When it comes to the Internet Retailer 2018 Top 500, the story has to start with Amazon.com Inc. The retail giant alone accounted for 37% of the 2017 online sales growth for North America’s 500 leading retailers by web sales. But the story doesn’t end there. Some of the biggest store-based retailers—those whose existence Amazon is said to threaten—posted hefty growth in online sales, while another new cohort of innovative startups have burst upon the scene.
In other words, plenty of Amazon rivals are finding ways to thrive online.
The Top 500 as a group increased their online sales 18.1% to $465.86 billion in 2017. That includes international e-commerce revenue for Top 500 retailers based in the United States and Canada. When stripping out international sales, the Top 500 accounted for 72.0% of the U.S. Commerce Department’s estimate of $453.5 billion in U.S. online retail sales in 2017, up from 69.8% in 2016.
Top 500 data shows a large share of retailers are succeeding online. Almost half, 47.6%, of the Top 500 retailers increased their web sales in 2017 by more than the 16.0% growth of U.S. online retailing. Among those growing quickly, two groups stand out in particular: big store-based retailers and innovative web-focused startups.
Some of the best-known traditional store-based retailers fared very well online in 2017.
In fact, seven of the 13 largest retail chains increased their web sales by at least 19.0%. Walmart Inc., the world’s largest retailer by sales and No. 3 in the Top 500, stands out with 61.5% year-over-year e-commerce growth in 2017. Some of Walmart’s growth comes from its acquisitions in 2016 and 2017 of such retail players as the Jet.com marketplace and e-retailers Bonobos, ModCloth, Moosejaw Mountaineering and Shoebuy.com.
Walmart also is the largest grocery retailer in the United States and aims to be a leader as consumers begin to shift some of their food purchasing online. Walmart offers free, same-day curbside pickup of online grocery orders at more than 1,000 of its 4,700 U.S. stores and is extending its home delivery of food items.
Target Corp. (No. 17), which is also a major grocery retailer, is following a similar path. Its $550 million acquisition of delivery service Shipt will allow it to rapidly expand same-day fulfillment of online orders. Like Walmart, it’s also beginning to offer consumers the option of driving up to a Target store where an employee will load groceries into a shopper’s car. Target’s online sales increased 24.0% in 2017, making it one of several big-box retailers posting above-market gains.
Many retail chains are increasing their web sales by using their stores to offer shoppers convenient features, such as in-store pickup of online orders, which 55.7% of Top 500 retail chains offer, and the option to return orders to stores, offered by 72.1%.
While Amazon and such big retail chains as Walmart and Target are growing rapidly online, so are smaller competitors. Indeed, the 100 largest online retailers in the Top 500 lost a bit of ground in 2017, accounting for only 85.5% of Top 500 web sales, versus 85.9% a year earlier.
Many of the fastest growers in the Top 500 were smaller companies. The Top 500 retailers ranked 201-500 collectively increased their 2017 online sales by 25.5%, significantly faster than the 16.6% growth of those ranked 1-200.
Many of those growing quickly online are startups: The 34 Top 500 retailers that launched between 2012 and 2016 collectively grew their online sales by 49.0% in 2017.
While they only represent 1.5% of Top 500 sales, they show that newcomers can still break into e-commerce and grow quickly.
Increasingly, fast-growing Top 500 retailers are newcomers that develop their own products or innovative business models and focus, at least initially, on reaching a broad audience via the web. Some call them “digitally native, vertically integrated” companies because of their strategy of focusing online and developing unique products that they alone can sell.
In the 2018 Top 500, there are 21 companies that fit this description, and collectively they increased their web sales by 53.7% in 2017.
Their average launch date is 2012, meaning that some of them made it into the ranks of the Top 500 within five or so years of their founding.
Six of them sell mattresses, often shipping them folded up in boxes for easy delivery. These mattress e-retailers as a group increased their web sales by 78.2% in 2017. They contributed to making the Housewares/Home Furnishings category one of the fastest-growing in the Top 500: The 54 e-retailers in this category increased their web sales by 32.7% in 2017.
The 2018 edition of the Top 500 is available as a PDF report or in an online database format. The 123-page 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 an in-depth analysis of the 15 merchandise categories. The report also includes a list of the Top 500 companies.