• Retail Dive

No end in sight for Amazon's e-commerce growth: S&P



Dive Brief:

  • S&P Global Ratings upgraded Amazon's already solid credit rating on Thursday. The ratings agency gave Amazon a mark of AA, up from AA-, according to an emailed press release. The previous rating was issued in 2012, an S&P spokesperson said in an email.

  • In doing so, analysts said they expect strong revenue and profit growth from Amazon as more shopping shifts to online and given the company's record of past growth.

  • "While we anticipate some online sales, especially apparel and footwear, could revert to brick-and-mortar players in 2021, we believe the ongoing shift online will continue to power Amazon's healthy long-term growth trajectory," S&P analysts Helena Song and David Tsui said in the release.

Dive Insight:


The boom in e-commerce last year lifted a lot of boats across the industry. Many retailers got a taste of what it's like to be Amazon, with digital sales ballooning. Triple-digit growth was not uncommon among major retailers.


But, even as retailers flocked online to make up for declines or outright stoppages of store sales during the pandemic, Amazon had just as much Amazon-like growth as ever. North American sales were up nearly 40% for the year — not too shabby for a player that already controls the lion's share of the e-commerce market. And so far that growth has continued this year.


S&P's Song and Tsui said they expect Amazon to maintain a leading market share in its retail business going forward and after the company's leadership transition, with Andy Jassy taking over the chief executive role from Jeff Bezos, who is set to become executive chair.


The analysts did nod to the growing digital and omnichannel prowess of competitors, namely Walmart and Target. "However, Amazon maintains a leading market share in the e-commerce segment, given its well-diversified worldwide operations and heavy investment in technology and distribution," Song and Tsui said.

Retail Insight, the research arm of Edge by Ascential, predicts that Amazon's U.S. gross merchandise value sales, which includes its massive third-party marketplace, will eclipse Walmart's sales by 2025 and amount to $631.6 billion. That is a massive amount of money and product to move through Amazon's website, and much of it likely would be handled by its warehousing and shipping arms.


Amazon's growth is fueled by all the many things that it is in addition to being an online retailer. It is an advertising platform, a marketplace, a logistics provider, a cloud services business, an entertainment producer and more. The company's growing and multifaceted role in the marketplace is actually creating a risk to its own growth, as anti-monopoly scrutiny comes from government agencies.


Washington, D.C.'s attorney general fired the first shot in what could become a protracted legal skirmish over Amazon's power and practices. D.C. filed an antitrust lawsuit against Amazon in May for allegedly controlling prices online through its relationship with third-party sellers who use its massive platform. The Federal Trade Commission and other states are reportedly investigating Amazon as well. Amazon has long denied that it has violated antitrust laws or that its practices are anti-competitive.


Song and Tsui acknowledged regulatory and enforcement risks in upgrading Amazon. "Although we do not assume outcomes of future actions by governmental or supranational bodies, we believe ongoing scrutiny raises the possibility of intervention that could impair business strategies and weaken competitive standing," the analysts said. "This compares unfavorably to 'AA+' rated peers more removed from such heightened scrutiny."


Editor's note: This story has been updated to include the issue year of Amazon's previous S&P rating.

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