Amazon’s Top 10 Fastest Growing Categories
Amazon is a clear beneficiary of the COVID-19 pandemic with consumers rushing to shop online while retailers around the world went into lockdown and closed their doors. While brick and mortar sales are rebounding eCommerce sales are still growing with Amazon’s eCommerce sales expected to grow by 14.6% in 2022 to reach $408.2 billion.
Amazon is expected to experience double digit growth in most of its categories this year proving that despite its dominance there is still room to grow in many areas. Here’s a look at three of Amazon’s fastest growing categories and some of the reasons why Amazon is taking share from others.
1. Health, personal care and beauty. Amazon’s fastest growing eCommerce category in 2022 is expected to be health, personal care and beauty, with a projected growth rate of 24.4%. The beauty industry has come a long way from the time when consumers stuck with buying products like makeup and skincare from drugstores and department stores. Things have changed. If you aren’t getting your beauty fix from Sephora or Ulta Beauty the pandemic may have pushed you to give Amazon a try. While shopping on Amazon for beauty or skincare you might be surprised by the depth of products that are available. Whether you want to buy cult favourites like CeraVe or Cetaphil Amazon is starting to look like your local beauty or drug store but online.
And don’t let the minimalist look of Amazon’s product pages fool you, Amazon is taking categories like beauty seriously. For example, Amazon teamed up with L’Oreal to bring augmented reality to its beauty shoppers. The functionality which can be found in Amazon’s shopping app allows customers to see which shades of lipstick look best on them. To use the feature all a customer has to do is take a photo or video of themselves using their phone’s camera or they can upload a photo. Then they can select from a range of different lipstick colours to try on.
Innovations like augmented reality reduce some of the friction in online shopping which keep a customer from buying a product online since you don’t know exactly how it’s going to look once you get it. Augmented reality gets you closer to the real thing. Speaking about the launch of this functionality, Nicolas Le Bourgeois, former Head of Amazon beauty said: “this launch is another important milestone in our vision to be the best possible place for customers to discover and buy beauty products online.” Perhaps Ulta Beauty and Sephora should be worried.
Amazon’s evolution in the beauty industry is also seen through higher end brands that now sell on the site. These brands include Sunday Riley, Drunk Elephant, Kate Somerville and Tatcha. Amazon also has a section on its website for indie beauty brands. “Sephora and Ulta have very, very successfully protected their customer base,”said Elaine Kwon, a former vendor manager in Amazon’s fashion vertical. “This is Amazon’s way of trying to reach out to those customers and give them a great experience that makes them think, ‘maybe I don’t have to go to Sephora for all of these things, maybe I can go to Amazon for this or that.’” By 2026 close to a third of health and beauty sales across the globe will take place online up from 20% in 2021. Amazon is primed to take more than its fair share of that growth.
2. Food and beverages. Another category which is expected to perform well on Amazon this year is food and beverages. Gone are the days when a majority of the population was hesitant to buy food online. But once again the pandemic proved to be the motivation we all needed to try it. After many consumers tried online shopping for groceries for the first time over the last two years and liked it they have continue to do so even as the pandemic subsides.
One of the main drivers of the growth of online shopping for food and beverages is in-store and curbside pickup. These sales, known as click and collect sales, were up a whopping 104.5% in 2020 across all eCommerce categories. Offering free pickup of grocery orders made on Amazon from Whole Foods stores is one way Amazon has reduced the friction in the online shopping process. “Trips that are initiated online and then picked up in store continue to power CPG e-commerce,” said Elizabeth Buchanan, head of consumer intelligence for North America at NielsenIQ. “This provides shoppers peace of mind on things like delivery fees and on scheduling and timing — not having your groceries show up during the middle of your conference call, for example, and sitting on your porch for an hour.”
Do you like this content? If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox
3. Apparel and accessories. This may surprise you but, Amazon is the largest seller of clothing and shoes in the United States. It sells more than seven times as much clothing and shoes than its next online competitor in that category, Macy’s. Amazon gained footing in the apparel sector by selling basics like jeans, socks and underwear.
Setting its sights on having an even bigger share of the apparel category, in 2020 Amazon launched Luxury Stores on its website a place where consumers can find higher end brand name merchandise. The luxury storefront features a number of designer brands including Oscar de La Renta, La Perla and Altuzarra. Luxury brands have long avoided selling on Amazon for a whole host of reasons from counterfeit merchandise on Amazon to a lack of a compelling brand presence on the site. The launch of the Luxury Stores section of Amazon doesn’t alleviate all of the issues luxury brands have with Amazon but it does have a more elevated look and feel than rest of Amazon’s website.
Just by looking at the number of Amazon fashion haul videos on YouTube you can see that Amazon has become a go-to place for clothing and accessories, especially among young consumers. “Fashion Apparel is now a top 3 category US Amazon shoppers are most likely to purchase on Amazon (up from #9 last year)—pointing to the headway Amazon has made towards becoming a destination for fashion apparel in the eyes of the consumer,” says Wells Fargo analyst Ike Boruchow.