Analysts point to growth potential of online giant in both retail and cloud computing.
Amazon has more growth potential than many realize, according to analysts who have projected that the online giant may be the largest U.S. company by the year 2020. According to MKM Partners analyst Rob Sanderson, Amazon recently surpassed Facebook as the sixth-largest U.S. company by stock market value: Coupled with more room for growth than any other company, and “two of the largest secular growth opportunities” in retail and cloud computing, Amazon could reach number one by 2020, Sanderson added.
According to Barron's, Amazon controls a 35 percent to 40 percent share of the U.S. e-commerce segment, while JPMorgan analyst Doug Anmuth estimated last month it could rise to 50 percent by 2018. Currently, E-commerce comprises about 11 percent or 12 percent of all retail, with anticipated growth to 14 percent by 2018, meaning Amazon is on pace to become an even bigger player in a still-growing space.
These projections come as Amazon Prime membership is now turning from a loss leader into a winning asset. Bernstein analyst Carlos Kirjner estimates that the Amazon Prime membership program, once thought to be a loss leader, now generates annual incremental operating profit of approximately $115 per user each year, according to financial news site Benzinga.
Amazon Video is an important driver for the program, according to Kirjner. “In the US alone, at least ~60 percent of Prime users can be considered monthly users of Amazon Prime Instant Video,” he wrote in his report, according to Benzinga. “In the UK, that number is ~65 percent.”
Kirjner calculates that there are 58 million to 69 million Prime members globally, including about 8 million on free trials.
Pam Goodfellow, principal analyst and consumer insights director at Prosper Insights also says that Prime’s growth is not slowing. Prosper’s May survey of some 7,000 consumers revealed that Prime membership rose 6.5 percent month-over-month to 33.5 percent of all U.S. adults, and to 39 percent of Target customers.
