Judging by its holiday performance and PYMNTS research, Amazon is well on its way to commanding more of consumers’ paychecks in 2019. The 2018 holiday shopping season is also providing encouraging news for the ongoing development of the Internet of Things — and Amazon’s role in in that growing ecosystem.
You may have already heard, but in case not, here is the main news: Amazon said this week that it had a record-breaking holiday season in 2018, with more items ordered around the globe than any other year past.
That’s not all.
Prime memberships grew during the holiday season, with tens of millions of people starting free trials or paying for memberships to get access to free same-day, one-day or two-day shipping and free two-hour delivery with Prime Now. Amazon had earlier said that Prime had more than 100 million members, more than 50 percent of the U.S. adult population. The company said millions of items in the U.S. were shipped with Prime free shipping promotions during the holidays. Amazon drove 81 percent of holiday web sales this season, according to one report.
Even before the holiday shopping season began, Amazon already commanded a growing share of consumers’ retail spending, according to The Amazon Paycheck Index from PYMNTS. Amazon now accounts for 2.1 percent of all consumer spend — some $1,320 of the total paycheck for a household that earns roughly $63,000 a year. That’s up from 1.6 percent in 2017 and 1.3 percent in 2016.
Yes, the 2.1 percent is small as a percentage of overall spend, but the number has grown fast — remarkably fast over the last four years — accounting for an enormous chunk of eCommerce. Over the last four years, retail sales have shifted to Amazon in key categories that were once the domain of the physical store. Amazon now accounts for 20 percent of all electronics, 9.7 percent of home furnishings, 9.3 percent of auto parts, 7.8 percent of apparel and 5.4 percent of sporting goods (which includes books, music and hobbies) sales.
When it comes to consumer retail spending — not total consumer spending — Amazon accounts for an estimated 6.4 percent of that in 2018, up from 5 percent in 2017 and 3.9 percent in 2016.
The best-selling products for Amazon during the 2018 holiday shopping show where eCommerce is headed — and indicate how the eCommerce operator intends to be there as consumers move into new shopping channels. Those devices include the all-new Echo Dot, Fire TV Stick 4K with all-new Alexa Voice Remote and Echo.
According to Strategy Analytics’ report “Smart Speaker User Survey – U.S. Results,” the Echo accounts for 23 percent of all smart speakers in use. When all of its models are taken into account, Amazon makes up 63 percent of smart speakers in use, while Google accounts for 17 percent and Apple 4 percent. Amazon’s Alexa, of course, is capable of much more than voice-activated shopping — Amazon said that in addition to seeing voice orders jump three times compared to a year ago, Alexa was also called upon hundreds of thousands of times to help consumers find cocktail recipes — but the trends do provide guidance about where retail is headed in 2019.
The survey also found that 88 percent of smart speaker homes have at least one Amazon smart speaker, and 31 percent own at least one Google smart speaker. And many Americans have more than one smart speaker in the house. In fact, 58 percent said they have two or more at home, with 62 percent using a smart speaker in the family room, 41 percent in a bedroom, 39 percent in the kitchen, and 12 percent in the bathroom.
In short, that shows how holidays sales trends are positioning Amazon to take a leading role in the expanding Internet of Things and the commerce and payments related to that ecosystem — though there is recent evidence that Amazon’s smart speaker dominance will shrink as non-Amazon models become more attractive to consumers. But Amazon likely will take command of more consumer spending in 2019, as the holiday figures would seem to indicate.