Is Amazon really losing market share?

Competitors start to show progress in the cup Amazonof (NASDAQ: AMZN) massive advance in electronic commerce.

Walmart (NYSE: WMT) and Target (NYSE: TGT) reported explosive second quarter results with a surge in e-commerce sales. Walmart’s online sales grew 97% while Target said its digital sales increased 195% in the past three months. Costco (NASDAQ: COST) has yet to release its results, but it saw monthly online sales growth of 106%, 86% and 75% in May, June and July, respectively. Shopify, which has hundreds of thousands of small traders on its e-commerce platform, said its gross merchandise volume grew 119% in the last quarter.

Amazon, meanwhile, recorded sales growth of “only” 48% for its online stores in the second quarter. When looking at its results by region, North America grew by 43%. Its third-party vendor services grew a little faster to 52%.

With slower growth than its competitors, Amazon must lose significant market share. But estimates from the US Census Bureau suggest it may not be so bad for the market leader. E-commerce sales in the country grew 44.5% year-over-year in the last quarter, according to government estimates. This is barely faster than Amazon’s North American sales growth during the same period and slower than its third-party seller services.

Image source: Amazon.

Amazon keeps pace with the market

Amazon kept pace with the overall market well in the second quarter. And this is a quarter where Amazon’s distribution network has been turned upside down.

It decided to prioritize fulfillment of items it deemed essential and asked traders to stop non-essential stock shipments to its warehouses as it was devoting its footprint to essential goods. Meanwhile, operations in its warehouses have been slowed down after taking steps to help prevent the spread of COVID-19. Even Amazon Prime members experienced long delays for some shipments.

Amazon has also backed down on internal advertising and promotion efforts typically used to drive sales. And he had to delay his Prime Day shopping vacation, usually scheduled for July, as he struggled to upgrade his warehouses.

Amazon does not report the gross volume of merchandise and does not break down its sales results by country. Therefore, it is impossible to know whether it has grown faster or slower than the overall market based on publicly available data. But it looks like Amazon has grown slightly slower than the overall US market.

However, when a company has a market share of almost 40%, growing slightly slower than the rest of the market means that there is a fair amount of market share gains to be made. Even if Amazon grew about 10% slower than the overall market (say about 40% GMV growth), that would open up about 1.2 percentage points of market share. And for competitors who only make up about 1% of the total market like Target or Costco, this is a huge opportunity to take part. Even Walmart, with a market share of around 5%, had a lot to gain.

Amazon expected to outperform other online retailers in second half

Above all, investors should consider that Amazon has largely recovered from the shock of COVID-19. He increases the capacity of his warehouse, starts spending again on advertising and plans a Prime Day in October. All signs point to sustained demand for Amazon shipments and high revenue growth through the end of the year.

Meanwhile, there are indications that Walmart’s sales growth could step back a notch. The company recorded same-store sales growth of 4% in July, compared to 9.3% for the full quarter. Online sales are a key contributor to comparable store sales. Management spoke of the uncertainty over consumer spending after the exhaustion of stimulus controls, as well as an abnormal back-to-school shopping season.

While Amazon may have lost a bit of its dominance in e-commerce (maybe), it feels more like a short hit on its steady march to an increasingly larger share of online retail. .