The North American ecommerce market grew 15.1% in 2019. The Top 500 grew online sales at a faster clip, 16.3%. And, 56.0% grew sales more than the North American ecommerce market average. But the outfall of the coronavirus could have far-reaching consequences on the 2021 Top 500, as well as ecommerce as a whole.

2019 was a solid year for North American ecommerce and a better year for the Top 500 online retailers as ranked by web sales in the region. Digital Commerce 360 analyzed thousands of ecommerce data points to determine the Top 500 online retailers in North America, which performed above the overall market.

The Top 500 e-retailers posted strong web sales gains, growing their collective web sales by 16.3% in 2019 over the year before. That’s at a faster clip than North American retail as a whole at 3.5% and North American ecommerce as a whole at 15.1%. What’s more, 96.2% of the Top 500 retailers increased their web sales in 2019.

In the United States, online sales represent 16.0% of total retail sales when excluding items rarely purchased online. Canada’s ecommerce penetration is far lower at 3.6% and Mexico’s only 1.8%.

But 2020 brought with it an unprecedented upheaval in ecommerce and retailing in general. In March, the rapid spread of the coronavirus pandemic changed nearly every aspect of life in much of North America as swiftly as the virus itself swept across communities. And the 500 leading online retailers in the United States, Canada and Mexico were impacted along with everyone else, both positively and negatively.

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Some retailers with stores that had already invested in omnichannel capabilities, such as curbside pickup and shipping from stores before the pandemic, are finding those investments paying off in spades. Other nonessential retailers are having to retool their marketing game plans to ignite consumer spending in categories such as apparel. Meanwhile, mobile continues to be a savvy investment with sales from mobile accounting for about a third of total web sales for Top 500 merchants. And Amazon.com In. (No. 1) marches on in its dominance.

From store to door

Retailers that only sell online are the top growers by merchant type in the Top 500, but those with stores aren’t far behind. That suggests such services as curbside pickup; buy online pick up in store (BOPIS); reserve online, pick up in store; ship from store; and just plain experience selling in multiple channels is paying off for store-based retailers.

Top 500 e-retailers posted solid 2019 gains, growing their collective web sales by 16.3% in 2019.

For example, Target (No. 12) told investment analysts in March that its same-day fulfillment options—in-store and curbside pickup and delivery via its paid Shipt service—are 90% less expensive than home delivery and cut the retailer’s ecommerce fulfillment costs by 25% in 2019. Shipt—a subscription service that costs $99 per year or $14 per month and provides free delivery of orders of $35 or more—delivered 2.5 times more orders in Target’s fiscal year that ended Feb. 1, 2020, than in the prior 12-month period. Curbside pickup of web orders also increased 500% year over year as Target extended the service to about 1,750 of its almost 1,900 stores.

Big retailers like Walmart (No. 3) and Target, which had already introduced curbside pickup in large part as a convenience for online grocery shoppers, promoted the ease of their curbside options in emails to consumers at the start of the coronavirus pandemic. “We’ve enhanced Drive Up with your safety in mind. No signature required and we’ll load your trunk, too,” Target wrote in an email. And it worked, as both Target and Walmart reported significant use of these services during the first few months of the pandemic.

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Fashioning a marketing makeover

But the pandemic has created new hurdles for Top 500 apparel retailers. According to an early April study of 1,064 shoppers by Digital Commerce 360 and Bizrate Insights, 30% of consumers had made online apparel purchases in the past few weeks. That’s compared with 55% who had made food or drug purchases. Another study of 450 consumers on April 8 from Coresight Research finds 40% of consumers said they were buying less apparel online. The downtrend in apparel sales led several Top 500 retailers, including Duluth Trading Co. (162), Neiman Marcus (41), Macy’s Inc. (15) and Urban Outfitters Inc. (34) to lay off workers. Additionally some retailers filed for bankruptcy including, Neiman Marcus,  J. Crew Group Inc. (47) and J. Hilburn (No. 315).

Apparel retailers will need to get creative to boost sales. From one-on-one online styling consultations to virtual happy hours, to marketing messages touting the emotional benefits of “getting dressed up at home,” apparel retailers will need to find other ways to drum up sales besides deep discounts. Nike Inc. (24), Macy’s, Columbia Sportswear (143) and Eddie Bauer LLC (136) have peppered marketing messages with themes of “togetherness” or “We’re all in this together.”

Mobile mindset

Whichever way the ecommerce tides may shift as a result of the pandemic, Top 500 research shows investing in mobile is likely money well spent. For example, nearly a third, 32.8%, of Top 500 retailers’ web sales came from tablets and smartphones in 2019.

As Top 500 retailers see these trends, they are investing in mobile. For example, 58.5% of Digital Commerce 360 Top 500 optimized more than 50% of their emails for mobile devices in 2019, up from 53.3% of Top 500 retailers a year earlier.

Some Top 500 retailers such as 1-800-Flowers.com Inc. (No. 66) are using progressive web apps. A PWA is a set of design and technology standards that offer the look and feel of an app but in a mobile website.

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And still, others are decreasing mobile load times by taking advantage of Google Inc.’s AMP, or Accelerated Mobile Pages technology. AMP allows retailers to build lightweight mobile pages that load extremely fast when a consumer visits a site from smartphone search results.

The biggest retailer gets bigger

Amazon.com Inc. capped a decade of rapid growth by outpacing the ecommerce market again in 2019. Amazon’s sales grew by a compound annual growth rate of 19.1% from 2010-19. And for 2019, Amazon accounted for 35.1% of Top 500 sales. While web-only retailers in the Top 500 grew sales 17.8%, Amazon represented much of that growth. Remove Amazon, and web-only players grew by a much smaller 14.3%.

If thousands of smaller physical stores prove unable to weather the coronavirus storm, Amazon stands to gain even more dominance from the pandemic. Amazon in some ways holds an edge over rivals like Walmart and Target because all of its sales are online, other than revenue from its roughly 500 Whole Foods supermarkets and a smattering of smaller stores. By late April, when the S&P 500 index was down 13% for the year because of uncertainty with the coronavirus, Amazon’s stock price was up more than 25%.

The 106-page 2020 Digital Commerce 360 Top 500 report provides a wealth of detail about North America’s online retailers and ecommerce trends.

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The report includes:

  • Nearly 30 charts breaking down Top 500 sales, benchmarks and trends
  • Detailed analysis of Top 500 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
  • Data and examples analyzing the ways the coronavirus outbreak is impacting ecommerce and the Top 500
  • Charts comparing the growth of online versus total retail in the United States over the past decade, plus a look at U.S. ecommerce penetration of total retail over the last decade
  • Data showing Amazon’s growth over the decade, including its own first-party sales and share of Top 500 sales
  • Benchmark data on free shipping, mobile sales and apps, paid search, loyalty programs, customer service, and website features
  • Analysis of omnichannel services offered by Top 500 retailers, including in-store pickup of web orders, store inventory lookup, curbside pickup and reserve online, pick up in store.

This article is based on analysis from the 2020 Digital Commerce 360 Top 500 report. This report is available for free to Digital Commerce 360’s Gold and Platinum members and available for others to purchase for $399. View the table of contents for full details on what’s included in the report. You can learn how to purchase the 2020 Top 500 report here.

 

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