Industries Outlook on Amazon, Part 1

Part
01
of three
Part
01

Apparel on Amazon

The Amazon apparel category available information showed growing numbers. We used information from early 2018 to the end of the same year. Additional and more complete reports are available to buy from Statista and Digital Commerce 360.com.

Amazon apparel category overview

According to Coresight, the Amazon general apparel category is growing and changing fast. Here some of the most interesting highlights.

Growth: Across men’s and women’s clothing, the study recorded a total of 1.12 million products, an increase of 27.3% between February and September 2018.

Offer: Amazon is now re balancing its offering, with strong growth in listings for formal categories such as suiting. Coresight recorded a 98.6% increase in women’s suiting and blazer listings and a 52.2% rise in men’s suit and sport coat listings between February and September 2018. Based on a 2018 survey by Morgan Stanley, some of the most popular items sold in the Clothing, Shoes & Jewelry category include:
  • Casual tops (68% of respondents purchased)
  • Casual bottoms (38%)
  • Shoes (48%)
  • Athletic wear (34%)
  • Accessories (26%)
  • Dresses (23%)
  • Underwear (24%)

Ranking: In different sources like this and this, we found that the Clothing, Shoes & Jewelry category is the 6th most popular of amazon.com.

Businesses in the category that are doing well.

  • Amazon Essentials/Collection
According to MarketPlacePulse.com, Amazon is using its knowledge to steer shoppers toward its in-house brands. Good examples are Amazon Essentials and Amazon Collection. These are private label brands, and based on customer feedback, they offer more comfortable, long-lasting, and affordable price products.

Amazon Collection (Jewelry), and Amazon Essentials (Clothes) are the 2nd and 3rd largest private label brands with 12,5% of the market share. Brands with “Amazon” in the name are performing well, while others with unrecognizable and disposable names are not performing as well, so we think that using the word "Amazon" is a significant advantage.

Amazon customer’s behavior is shifted from a brand-driven world observed elsewhere to a needs-based decision process. According to Julie Creswell, about 70% of the searches done on Amazon’s browser are for generic goods. That means users are looking for “men’s underwear” or “running shoes” and not for specific brands.

30% of products of the top 10 brands are rated 4.5 or more, and 83% are rated 4.0 or more, so it is another important driver for customers when they are choosing a product.
  • Daily/Ritual
It’s another Amazon private label brand that specializes in cozy lounge wear and casual basics. Besides the advantage that means being an Amazon brand, Daily Ritual colors are mostly neutrals like black, white, and gray, making it easy to mix and match, and the majority of their styles also come in plus sizes, and this is boosting its performance on Amazon.

The products also are reasonably priced, the whole line is relatively inexpensive, with most dresses costing around $30 and two-packs priced at an average of $20 total. The leggings are all under $20.

Some blogs have sponsored posts with reviews inviting to know the brand and leading traffic to its Amazon site. It was not possible to check, but it seems that the brand uses social media influencers too.
  • Tommy Hilfiger
According to the Nomura report, since 2018, Amazon offers a bigger selection of Tommy Hilfiger clothing than Macy's and JCPenney do.

The brand has had a strong presence in department stores, however, the Nomura data shows that Tommy Hilfiger shifted away from this channel. Offer a bigger selection of clothing on Amazon seems to have boosted the brand’s performance.

Advertising opportunities for the category

Advertisers can be creative using customer reviews. It’s possible to use the competition’s successes and weaknesses, for example, to identify keywords on their positive reviews and use them on new ads. And not just like keywords, but to create a related blog or social posts and other content.

Examining the negative reviews, we can find what Amazon customers are looking for and not getting elsewhere. It can be used to create ads like “Did you buy X Product and it wasn’t what you wanted? We know how it feels” to get engaged with disappointed users.

Amazon is building a pay-to-play business that favors companies with the budgets to build out enriched content and spend on-site advertising. The message is clear: prepare to create enriched content and assign some budget to promote it on Amazon.

Research strategy

We started the research looking for information about the apparel category on Amazon, and we found two serious sources indicating its growth in sales and the number of available products. We found a complete report related to Amazon private label brands, and it was used to get some highlights about how brands are performing on the platform. In the case of Tommy Hilfiger, we crossed information from Coresight Research and the Nomura report. To the ad opportunities, we made an analysis based on digiday.com information.
Part
02
of three
Part
02

Shoes on Amazon

The footwear/shoe category is one of the highest-selling categories on Amazon in the United States. Nike, New Balance, and Skechers are three brands of footwear that have the highest sales in the footwear category on Amazon in the United States market. Presented below is an overview of the shoe category, the best-selling brands, and the advertising opportunities that Amazon provides to the shoe sellers on its platform.

Amazon Shoe Category Overview

  • The United States is the biggest footwear market in the world. The footwear industry generated a revenue of $79.86 billion in the United States in 2017.
  • Amazon is the top e-commerce platform in the United States, accounting for a market share of 45% of all e-commerce platforms as of 2019. There were an estimated 112 million Amazon Prime subscribers in the United States as of December 2019.
  • As of February 2019, clothing, shoes, and jewelry was the second-most purchased category by Amazon customers in the United States. It was purchased by 43% of all Amazon customers. The revenue generated by this category in the United States was $33.4 million. Even though Amazon did not release their sales statistics from the shoe category alone in 2018 and 2019, these figures along with the above two statements imply that shoes account for a large share of Amazon's yearly revenue in the United States.
  • Historically, the sale of shoes on Amazon has far exceeded the total United States' shoe sales through both online and offline channels. This becomes clear from the last available exclusive shoe sale statistic that Amazon released in the year 2017.
  • In 2016, Amazon's total shoe sales increased by 35% as compared to 2015. The corresponding growth for the entire United States' shoe industry was only 5%. Similarly, Amazon reported an 18% increase in its revenue from the sale of shoes in 2017 as compared to 2016.
  • As per data collected from Amazon, the most popular subcategory of footwear sold in the United States is the athletic type, with 27.8K products available for sale. This subcategory accounts for over 50% of all footwear products on Amazon. The next popular subcategories are fashion sneakers (9.8K products), sneakers (3.6K products), outdoor (2.2K products), and sandals (1.5K products).
  • Collectively, the footwear for men and women constitute 82.32% of the total footwear products on Amazon. Out of this, women’s footwear has a larger share of 22.6K products on Amazon. Boys and girls (including kids) footwear make up the remaining 17.68% of all footwear products found on Amazon in the United States.

Leading Sellers in the Shoe Category

  • Among all footwear brands that sell on Amazon in the United States, Nike is the best-selling having 16.4K products on Amazon. Nike is also the most expensive footwear brand on Amazon, having an average selling price of $103.30. Nike has a huge footwear collection for women with 7.4K products. Nike has 7.1K products for men, 1.2K products for boys, and 0.7K for girls on Amazon. Nike's dominance in the footwear industry is because of the premium quality of its products and innovative design. A survey of the top-10 best-selling shoes in the United States in 2019 revealed four Nike products out of the ten. Nike's Air Max and Air Force series are the most popular.
  • The second-most-popular footwear brand on Amazon in the United States is New Balance, having 9.7K products on Amazon. New Balance's footwear products for women constitutes 66% of their total collection on Amazon (with 6.4K products). New Balance has 2.0K products for men, 0.8K products for boys, and 0.5K products for girls. The average price of a New Balance footwear on Amazon is $61.30, which makes it a cheaper alternative to the pricey Nike. New Balance's sole design that distributes the stress evenly throughout the feet, lower legs, and ankles and attention to detail during the manufacturing process makes New Balance's footwear so popular throughout the United States.
  • The third-most-popular footwear brand on Amazon in the United States is Skechers, having 7.0K products on Amazon. Skechers is the most reviewed brand on Amazon with 604K reviews. Like New Balance, women's footwear constitutes 66% of Skechers' total collection on Amazon with 4.6K products. They have 1.3K products for men. The average Skechers' footwear sells for only $44.0 on Amazon. Skechers makes the United States' second-most popular sneakers after Nike. Skechers' association with celebrities, innovative advertising, and cheap prices have led to the growing popularity of the brand over the years.

Advertising Opportunities in the Shoe Category

  • Amazon provides several advertising self-service solutions for shoe sellers to advertise on Amazon's platforms. One of the ways is through Amazon Sponsored Product Ads. These are pay-per-click and keyword-targeted display ads that shoe sellers display on Amazon for their products. These ads appear on product detail pages and shopping results pages and help in driving sales and product visibility. With Sponsored Product Ads, shoe sellers use three types of keywords to leverage manual targeting of their products: exact, broad, and phrase.
  • Another way to advertise on Amazon is through Amazon Headline Search Ads, which are pay-per-click ads. These are also known as Sponsored Brand Campaigns. This type of advertising enables shoe sellers to showcase their brand and product portfolio on the Amazon webpage. Footwear businesses can feature their brand logo, a headline, and at least three of their products which appear on the shopping results. The three types of keywords used in this type of advertising are branded product keywords, sponsored products automatic targeting keywords, and complementary product keywords. Amazon uses a pay-per-click and auction-based pricing model strategy for this advertising type in which sellers can either manual bidding or automated bidding. The automated bidding feature optimizes the sellers' ads for conversion. Amazon introduced some improvements in its Sponsored Brand Campaigns advertising in July 2019. These improvements were aimed at helping sellers to reach a wider audience and control their advertising costs, allow more product optimization, and enabling customers have a better mobile ad experience.
  • Shoe sellers can also promote their brand or product on Amazon Stores. These are customized multipage shopping destinations that utilize features like drag-and-drop tiles or Amazon's templates to enable individual businesses to showcase their brand and product offerings. Advertising their products on Amazon Stores enable businesses to get an Amazon URL and view traffic analytics on their individual Amazon webpage. This helps them to view their sales, ad campaigns, and traffic sources. Amazon Stores require no prior website experience and are free to use, unlike the Amazon Sponsored Product Ads and Sponsored Brand Campaigns that are pay-per-click ads.

Research Strategy

We started our research by trying to find Amazon's latest sales figures for footwear in the United States. However, ever since Amazon clubbed the three categories, i.e., clothing, shoes, and jewelry together, the company has not released any sales data for only shoes separately. Hence, we had to refer to Amazon's last known sales figures for shoes exclusively. We found the report from 2017. Since 2018, the clothing, shoes, and jewelry category has become Amazon's second-most purchased category in the United States by sales figures. We have mentioned in the above research whatever data that is available in the public domain. Next, we searched for the three most popular footwear brands on Amazon in the United States and found the data that established Nike, New Balance, and Skechers as the three top-selling footwear brands on Amazon. We have also presented above the various advertising opportunities that Amazon provides to the businesses that sell on its platform. These are mostly in the advertising self-service space.
Part
03
of three
Part
03

Outdoors on Amazon

The sports and outdoors category is one of the highest growing product categories on amazon.com. Camelbak and Wild Owl Outfitters are two brands enjoying increased prominence and leading growth within the outdoor recreation sub-category, in terms of items sold and revenue, as more people are attracted to activities in the sector. An overview of these brands is provided below as well as several marketing opportunities for the sector.

SPORTS & OUTDOORS CATEGORY

  • Between 1 February 2018 and 31 January 2019 Amazon's Sports and Outdoors category accounted for 4.4% of all items sold by volume on the website.
  • Sales of items for the Sports and Outdoors category are largely steady over time, experiencing a slight rise at the start of summer and in conjunction with Amazon's annual 'Prime Day' of sales. Sports and Outdoors also delivers a sharp peak pre-Christmas, which is consistent with almost all product categories on the marketplace.
  • 17% of Amazon customers who have purchased from the site in the past 12 months have bought a product from the Sports and Outdoors category.
  • The revenue growth for the Sports and Outdoors category on Amazon during the financial year 18/19 was 15.4%.

LEADING SELLERS IN OUTDOORS

  • As of 06 April 2020, the #3 best-seller in the outdoor recreation sub-category on Amazon was a kid's water bottle sold by Camelbak. The company is a manufacturer of hydration packs, water bottles, reservoirs, and related products. In a recent earnings call, the CEO of Vista Outdoor, Camelbak's parent company reported that the brand had significant year-over-year growth in the digital and e-commerce space. This growth was partly driven by successful promotional activities with online retailers including Amazon.
  • The major drivers for the growth of Camelbak's market are the increasing popularity of outdoor activities and promotional strategies such as targeted marketing and product design. Emerging trends that are impacting Camelbak's growth are the increasing use of reusable bottles to reduce plastic waste, and increasing demand for insulated water bottles.
  • As of 06 April 2020, the #16 best-seller in the outdoor recreation sub-category on Amazon was a camping hammock sold by Wise Owl Outfitters. This particular item boasts an average rating of 4.8/5 out of almost 6,000 customer reviews.
  • Wise Owl Outfitters (WOO) specializes in the manufacture of camping hammocks and related items including talon straps, camp towels, bug nets, and rain tarps. The increasing popularity of WOO's products, similarly to Camelbak, is closely aligned to overall growth in interest in outdoor activities. The number of U.S. households that go camping is now at an all-time high of 78.8 million, having increased by more than 7.2 million in the past 5 years. In addition, the percentage of campers who camp three or more times each year has increased by 72% in the same timeframe.
  • It should also be noted that in addition to the impressive review numbers on Amazon, WOO also benefits from favorable reviews in popular media including CNN, Country Living, and Men's Health. The impact of influential media and influencers or writers may be a considerable driver of potential consumers to WOO's online outlets. Indeed, a hammock from WOO was included recently in the famous Oscar 'goodie bags' dispensed to celebrity attendees each year at the Academy Awards.

ADVERTISING OPPORTUNITIES

  • It may not be surprising but the demographic of people who enjoy outdoor activities and nature will be quite keen to ensure its preservation so that they and future generations may continue to benefit. As a consequence, outdoor enthusiasts are likely to be environmentally conscious with their consumer behavior and practices. Outdoor brands that can extol their ethical virtues, social responsibility, and environmental awareness will likely appeal. Thus, there is now a trend where brand messaging is evolving to focus more on sustainability in the supply chain and corporate social responsibility in the broadest terms.
  • The enthusiasm of outdoor activity hobbyists for ethical practices also lends them more willing to pay a higher price for high quality and sustainable products.
  • Outdoor activities by their nature are affected by the outdoors. Seasonal weather changes, therefore, offer an opportunity for targeted marketing and product development for specific times of the year based on the elements that consumers may expect to be exposed to. By periodically changing messaging to reflect different activities and weather-based locations this also allows a brand to reach a larger audience based on diversity of interest.
Sources
Sources

From Part 01
Quotes
  • "Amazon Apparel Update: An Analysis of More than 1 Million Clothing Listings on Amazon Fashion"
Quotes
  • "The Most Profitable Product Categories on Amazon"
Quotes
  • "10 Best Selling Category & 1000 Best Selling Products On Amazon"
Quotes
  • "According to Marketplace Pulse research, Amazon-owned private label brands are not nearly as successful as many paint them to be."
Quotes
  • "Shop all"
Quotes
  • "5 Stylish Picks to Scoop Up From Amazon’s Daily Ritual Brand"
Quotes
  • "Calvin Klein and Tommy Hilfiger are sending a clear signal that Amazon is the future of fashion, and it’s terrible news for department stores"
Quotes
  • "While Amazon has never openly claimed that pricing is a determinant of whether or not you make it to the Buy Box, we have observed over time that it indeed is. "
Quotes
  • " How brands are growth-hacking Amazon’s marketplace "
Quotes
  • "Amazon is seeking deeper relationships with brands to grow advertising"
Quotes
  • "Apparel is the biggest non-food consumer goods category worldwide."
From Part 03
Quotes
  • "At Amazon, proportions of categories, relative to each other, remained steady for most of the year but saw large fluctuations during the holiday months especially in Home & Kitchen, Electronics & Accessories, and Toys & Games. Just as in eBay’s numbers, although less so, there was a jump in sales among many categories during the month of March. There’s also a bit of a jump in sales around July, most likely due to Amazon’s annual Prime Day. "
Quotes
  • "The US hydration bottle market is expected to reach an estimated $2.5 billion by 2023, and it is forecast to grow at a CAGR of 3.9% from 2018 to 2023. The major drivers for the growth of this market are increasing popularity of outdoor activities, and promotional strategies by manufactures such as targeted marketing, product design, and giving more space on shelf by major retail brands. Emerging trends which have a direct impact on the dynamics of the hydration bottle industry include increasing adoption of smart bottles with integrated hydration calculator, increasing use of glass and stainless steel bottles to reduce plastic waste, and increasing demand for vacuum insulated double walled water bottles."
  • "The insulated water bottle is expected to remain the fastest growing segment in the forecast period due to increasing consumer interest in sports and outdoor activities."
Quotes
  • "Within CamelBak, we continue to see significant year-over-year growth in the digital and e-commerce space, driven by successful promotional activities with e-tailers like Amazon, as well as improved traffic and sales conversion on camelbak.com. "
Quotes
  • "The percentage of campers who camp three or more times each year has increased 72% since 2014, according to the 2019 North American Camping Report, sponsored by Kampgrounds of America"
  • "More than 7.2 million households in the U.S. have started camping over the past five years, bringing the total number of camping households in the U.S. to a new high of 78.8 million,"
Quotes
  • "Lightweight yet roomy enough for two, Wise Owl's portable hammock is just the right size for cuddling under the stars. Its easy setup and durable parachute nylon have helped it earn 3,800 5-star reviews."
Quotes
  • "This top-rated single hammock is made of a sturdy parachute nylon. The budget option is light and compact, so fold it up tightly in your bag, hightail it to the lake of your choice, and set it up For your own outdoor living room."
Quotes
  • "Clocking in at 9-feet long, this parachute nylon hammock is sure to keep you comfortable in the great outdoors. A low price point and 16 different color choices means you can basically justify getting one for each person in your family."
Quotes
  • "Among the 75 gifts in the swag bag are a hammock from Wise Owl Outfitters, a break at one of California's leading spas Golden Door; a 24 carat gold Royal Chakra Bath Bomb from Hotsy Totsy Haus and up to $25,000 of treatments and cosmetic procedures from Upper East Side cosmetologist, Dr. Konstantin Vasyukevich."
Quotes
  • "With its encouragement of urban-based outdoor activities reducing carbon footprints, the Barcelona venue was an appropriate setting as the Catalan city was recently ranked top of the list of destinations committed to responsible tourism management at the 2018 World Travel Market in London, particularly in the area of sustainability."
  • "Whilst grueling expeditions grab consumers’ imaginations, brand stories are evolving to focus more on sustainability in the supply chain and corporate social responsibility in the broadest terms."
Quotes
  • "The seasonal nature of so many outdoor activities makes it possible for marketing and advertising initiatives to be timed and designed accordingly."
Quotes
  • "They’re willing to spend more for high-quality products and enthusiastically support environmentally conscious brands. Their love of the outdoors goes beyond a mere hobby; outdoor recreation is a full-blown lifestyle."