The year 2020 proved to be the best year for e-commerce and marketplaces in over a decade. The growth in the e-commerce sector was rapid and robust, with marketplaces dominating a significant share of the market both in the United States and globally.
Unlike many sectors that suffered significantly due to social distancing measures, e-commerce emerged as one of the most flourishing areas during the past year.
Amazon expanded its reach in 2020 by launching three new marketplaces in the Netherlands, Saudi Arabia, and Sweden, bringing its total number of marketplaces to 18. Amazon.com remained the largest and most important marketplace, representing almost 46% of all visits across its platforms worldwide. The following three marketplaces – Japan, Germany, and the United Kingdom – accounted for 10%. Together with India, these top five markets represented nearly 80% of Amazon's traffic in 2020.
Amazon's sales revenue increased by approximately 53% compared to the previous year, reaching a peak of $475 billion in 2020.
One marketplace that experienced remarkable and impressive growth was Etsy, the marketplace for handmade goods and crafts. Etsy capitalized on the high demand for face masks, significantly boosting the growth of handmade products. Etsy's overall sales doubled in 2020 compared to the previous year, reaching a level the platform hadn't seen in at least three years. While face masks contributed to this success, they accounted for only 20-25% of the overall growth. The true achievement was attracting numerous new sellers who joined the platform, influencing more buyers to participate, thus creating a festive atmosphere.
Over a million new sellers joined Etsy in the past year, diversifying the platform's catalog, resulting in Etsy ending the year with over 80 million products, compared to 60 million at the beginning of the year. This growth spanned across all categories and departments.
Another marketplace that doubled its sales revenue in the past year was Walmart. In 2020, Amazon made two significant moves in the e-commerce space, aside from the obvious impact of the global pandemic, which are expected to substantially increase their sales volume and market share in the coming years.
In February, Walmart announced its Warehousing and Fulfillment Services (WFS), allowing third-party sellers to store their products and letting Walmart handle direct shipping from its warehouse, similar to Amazon. However, as of now, the service operates on less than 0.1% of active products, with only about 430 sellers utilizing the service by the end of the year. It's clear that 2021 is poised to be a breakout year for Walmart's WFS service.
The second move occurred in June, when Walmart announced a partnership with Shopify. The mutual partnership aimed to add 1,200 Shopify stores to the Walmart marketplace by the end of the year, a goal that was already achieved by the end of June.
Walmart currently boasts nearly 70,000 sellers, precisely double the number at the end of 2019. The partnership with Shopify accelerated the growth of sellers and product variety in the catalog, which is expected to significantly expand in 2021.
For a detailed and impressive summary of 2021, including insights into other e-commerce platforms like eBay, Target, and more, I highly recommend reading the full report on Marketplace Pulse here.
As we look ahead to an intriguing year, following the significant leap in 2020 amid the contributions of the pandemic and social distancing, it will be interesting to see the trajectory of the e-commerce sector in 2021. Will it maintain the momentum spurred by the pandemic? Will it continue to grow at the same rate? Or will we witness a decline as the world returns to a more familiar routine and traditional retail reopens?
