The retail industry is in the middle of what Target Corp. CEO Brian Cornell in early 2017 called a “seismic shift.” And Amazon.com Inc. is accelerating the dramatic shift by offering convenience, massive selection, low prices and fast delivery.
Those changes—from stores to e-commerce and, increasingly, e-commerce to Amazon—are shown in the just-released 2017 edition of the Internet Retailer Top 500 rankings.
The No. 1 retailer, Amazon, is increasing its dominance of e-commerce, not to mention all of retail, and doing so fast. Here’s how big a threat is Amazon to its retail rivals: Online retail sales to consumers in the U.S. reached nearly $400 billion in 2016, up 15.6% year over year, according to U.S. Commerce Department figures. The merchants ranked in the 2017 edition of the Internet Retailer Top 500 grew web sales 15.5% in 2016. But factoring out Amazon, the remaining top 500 retailers grew 11.7% last year—nearly four percentage points slower than the U.S. e-commerce market as a whole.
To break it down further, the retail chains ranked in the Top 500 collectively had the slowest year-over-year online sales growth rate since the heart of the recession in 2009. It was also the second-slowest growth rate for retail chains in the 14-year history of Internet Retailer tracking the largest e-commerce players in North America.
The 154 Top 500 merchants that primarily sell products through physical stores grew online sales 10.7% in 2016. Web-only retailers grew more than twice as fast as the chains, at 22.3%. Factoring out Amazon, web-only retailers grew online 16.6% last year.
The world’s largest online retailer grew its product sales last year—or revenue it earned from sales of products it owned, plus fees it secured for third-party sales on its marketplace—by 24.9% to $123.77 billion globally. That revenue represents 31.5% of the Top 500 online sales total.
Even that figure underestimates Amazon’s pull, though, as it does not account for the full value of purchases consumers make on Amazon.com from Amazon Marketplace sellers. As of the first quarter of 2017, marketplace sales accounted for 50% of all orders placed on Amazon. If, for example, a retailer sells a $100 lamp on Amazon.com and Amazon takes a $15 commission (the percentage varies by product category), then the $123.77 billion figure includes that $15 commission, but not the $85 that goes to the marketplace seller.
To calculate the full impact, it’s necessary to estimate the total value of everything sold on Amazon—a number known as gross merchandise volume, or GMV. Amazon does not publicly report its GMV, but Internet Retailer estimates that in the U.S. total sales transacted on Amazon-owned sites reached $147.0 billion last year, a 31.3% jump from $112.0 billion in 2015. That means that Amazon alone accounted for $4 of every $10 spent online by U.S. consumers. It also was responsible for two-thirds of the $52.9 billion in e-commerce growth in the U.S. last year, not to mention more than 27% of the $127.6 billion in growth for all retailers, when factoring out the sale of automobiles, fuel and sales in restaurants.
Here’s the twist in e-retail these days: While consumers consistently demonstrate their fondness for Amazon’s fast delivery, convenient shopping tools and wide selection of products, the other online retailers growing the fastest at the moment are those that are the least like Amazon, in one or another key way. The just-released Top 500 analysis report delves into the different ways fast-growing e-retailers are effectively competing with Amazon.
The 2017 edition of the Top 500 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.
Stefany Zaroban and Fareeha Ali contributed to this report.
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