2016 was another one for the record books in e-commerce, as shoppers shifted more of their retail spending to the web.
Online retail sales to consumers in the U.S. reached nearly $400 billion in 2016 by the U.S. Commerce Department’s measure—a 15.6% jump compared with 2015. That’s the biggest jump in three years and far eclipses the growth in retail sales in physical stores, which barely reached 2.6% last year.
It means e-commerce now comprises 11.7% of total retail sales when factoring out the sale of items not normally purchased online, such as fuel, automobiles and sales in restaurants. It also means that in only a decade the web has more than doubled its share of retail sales. Ten short years ago, e-commerce was at 5.1% of total retail sales.
What’s more, the leaders in online retail—those ranked in the just-released 2017 edition of the Internet Retailer Top 1000—are driving the bulk of those sales. Top 1000 retailers collectively sold roughly $341.75 billion online to U.S. consumers last year, or 86.5% of total U.S. e-commerce sales. Globally, the Top 1000 sold $401.09 billion online last year—up 15.5% from $347.37 billion in 2015.
But increasingly, the e-commerce picture is a lopsided one, as Amazon grows its market share at a breakneck pace. Meanwhile, the operators of chains of retail stores—after two years of above-market online growth in 2013 and 2014—have struggled to grow web sales in 2015 and 2016. In many cases, the overall picture for store-based retailers is so dire that we’re at the point now of talking about which of the big chains are going to survive, and which will not. Many buckled in 2016, including Sports Authority. Bankruptcies in 2017 include Limited Stores, Gander Mountain and Wet Seal, while Sears has warned that its future is in doubt.
The Top 1000 has long been a great representation of the online retail market as a whole. Since collectively they represent nearly 87% of total U.S. e-commerce sales, it can easily be said that what happens in the Top 1000 dictates the direction of the online retail market in the U.S.
And 2016 was a year of big highs and big lows. That is made abundantly clear by looking at the companies new to the Top 1000 rankings this year, as well as those that fell off the list. For one, the sheer number of retailers added to the ranks this year—81 versus 53 last year and 78 the year before—and the same number that dropped off, speaks to the volatility of the market.
At least 12 companies no longer appear in this year’s rankings because they were acquired by another Top 1000 e-retailer. In the case of Wal-Mart’s $3.3 billion acquisition of fast-growing startup marketplace operator Jet.com (as well as Hayneedle.com, which Jet acquired before being bought by Wal-Mart), the deal generally was taken as a sign of the health of the e-commerce industry because the deal valued Jet at more than four times the sales taking place on its online shopping portal.
On the flip side, however, some of those 12 companies were acquired at a price much lower than they once would have earned. Housewares flash-sale seller One Kings Lane, for example, was bought by Bed Bath & Beyond for anywhere between $12 million and $30 million—a drop in the bucket compared with its nearly $1 billion valuation in 2014.
The retailers that took their place in the Top 1000 ranks are a varied group. The largest portion of the 81 newcomers are fast-growing startups like women’s apparel e-retailer Stitch Fix or lingerie merchant Adore Me that have been in business for only a few years. The 16 e-retailers on that list founded in 2013 or later, for example, grew collectively 183.0% online last year. The 40 newcomers that launched in 2011 or later grew 52.4%.
Others are brands, like outdoor apparel maker Canada Goose and Ashley Furniture, have been in business for many years but are relatively new to e-commerce.
The 2017 edition of the Top 1000 is available as a PDF report or in an online database format. The report provides a comprehensive look at the trends and key players shaping the U.S. e-commerce industry, as well as a deep dive into who the leaders are and what they’re doing to stay ahead of the competition—or, in many cases, to survive.
The online database membership—depending on the subscription level—gives the list of companies and a host of exclusive data, including financial and operational data, key e-commerce executive names and a list of technology vendors each merchant uses to run its online retail business.