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Apple’s Online Retail Sales is Second Only to Amazon

Apple has grown up to be a huge online supplier. The company now beats Wal-Mart, Netflix, and other major retailers to the coveted number two position behind Amazon. The growth has taken shape in the years following 2010 as apps came to dominate iTunes purchases.

In 2013, Amazon boasted $67.8 billion in online sales – much more than Apple’s $18 billion, but Apple has many more registered iTunes users than Amazon’s active users. Apple’s iTunes users number in the 800 million while Amazon is slightly more than 200 million. User growth charts from Asymco analytics shows Apple gaining users exponentially since 2010, around the same time it started growing its app market.

As noted by the Wall Street Journal, Apple included its hardware division in its 2013 sales figures, so the numbers may look a bit skewed. Apple’s strategy may rely on boosting its sales with a payment app driven by iTunes users – a very large pool of users that typically spends much more than your average Android user. Unless Apple can leverage massive sales with new users, it’s hard to imagine a future where Apple software and hardware outsells the internet’s warehouse.

Asymco’s evaluation of the two company’s users in numbers:

This view shows just how different the economic value of users can be. In the case of Apple, it’s growing its user base at (literally) exponential rates. The revenues per user does, understandably, decline. This is because new/later users don’t spend as much as early users. There might be some stability toward the later stages of adoption in revenue per user. The other point about iTunes data is how the mix of revenues has shifted from music to Apps and Services pointing out how users can be migrated across revenue sources over time.

Apple’s user growth is a function of expanding its device portfolio and distribution. Apple has shown that there are limits this type of growth. Achieving 830 million or so iOS device sales within 7 years is an amazing feat and one can forgive not having achieved billions more since they managed to obtain significant hardware and service/content revenues from most of them and that those who reached higher figures more quickly didn’t manage the same revenue per user.

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