain the No. 3 largest retailer, with sales growing at a CAGR of 3.6% to reach $166.6 billion in sales by 2025. Chain Store Age reported. The fourth largest retailer in 2025 will be Costco, with online sales growing 47%, reaching $15.3 billion in sales by then.
Walmart, the nation’s largest employer, will be overtaken by Amazon despite seeing a 14.9% five-year growth rate for its e-commerce sales, from $43.6 billion in 2020 to $87.5 billion in 2025. In fact, e-commerce, where Amazon reigns, will be the only channel to increase market share over the next four years, with market share coming from supermarket and big box retailers. Food service and discount retailers will maintain their market shares.
“As Amazon grows to become the largest retailer in the U.S., brands must understand they cannot win through mass personalization when faced with the huge spending power of large marketplaces like this,” said Deren Baker, CEO of Edge by Ascential. “They should therefore ensure they have the correct strategies in place to use marketplaces, like Amazon, to reach the right consumers and meet their needs.”
E-commerce sales will top $1 trillion by 2025, the report predicted, reaching $1.204 trillion--a 41% increase from 2020. That jump will also impact grocery stores, as online shopping grocery shopping is expected to remain elevated even as social distancing measures put in place during the Covid-19 pandemic are relaxed. Between now and 2025, edible grocery e-commerce will grow at 13% CAGR.
“The pandemic has permanently shifted consumer habits from in-store to e-commerce,” Baker said. “This has implications for a brand’s go-to-market approach but also its store strategy as stores become part of an ecosystem of retailing touch points rather than the main event with a digital add-on. Brands must embrace digital platforms, such as marketplaces and delivery intermediaries and customize product offerings and selling strategies accordingly.”