The decade of the 2010s was bookended by two crises with major implications for online retailing. As the decade began, the world was emerging from the financial crisis of 2008-2009, a recession that swept away weaker retailers and opened the door for online-focused newcomers. A decade later the COVID-19 pandemic that hit North America in early 2020 could have even more far-reaching consequences, even for the 2020 Top 1000 retailers.
We can already see how some initiatives retailers ranked in the new 2020 Digital Commerce 360 Top 1000 retailers took in recent years helped them respond to the new crisis. For example, Walmart Inc. (No. 3 in the Top 1000) and Target Corp. (No. 12) were in a stronger position because they can serve consumers through the curbside pickup services they had developed over the past few years, making those retailers attractive options for shoppers not wanting to enter the store.
On the flip side, many of the 426 Top 1000 retailers that sell on the Amazon.com Inc. marketplace found themselves in dire straits in March 2020 when Amazon announced suddenly it would stop accepting shipments into its warehouses of merchandise it deemed nonessential so that it could focus on shipping the necessities consumers were demanding.
With the coronavirus outbreak still unchecked, all indications are that consumers will shop more online during the upcoming back-to-school and holiday seasons rather than risk infection at bricks-and-mortar stores. And that means they will be buying more on the sites of the retailers in the Top 1000, as the 959 U.S.-based Top 1000 retailers accounted for 91.9% of U.S. online retail sales in 2019.
The Top 1000—a ranking of the leading online retailers based in the United States, Canada and Mexico—effectively tells the story of retail ecommerce in North America. It’s been a story of rapid expansion over the past decade that positions Top 1000 retailers to play an even bigger role in retailing as consumers shift their buying behaviors during and after the coronavirus pandemic.
Ecommerce penetration: A decade of growth
Even before COVID-19 hit, the shift to online shopping had been the big retail story of the past decade, and that continued in 2019. Across North America, ecommerce accounted for 51.2% of all retail growth last year, as online sales grew by 15.1% while total retail sales increased by only 3.5%. Global online sales for the Top 1000 increased by 16.2% in 2019 over 2018.
Ecommerce penetration of North American retail increased to 13.3% in 2019 from 11.9% the previous year. In the United States, that penetration is far higher: Online sales represented 16.0% of total retail sales in 2019 when excluding items rarely purchased online, such as motor vehicles and gasoline. Canada’s ecommerce penetration is far lower at 3.6% and Mexico’s only 1.8%.
Thus, the big engine of ecommerce growth has been the United States, where online has steadily captured a growing share of retail sales and where the Top 1000 has captured the overwhelming bulk of online retail sales.
From 2010-19, total online retail sales in the U.S. increased at a compound annual growth rate of 15.1% versus 3.9% for total retail sales. That accounts for the growth in ecommerce penetration of U.S. retail sales from 6.4% in 2010 to 16.0% in 2019.
However, one retailer—Amazon—grabbed much of that growth, consistently outpacing its U.S. rivals on online sales growth. Just counting sales of items the retailer itself owns and excluding sales by outside merchants on its marketplace, Amazon accounted for 33.8% of the $634.70 billion in Top 1000 online sales in 2019. Including sales by third-party merchants on Amazon’s marketplace, the gross merchandise value of U.S. sales of physical goods on Amazon.com accounted for 37.3% of U.S. online retail sales in 2019 and 59.7% of ecommerce growth.
Small and midsized retailers hold their own
Nonetheless, Amazon is far from the only ecommerce story: Most other Top 1000 retailers are growing as well.
Within the 2020 Top 1000, 594 retailers increased their online sales by 15.1% or more in 2019 over 2018—at least as much as the 15.1% overall growth of online retail sales in North America. And 280 Top 1000 merchants increased web sales by more than 20%.
Nor is size a strong predictor of online growth. While the 100 largest retailers in the Top 1000 account for the bulk of online sales, smaller competitors are holding their ground.
The retailers ranked Nos. 1-100 accounted for 83.5% of Top 1000 global ecommerce sales in 2019, essentially unchanged from 2018. Take away Amazon, and the remaining 99 big companies generated 49.8% of Top 1000 sales, down slightly from 50.5% a year earlier.
However, the fastest growth was concentrated among mid-tier companies, with the retailers ranked Nos. 301-400 collectively growing by 17.4% in 2019 and the larger group of mid-tier merchants ranked Nos. 301-500 increasing sales by 17.0%. That’s compared to 16.2% for the Top 1000 as a whole. There was also rapid growth among the 71 digitally native brands in the Top 1000, which collectively increased their web sales by 26.5% in 2019 and registered a 5-year compound annual growth rate of 41.2%.
The bottom half of the Top 1000, or retailers ranked between 501 and 1000, grew by 15.2%. That is slower than the 16.3% growth of the Top 500, but exceeded the 14.8% year-over-year increase of the retailers ranked Nos. 2-500—in other words, the Top 500 without Amazon.
The 208-page 2020 Digital Commerce 360 Top 1000 report provides a wealth of detail about North America’s online retailers and ecommerce trends. The report includes:
- More than 40 charts breaking down Top 1000 sales and ecommerce trends
- Detailed analysis of growth by merchant type and by merchandise category
- Benchmark data on such key metrics as conversion rate and average order value by merchant type and merchandise category
- A chapter analyzing six ways the coronavirus outbreak is likely to impact ecommerce
- Charts comparing the growth of online versus total retail in the United States over the past decade plus a look at how Canada and Mexico have impacted the North American retail landscape in the last couple of years
- Data showing Amazon’s growth over the decade, including its own first-party sales and exclusive estimates of Amazon’s gross merchandise value, including sales by marketplace sellers
- Detailed analysis of 71 digitally native brands, showing what they sell, how they sell and their 1-year and 5-year growth
- Growth by size of Top 1000 retailer
- Benchmark data on international shipping, payment methods accepted, loyalty programs, email marketing, paid search spending, source of website traffic, mobile traffic and apps, website visitor activity and free shipping
- Charts detailing Top 1000 bankruptcies and acquisitions
- Analysis of omnichannel services offered by Top 1000 retailers, including in-store pickup of web orders, in-store returns, store inventory lookup and curbside pickup
- Analysis of funding raised by Top 1000 retailers and performance of publicly traded retailers in the Top 1000
This article is based on analysis from the 2020 Digital Commerce 360 Top 1000 report. This report is available for free to Digital Commerce 360’s Gold and Platinum members and available for others to purchase for $499. View the table of contents for full details on what’s included in the report. You can learn how to purchase the 2020 Top 1000 report here.