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

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 & Kitchen
• Health/Beauty
• Grocery
• Office Equipment/B2B.

The note stressed that Amazon owns less than 5% market share in all 5 categories. But Baird believes Amazon has a chance to significantly increase its presence there, based on its huge 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.

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

Sebastian believes Amazon will only accelerate its growth in these markets by increasing product selection and improving its transportation/logistics network, which will 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 added.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.