Like most retailers, Amazon suffered from increased expenses resulting from ongoing supply chain issues, excessive warehouse capacity, and labor shortages. We expect Amazon’s first-party (1P) sales will decline, while third-party (3P) marketplace sales will increase to account for more than 65% of its sales by next year. But Amazon has a lot of irons in the fire that should help it bounce back quickly. It’s opened a new physical fashion store, increased in customer-facing tech solutions that reduce friction (like virtual shoe try-ons), and doubled down on its grocery business (typically a recession-proof category). Add that to the return of Prime Day in July, with the potential of a second event in Q4, and things may not be so bad for the ecommerce giant.
No. 2 Walmart will maintain its 6.3% share despite a tough start to 2022 for big-box retailers. Walmart should be able to navigate these uncertain times by focusing on its grocery business and fostering its Walmart+ membership program. The retailer has been increasing its Walmart+ offerings, which now include fuel discounts and the expansion of free delivery for members. Its pricing strategy, combined with efforts to make shopping more convenient and efficient, will help the company protect its market share. However, given Walmart’s appeal among lower-income households, it’s possible its shoppers could stop buying some types of goods altogether instead of trading down to its private label brands, hampering its ability to weather an economic downturn.
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