The shift to online shopping during the three-year COVID-19 pandemic put an additional $75 billion in ecommerce revenue into the coffers of Top 1000 retailers, and that bounty was widely shared among North America’s leading merchants by online sales.
While Amazon.com Inc. easily retained its No. 1 spot in the Top 1000, according to the newly released 2023 Digital Commerce 360 Top 1000 report, it lost market share from 2020 to 2022 to Retail Chains that operate physical stores and Consumer Brand Manufacturers. Nor was it only big retailers that gained from consumers buying online rather than in brick-and-mortar stores. After the first year of the pandemic, retailers ranked Nos. 501-1000 outpaced the growth of the 500 leading retailers by web sales.
Top 1000 sales
Global online sales of the Top 1000, the leading North America-based retailers by ecommerce sales, had been growing by 17.7% annually in the five years leading up to the pandemic. If that had continued, Top 1000 sales would have totaled $947 billion in 2022. Instead, the Top 1000 generated online sales last year of $1.022 trillion. That means the COVID-19 outbreak put an extra $75 billion into the bank accounts of Top 1000 retailers from 2020-2022.
And that growth helped make 2022 the second year in a row when Top 1000 online sales topped $1 trillion. It marked the end of a three-year period when Top 1000 sales grew at a compound annual rate of 20.7%. That’s three percentage points higher than the typical pre-pandemic rate. The cumulative three-year stacked growth rate for the Top 1000 was 75.9%.
Retail Chains and Consumer Brand Manufacturers grew the fastest. Direct Marketers, retailers that sell through printed catalogs or TV shopping shows, grew the slowest. Web Only retailers’ growth rate of 19.7% trailed the Top 1000 average of 20.7%. Amazon grew at 20.3% and the other 427 Web Only retailers in the Top 1000 by only 17.9%.
Retail Chains made the biggest gains. They increased their share of Top 1000 sales to 34.3% in 2022 from 32.5% in 2019. The share of Web Only retailers slipped to 48.3% from 49.6%. Amazon, which represents more than three-fourths of the sales of the Web Only retailers, declined to 36.5% of Top 1000 sales in 2022 from 36.9% in 2019. The share of the 427 other Web Only retailers fell more sharply, to 11.8% in 2022 from 12.7% three years earlier.
That growth could not be sustained once the pandemic and its restrictions eased and consumers returned to stores. And it wasn’t. In 2022, the Top 1000 collectively increased online sales by only 5.1%, marking the first year since the deep 2008-2009 recession that Top 1000 percentage growth fell into single digits. Consumer Brand Manufacturers posted the sharpest growth in 2022 at 8.3% followed by Retail Chains at 5.7%.
Online retail, like retail overall, is quite concentrated in North America. But the pandemic did not significantly increase that concentration. And smaller online retailers continue to grow, despite the massive market share and reach of giants like Amazon, Walmart Inc. (No. 2 in the Top 1000) and Apple Inc. (No. 3).
In 2022, the retailers ranked Nos. 501-1000 in the Top 1000 grew by 6.1% and those ranked Nos. 1001-2000 in the Digital Commerce 360 database by 5.9%. Both groups outpaced the Top 500 growth of 5.1%.
That was no fluke. The same was true in 2021: The Top 500 grew more slowly than the retailers in the Second 500 and Next 1000.
North America ecommerce penetration
Online retail sales grew much faster than total retail sales during the pandemic, significantly increasing the ecommerce penetration of retail in the United States, Canada and Mexico.
Taking the three North American countries together, ecommerce grew by a compound annual growth rate of 22.0% from 2019-2022 versus 9.0% for all retail sales. The disparity was especially pronounced in Mexico, where online grew by 37.9% annually versus only 3.1% for total retail.
As a result of online growing faster than total retail, the ecommerce share of total North American retail sales rose to 18.0% in 2022 versus 12.8% in 2019. In the U.S., the market with the highest ecommerce penetration, online represented 20.9% of total retail sales in 2022 versus 15.4% in 2019.
Digital Commerce 360 excludes from its calculation of retail penetration items rarely purchased online. This includes spending at restaurants and bars and purchases of vehicles, gasoline and heating oil.
Other highlights from the 2023 Digital Commerce 360 Top 1000 report include:
- The median conversion rate for Top 1000 retailers stood at 2.8% in 2022, essentially unchanged from 2021 and up significantly from 2.2% in 2019, the last year before the pandemic.
- Average order value for Top 1000 merchants jumped to $180 in 2022 from $156 in 2021 as inflation drove up retail prices.
- Food/Beverage was the fastest-growing merchandise category over the pandemic, posting compound annual growth of 32.2% from 2019 to 2022. Health/Beauty was next at 26.1% annual growth.
- 2% of Retail Chains in the Top 1000 offered buy online, pick up in store in 2022, up from 71.3% in 2021. But the percentage offering curbside pickup fell to 44.4% in 2022 from 55.2% a year earlier.
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