Amazon could be the largest US retailer in 2024, JP Morgan analysts say

Amazon (AMZN) is set to achieve a major milestone in 2024: to become the largest retailer in the United States, according to JP Morgan analysts Doug Anmuth and Bryan M. Smilek.

If that happens, Amazon will overthrow Walmart (WMT) as the nation’s largest retailer. It would be a seismic shift, driven by increased e-commerce penetration, faster shipping times, and the stickiness of Amazon Prime. JP Morgan estimates show that in 2023, Amazon’s gross merchandise volume, or GMV, will grow 11.6% year-over-year to $477 billion.

This kind of growth shows the kind of resilience Wall Street was hoping to see emerge from e-commerce companies, which have had a tough 2022. Although e-commerce companies like Amazon have seen major booms during the pandemic, the past year has seen a setback. It was the first year since 2009 that U.S. e-commerce grew by less than 10%, analysts noted, adding just 8.5% year-over-year, “likely due to macroeconomic pressures, the resurgence of [brick-and-mortar] retailers and the post-pandemic shift to omnichannel retail,” Anmuth and Smilek wrote on June 20.

This year, Amazon’s GMV is increasing due to “solid growth in under-penetrated categories” like groceries and apparel, “faster delivery speeds, with a follow-up in 2023 towards delivery speeds Amazon’s fastest,” and “primary flywheel,” the idea that the company’s much-discussed subscription service builds momentum at every stage of the experience, the analysts wrote.

Amazon’s e-commerce business will also benefit from increased B2B capabilities, new fintech offerings such as Buy With Prime and an estimated growth in the number of third-party sellers operating in the enterprise marketplace, they added.

JP Morgan estimates there will be approximately 300 million Prime members worldwide by the end of this year. In 2021, then-CEO Jeff Bezos said the company had “more than 200 million Prime members worldwide”.

Amazon also has a massive grip on the e-commerce market, and by the end of 2023, JP Morgan analysts expect the company’s e-commerce market share to be 42.2%, or an increase of 106 basis points year over year.

**FILE PHOTO** Amazon sued by FTC over Prime subscription tactics.  NORTH LAS VEGAS NV - AUG 8: View of delivery vans at Amazon Hub as Amazon issues a mask mandate requiring all warehouse workers to wear masks at work due to the Covid-19 Delta variant.  North Las Vegas, Nevada on August 08, 2021. Credit: DeeCee Carter/MediaPunch /IPX

View of delivery vans at Amazon Hub in North Las Vegas (DeeCee Carter/MediaPunch/IPX)

JP Morgan’s optimism on Amazon is also linked to the belief that the company will leverage generative AI in its e-commerce operations, suggesting that “ChatGPT-like product research would create an interactive conversational experience.” which analysts said would “allow Amazon and other retailers to deliver a more personalized customer experience” and that AI could also “allow Amazon and other retailers to take advantage of a wide range of historical and customer purchase data and improve personalized recommendations”.

Government scrutiny of big tech

There is a catch, however: In recent months, so-called “big tech” companies, including Amazon, have come under increased scrutiny from the federal government. Vermont Sen. Bernie Sanders said he was investigating what he called Amazon’s “abysmal security record” and, while it’s far from the first time Sanders has gone after at Amazon, it’s certainly one of the most formal, and it’s unlikely to be the last.

Additionally, last week the Federal Trade Commission (FTC) sued Amazon, alleging the company tricked customers into signing up for Amazon Prime and making it harder to cancel those subscriptions. The lawsuit is the byproduct of an FTC investigation that began in 2021. For Amazon, it’s a punch of a lawsuit, alleging the company violated multiple privacy laws. consumers and that the court should issue an injunction to stop Amazon’s Prime subscription practices. .

This new legal action by Amazon follows actions by the FTC against many big names in technology, including Alphabet (GOOG), Microsoft (MSFT), Meta (META) and Apple (APPL).

Allie Garfinkel is a senior technical reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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