Each year, Internet Retailer, the leading information provider for the e-retailing industry, looks at the Top 500 online retailers to provide a logical ranking for America's largest e-retailers based on their annual sales on the web. The all new Top 500 Guide contains the very latest competitive data on the leaders of web-based retailing who account for nearly two-thirds of $135-billion e-retailing industry in the U.S.
Click on the link below to read datapoint excerpts from the new research.
The Internet Channel Fastest Growing Retail Channel
For more than a decade the Internet has been the fastest growing retail sales channel. It routinely generates annual growth of 25%, while total retail sales have been growing at 5% to 6% each year.
Last year was no exception, with online sales reaching $136.2 billion, up 25.9% from a year earlier. But what was different last year was that growth came from smaller retailers. While the Top 500 was the engine that powered online sales growth for several years, in 2006 sales at the Top 500 grew 21.3% compared to 25.9% for the entire market. Top 500 sales totaled $83.6 billion, up from $68.9 billion a year earlier. The rest of the market, including an estimated $34 billion in eBay Inc.-originated sales that could be considered retail sales, accounted for $52.6 billion in sales, up 29.9% from $40.5 billion a year earlier.
David vs. Goliath: Small Site Growth Outpaces Large Established Competitors
Smaller and more nimble merchants continue to grow faster than their established competitors. For instance, the Top 25 retailers grew their combined sales in 2006 to $52.9 billion from $44.8 billion, an increase of 18%. But the total sales for all start-up retailers in the Top 500 Guide—companies only in business since 2004—grew by 55% to $494 million last year from $319 million in 2005.
Retail eCommerce Strategy is Shifting
In the early days of e-commerce most web merchants built sales by concentrating on customer acquisition and increasing brand awareness. But now, with active U.S. web shoppers expected to peak at about 161 million by 2010, web retailers are shifting resources to applications, third-party services and merchandising strategies that drive more repeat business.
Clearly online buyers are spending more time surfing, searching and shopping the Internet and spending more each time they make a purchase. In 2006, the total number of transactions initiated on all Top 500 web sites rose by 20.7% to 632.5 million from 523.9 million, while the average ticket grew 19.2% to $199 from $167. Factoring out unusually high average orders, such as furniture and computers/-electronics purchases, the average ticket is $132, compared with $118 in 2005. As in previous years, chain retailers accounted for the biggest portion of total online sales in 2006. Last year chain retailers amassed 41.1% of all sales vs. 40.3% in 2005. In 2006 chain retailers in the Top 500 Guide generated combined sales of $34.3 billion, an increase of 23.4% from combined sales of $27.8 billion in 2005.
Following chain retailers were virtual merchants with 30.8% of sales among Top 500 companies, while catalogers and consumer brand manufacturers ended 2006 with market shares of 14.4% and 13.7%, respectively.
In 2006, Top 500 web-only merchants combined for sales of $25.7 billion, up 23.6% from $20.8 billion, compared with catalogers with total combined sales of $12 billion vs. $9.9 billion in 2005, an increase of 21.2%. Consumer brand manufacturers combined for $11.5 billion in 2006 sales, an increase of 9.1%.
Among the Top 100, three merchants including EasyAsk customers Redcats USA (No. 28), and Talbots Inc. (No. 62) grew year-over-year by more than 50% through key acquisitions during the year. Redcats acquired The Sportsman’s Guide Inc., while Talbots purchased the J. Jill Group.
The Fastest Growing eCommerce Categories
In 2006, the fastest--growing Top 500 merchant category was hardware & home improvements followed closely by apparel & accessories. In 2006 total web sales for online hardware and home improvements retailers climbed 42% to $1.2 billion from $851.2 million in 2005. The merchants in the largest category in the Top 500 Guide—apparel & accessories—continue to show that shoppers have no qualms with buying clothes and other items, including shoes and bags, online. Combined 2006 web sales rose by 41% to almost $10 billion from $7 billion in 2005.
The group with the potential to dominate web retailing—chain stores—often still views the Internet as a minor sales channel or as a venue best used to support their bricks-and-mortar operations
But chain retailers also make up only 20% of the 50 fastest-growing merchants in the Top 500 Guide. In contrast, virtual merchants make up 70% of the list followed by catalogers at 4% and consumer brand manufacturers with 6%, respectively.
Conversion Rate Averages
The Top 500 retail sites recorded an estimated 632.5 million separate sales in 2006 at an average ticket of $132. Sales conversions based on monthly visits vary widely, ranging from 0.05% to 22.5% for chain retailers, 0.33% to 12% for catalog/call center operators, 0.03% to 22.5% for web-only merchants and 0.33% to 12% for consumer brand manufacturers.
To find out more about Internet Retailer 500, or to purchase the report, click on the link below: http://www.internetretailer.com/top500/