There are a number of reasons that Amazon.com Inc. keeps gaining e-commerce market share. There’s the power of Amazon Prime, which thanks to its offer of free two-day shipping leads many Prime members to look nowhere other than Amazon for everything from books to apparel to furniture. There’s Alexa, which makes it simple for shoppers to make a purchase by speaking to their Echo speaker. There’s its massive selection. There’s its competitive prices. There’s its rapidly growing private-label business. And then there’s also another huge advantage that Amazon holds over other retailers: its massive marketing budget, which enables it to dominate natural and paid search and exert its influence over a host of other digital and offline marketing channels.
Amazon boosted its marketing budget 39.2% last year to $10.070 billion. For perspective, that’s 3.8% more than the $6.210 billion that retail giant Staples Inc. sold online in 2016, and roughly 74% as much as the $13.7 billion Amazon paid to buy Whole Foods Market Inc. last year. Those dollars are producing strong results; Amazon accounted for 44% of U.S. e-commerce sales in 2017, according to a recent estimate by retail analytics firm One Click Retail. That amounts to roughly 4% of total U.S. retail sales, according to the vendor. One Click Retail estimates online sales figures using a combination of website indexing, machine learning and proprietary software.
To understand Amazon’s approach, just consider how it leverages paid search ads. The e-commerce giant devoted an average of $37.6 million per month to paid search ads in 2017, according to estimates from search marketing firm AdGooroo. That’s over $14 million more than the average monthly paid search spend by…