Amazon has a $1.7 trillion opportunity if it can grow in these 5 markets

• Eugene Kim
 

Amazon CEO Jeff Bezos. Matthew Staver/Bloomberg via Getty Images

Amazon is in a good position to expand in five "mega categories" that could potentially open up a $1.7 trillion market share opportunity altogether, financial research firm Baird Equity Capital wrote in a note Friday.

The categories are:

• Clothing/accessories
• Home and kitchen
• Health/beauty
• Grocery
• Office equipment/B2B.

The note stressed that Amazon owns a less than 5% market share in all five categories. But Baird believes Amazon has a chance to significantly increase its presence there, based on its huge and loyal customer base, improving service infrastructure, and growing online commerce market.

"Amazon currently has less than 5% market share in each of these five mega-categories representing $1.7 trillion in market share opportunity, addressable we believe due to an increasingly loyal customer base, increasingly sophisticated fulfillment and logistics network, and the increasing adoption of online shopping across traditionally bricks-and-mortar product lines," Baird analyst Colin Sebastian wrote.

Amazon owns a less than 5% market share in all of these categories. Baird Equity Capital

Plus, Amazon has been making big investments lately in all of those categories. It has launched its own private fashion labels while expanding its grocery delivery network. Amazon Business, its office supply sales channel, recently announced that it has sold over $1 billion worth of products, just a year after its launch. It even has its own local services network, called Amazon Home Services, for things like plumbing and TV installations.

Sebastian believes Amazon would only accelerate its growth in these markets by increasing product selection and improving its transportation/logistics network, which would ultimately help continue the growth of its retail sales.

"Amazon continues to add product selection at a rapid (double-digit %) clip, which we view as one of the fundamental drivers of unit sales growth," Sebastian wrote.