It's no secret that e-commerce platforms have benefited from the COVID-19 pandemic, as the public health crisis has shut down many retail stores, and people are choosing to shop online from the safety of their homes. As the largest such platform, Amazon.com (NASDAQ: AMZN) is leading the way and has hired an army of new workers to help meet the booming demand. Not only are people buying more on Amazon, but consumers are also changing what they're purchasing.
The good news for the e-commerce giant is that it is now growing in two specific categories that it has been chasing for years.
Grocery and apparel
This week, Consumer Intelligence Research Partners (CIRP) put out fresh estimates on purchasing activity on Amazon in the second quarter. U.S. customers on average are placing orders more frequently, with each order including more items. CIRP's data is based on a survey of 500 U.S. adults during the quarter.
2.1 times per month
2.5 times per month
Number of items per order
There has been a notable shift away from discretionary categories like electronics toward necessities like groceries, as well as apparel. Amazon has been aggressively investing in both of those categories for years, most notably via its 2017 acquisition of Whole Foods, which gave it a significant physical presence in the grocery industry. The e-commerce juggernaut has also been expanding its private-label business in order to boost first-party apparel sales.
Amazon even briefly experimented with the Echo Look, an Alexa-powered device that aspired to be a fashion assistant. The company discontinued that product earlier this year, presumably because it recommended wearing white after Labor Day; Alexa should know better. Amazon has migrated the Style by Alexa features that offer fashion tips to the main Amazon shopping app.
"COVID-19 helped Amazon advance in highly desirable categories, with more customers including groceries or apparel in their orders," CIRP partner Mike Levin said in a statement. "Grocery became the dominant department, with over one-third of customers including it in their most recent order, the highest percentage we've seen."
Nearly a quarter of orders included apparel, Levin added. In contrast, just 22% of orders included groceries a year ago, and less than 20% had clothing.
The data suggests a potential shift from the first quarter, when the coronavirus outbreak escalated into a pandemic. Near the onset of the crisis, consumers focused heavily on staples like food and household consumables like toilet paper. On the April earnings call, CFO Brian Olsavsky noted that Amazon saw "lower demand for discretionary items such as apparel, shoes, and wireless products" in the first quarter.
Even as stores start to reopen across various parts of the country, the virus will likely have long-term impacts on how people shop for many items, including clothing and groceries.
10 stocks we like better than Amazon
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of June 2, 2020
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.