Online sales of Baby Products are booming. Among consumer packaged goods, Baby Products is the category with the single highest eCommerce penetration rate and is therefore a highly valuable (and competitive) field for online retailers. Amazon leads the pack with 43% of total online sales in the US, but there is close competition with Walmart and Target, as well as strong sales numbers outside of mass market leaders.

Baby Products are largely driven by parents with children under the age of 5. As more millennials enter parenthood, this market is becoming saturated with a generation of people who grew up with the internet. This demographic is broadly responsible for most of the overall growth of eCommerce across all product categories, and Baby Products is no exception. But a new generation of digitally-connected parents is not the only thing driving Amazon’s growth in this category – let’s take a look.

The Numbers (2016)Amazon-Baby-Products-Revenue

$30 billion: The total value of the U.S. Baby Products market.
$2 billion: Amazon.com’s Baby Products sales.
7%: The YoY growth of U.S. Baby Products.
20%: The YoY growth of Amazon.com’s Baby Products.

In the US, 20% of all Baby Product sales are made online. That’s 10 times higher than the eCommerce market share for consumer packaged goods. Amazon.com alone accounts for more than 7% of the total domestic sales, responsible for 43 cents on every dollar spent online on Baby Products in America. However, brick-and-mortar sales are still strong, with higher growth than most product categories, but Amazon’s growth is predictably higher at nearly triple the YoY rate.
When online and offline sales are measured together, Walmart is the market leader with 17% of total US sales of Baby Products. But Walmart.com only accounts for less than 4% of online sales, roughly half of Amazon’s share. Target accounts for 12% of the total market (just over 3% online), while specialty eCommerce outlets are responsible for roughly a quarter of the total online sales in this category.

Top Performing Baby Product Categories on Amazon.com, 2016Amazon-Baby-Top-Revenue-Categories

Category Growth
Feeding
– Breastfeeding
– Pacifiers & Accessory
30%
80%
30%
Car Seats
Convertible Car Seats
– Booster Car Seats
25%
35%
25%
Activity & Gear
Bassinets & Cradles
– Bouncers & Baby Seats
25%
50%
40%
Care & Safety
– Diaper Pails & Accessories
– Gates
20%
40%
35%
Furniture
Portable Cribs- Toddler Furniture
20%
100%
55%
Infant Toys
Bath Toys
– Car Seats, Stroller & Attachment Toys
20%
60%
30%
Diapering
Diapering Accessories
– Changing Pads/Covers
10%
30%
10%
Strollers
– Bunting Bags & Car Seat Bunting
– Joggers
5%
25%
15%

Key Trends

Gifts

It comes as no surprise that the households that buy the most Baby Products are those with babies. It may come as a surprise, however, that almost 40% are purchased by consumers who don’t have children under 5 in their homes—signifying that gift-giving is a strong sales driver in this category. This has also help push nominal growth in Décor and Gifts, the latter of which includes the subcategory Shower Favors, up 45% in 2016.

Health & Safety

Resulting from a combination of growing child safety regulations, awareness campaigns by NGOs, and the publicity of manufacturers, young families are investing heavily in baby health and safety products. In dollar value terms, the top two Baby Products categories on Amazon.com are Car Seats and Care & Safety.Amazon-Baby-top-sellers-2016

Active Families

Leading an active lifestyle is still very much a priority for young people with or without kids. Due in part to this evolving parenting culture, car seats drove a huge amount of sales across several categories, with parents also investing heavily in Activity & Gear, portable cribs (which doubled in sales YoY), joggers, and other active wear.

Baby Food Category Growth (Including Pantry)

Baby Food 15%
Baby Formula 80%
Baby Food Jars/Tubs 20%
Baby Juice/Electrolytes 10%
Baby Snacks 10%

Sales Down in Q1 2017

In the first quarter of 2017, the total US domestic sales of Baby Products dropped 10%. Most of this decrease took place in offline sales, allowing the eCommerce market share to rise from 20% to 22%, even though Amazon.com’s total sales did decrease in Q1. There is a notable income disparity in this trend: high-income families actually spent more in Q1 on baby products, while families earning less than $150,000 spent less in just about every category.
Despite this lull, not only do Baby Products have an eCommerce penetration 10 times higher than other consumer packaged goods, but in Q1 that online penetration grew even further. Clearly, more new parents are shopping online, with Amazon being the preferred destination for Americans to buy safety products for their young children. Brands would be smart to use Baby Products as an opportunity to reach new customers and to compete in the competitive online marketplace.

“The Amazon Effect” series breaks down specific product groups, compares Amazon’s performance in that category to total retail sales (online and offline) and considers the effect Amazon has on that specific industry as a whole. In this latest edition, we explore how Amazon has impacted the U.S. Baby Products market.

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