Despite unprecedented challenges, online small- and medium-sized retailers had one of their best years ever in 2020 in terms of online sales growth.
Digital Commerce 360 ranks online small- and medium-sized businesses, or SMBs, by their web sales growth in the annual report The 2021 Digital Commerce 360 Next 1000. The Next 1000 online retailers are merchants that individually generated annual ecommerce revenue between roughly $1 million and nearly $32 million in 2020.
Collectively, the Next 1000 merchants posted year-over-year web sales growth of 20.8% in 2020, higher than any of the past five years. In 2019, Next 1000 merchants collectively grew 16.9% year over year, 11.8% in 2018, 13.9% in 2017 and 16.2% in 2016.
Leading online SMBs
The top online SMB retailers are:
- Housewares merchant Camp Chef Inc. (No. 1001)
- Sporting goods merchant BTO Sports (No. 1002)
- Jewelry merchant Uncommon James (No. 1003)
- Automotive parts retailer SimpleTire (No. 1004)
- Apparel merchant Gwynnie Bee (No. 1005)
The coronavirus pandemic was one of the top reasons for the larger-than-usual growth. Many store-based merchants were forced to close their stores in March 2020 for weeks or months, spurring many consumers to shop online. As the pandemic progressed, some merchants kept a portion of their stores closed, depending on the state of the virus or government ordinances in each geographic area. Even when stores could reopen, many shoppers still opted to shop online to avoid crowded, indoor spaces. This was a boon to online merchants, which benefitted from consumers shopping online more frequently—some even for the first time.
The pandemic caused major shifts in what types of products shoppers wanted, how they purchased those products and the types of retailers they bought from. These trends are reflected in the Next 1000.
During COVID-19, consumers flocked online to purchase food and beverages more than ever before. The food and beverage category was the fastest-growing merchandise category among the 14 Digital Commerce 360 tracks in the Next 1000, with merchants in this category collectively growing 37.7% year over year. This was far above the total Next 1000 growth rate of 20.8%.
In addition, shoppers shifted their discretionary spending habits in 2020. With many consumers opting not to travel or attend formal events, they made other discretionary purchases, such as items to support new hobbies (the toys/hobbies category increased online sales 36.6% year over year), to make home improvements (hardware/home improvement grew web sales 35.2% year over year), upgrade their home digital entertainment (consumer electronics grew web sales 23.7% year over year), or take up a new sport (sporting goods grew web sales 22.0% year over year).
Challenges to online SMB retail growth
While 20.8% year-over-year growth may seem like exceptional news for small- and medium-sized online retailers, the growth is less impressive when benchmarking against the broader ecommerce market and larger online retailers.
For example, Digital Commerce’s 360 Top 1000 online retailers grew their collective web sales dramatically—at 44.5% year over year—compared with 17.0% in 2019.
Similarly, the U.S. ecommerce industry as a whole experienced strong 2020 growth, with U.S. ecommerce sales jumping 31.8% year over year in 2020, more than double the growth in the past four years, which was between 13.4% and 15.6%, according to Digital Commerce 360’s analysis of U.S. Department of Commerce data. This is more than 10 percentage points faster than the Next 1000’s collective growth for 2020.
The 2021 Next 1000 Report digs into some of the reasons why online SMBs did not grow as fast as larger merchants or the ecommerce industry as a whole.
The 2021 Digital Commerce 360 Next 1000 Report includes:
- A full list of rankings of Next 1000 merchants, ranked Nos. 1001-2000
- More than 20 charts detailing how online SMBs performed in 2021
- Rankings of the Top 10 leaders and Top 10 fastest growers in the Next 1000
- Category and merchant type data analysis for online SMBs
- Breakout sections on 2021 challenges, marketplaces and customer acquisition and experience
- Exclusive interviews with Next 1000 ecommerce executives
- View the table of contents for full details on what’s included in the report.
The 2021 Digital Commerce 360 Next 1000 can be downloaded now as a PDF for $399. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as a part of their membership.