E-commerce behemoth Amazon (AMZN - Free Report) witnessed remarkable quarterly growth in the sale of consumables—including grocery, health, and personal care items—in several key markets, according to a new report from research firm One Click Retail.
In the third quarter, Amazon’s consumable sales rose by an average of 80% across the U.S., U.K., Germany, France, and Canada, One Click Retail says.
“Emerging eCommerce categories, such as spirits and luxury cosmetics, are capturing more of the buying public, and brands adopting Amazon as a primary sales channel are experiencing great success,” said One Click Retail CEO Spencer Millerberg.
Specifically in the United States, Amazon’s total consumable sales rose about 60% to reach a quarterly total of $2.4 billion. The company’s top performing category in the U.S. was Nutrition & Wellness, and its Amazon Fresh service consistently grew at a rate of 3% per week.
One Click Retail also notes that Amazon’s recent purchase of Whole Foods is bound to have a major impact on its grocery business, but it’s too early to notice a meaningful effect right now.
“While the effect of Whole Foods on the Grocery product group will not be fully understood until our Q4 review, Amazon's sales and growth in consumables is already a major success story,” Millerberg added.
This new report comes on the same day that another report highlighted a surprising growth category for Amazon. In a note to clients on Thursday, Atlantic Equities analyst James Cordwell raised his price target for Amazon shares to $1,250 from $1,120, citing expansion in the company’s advertising business as a key catalyst.
“Amazon's advertising business is growing in importance, representing an increasingly material source of profits as Sponsored Products continues to grow rapidly and more brand-oriented offerings are introduced,” Cordwell wrote, eventually predicting that the company’s ad sales will nearly quintuple over the next four years.
Cordwell also mentioned that Amazon’s Sponsored Products sales have grown more than 100% this year. Sponsored Products allows third-party sellers to appear in featured spots on the site’s product search results, making it a traditional advertising play. The company’s growth in this unit should not be understated, but up to this point, it doesn’t seem to have been identified as a key growth driver.
Amazon shares were up about 0.7% to $1,002.23 in early morning trading Thursday. Thanks to some short-term concerns related to slumping earnings estimates, AMZN is currently a Zacks Rank #5 (Strong Sell) and could present some volatility as we approach its report date. Still, if the company can continue its strong growth in major sales categories, investors might be in for some surprises soon.
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