January 2020 Industry Updates: Acquisitions & Amazon’s Falling Profit

Published January 22, 2020Lauren Toney Content Specialist Author

 

Top Ecommerce Acquisitions of 2019

2019 saw over 29 online retail acquisitions among Top 1000 and Next 1000 retailers. Fourteen retailers disclosed sale prices for these acquisitions, totaling $19.80 billion.

The largest acquisition last year was Louis Vuitton Moet Hennessy’s (No. 20 in the Digital Commerce 360 Top 1000purchase of Tiffany & Co. (No. 179) for $16.2 billion – almost $2 billion more than the initial bid. This deal dwarfs both PetSmart’s acquisition of Chewy in 2017 and Walmart’s acquisition of Jet in 2016 ($3.35 billion and $3.30 billion respectively). When they occurred, these two deals both held the titles of “biggest ecommerce acquisition to date.” 

Another notable 2019 acquisition comes from PayPal, who acquired Honey for $4 billion. This acquisition – PayPal’s largest to date – indicates their mission to play a more meaningful role in the daily lives of their consumers.

2019 Sales: By the Numbers

Boosted by Cyber Monday’s record sales falling in December, U.S. nonstore retail sales grew at the highest ever year-over-year rate for the month. While November was the month with the weakest YoY growth, November and December combined saw nonstore sales climb 14.6% – the largest seasonal boost since 1999 – to reach $167.8  billion.

This helped close out 2019 with a 13.9% uptick in nonstore spending, from $655.23 billion in 2018 to $746.24 billion in 2019 – the biggest annual growth in nearly two decades.

Total sales hit $3.76 trillion up 3.8% from 2018 sales. While this is fair growth, the growth rate itself is down from the 4.1% YoY increase we saw in 2018.

2019 ecommerce sales numbers

Amazon Profits Fall Despite Rising Sales

While Amazon.com Inc.’s sales rose 24% in the third quarter, the retail giant’s one-day free shipping offer put a dent in its bottom line as its net income fell 26%. Amazon’s shipping costs rose roughly 46% during the quarter to $9.61 billion. Brian Olsavsky, the retailer’s chief financial officer, acknowledged that the costs associated with the shift to one-day delivery have been higher than anticipated. Jeff Bezos commented,

“It’s a big investment, and it’s the right long-term decision for customers.” 

In addition to shipping costs, Amazon’s marketing costs rose nearly 44% year over year to $4.75 billion in the third quarter. The sales reflect this investment with Q3 net sales reaching $69.98 billion – up $13.4 billion YoY.

amazon revenue
Sourced from Statistica

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