Wednesday, March 12, 2008

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Smaller niche retailers pace the 2007 Top 500

America’s 500 largest web retailers accounted for 61% of all e-commerce sales in 2006, but the fastest-growing merchants are smaller niche retailers who specialize and know what makes their customers tick, according to Internet Retailer’s forthcoming 2007 Top 500 Guide.

While the Top 500 was the engine that powered online sales growth for several years, in 2006 sales at the Top 500 companies grew 21.3% compared to 25.9% for the entire market. Top 500 sales totaled $83.6 billion, up from $68.9 billion a year earlier. The rest of the market, including an estimated $34 billion in eBay Inc.-originated sales that could be considered retail sales, accounted for $52.6 billion in sales, up 29.9% from $40.5 billion a year earlier.

Within the Top 500, the split between slower growing large sites and faster growing smaller sites was apparent. In 2006, combined revenue of the Top 500’s 100 smallest merchants—with annual sales of about $5.5 million to $10.9 million—rose by 23% to $836.3 million from $682.6 million in 2005. Sales at the Top 100 grew 19% to $71.6 billion in 2006 from $60.2 billion in 2005.

In 2006, the Top 500 accounted for 61.3% of all online retail sales of $136.2 billion, down from 62.9% a year earlier. Among the Top 500, the Top 100 account for 86% of all sales, down slightly from 87% a year earlier.

But smaller and more nimble merchants continue to grow faster than their established competitors. For instance, the Top 25 retailers grew their combined sales in 2006 to $52.9 billion from $44.8 billion, an increase of 18%. But the total sales for all start-up retailers in the Top 500 Guide—companies only in business since 2004—grew by 55% to $494 million last year from $319 million in 2005.

The Top 500 Guide ranks America’s 500 largest web retailing organizations based on annual sales. Each retailer’s listing also includes: site traffic, conversion rate, average ticket, senior management, key vendors and where each retailer ranks in the market they serve. New this year are a list of web features and functions for each retailer, the percent of traffic from search engines for 2005 and 2006 for each merchant, and a browser satisfaction score and the ForeSee Results/Internet Retailer Purchase Intent Index for each top 100 e-retailer.

The Top 500 Guide includes 145 e-retail businesses that are owned or operated by store-based retail chains, 89 by catalog and direct-marketing firms, 42 by consumer branded manufacturers and 224 by the so-called pure plays or web-only retailers.

As e-retailing becomes more established, the Top 500 Guide finds that more online merchants are freely revealing their online sales numbers. This year, 256 companies reported their online sales data, compared with 240 last year and 150 the year before. The Top 500 Guide sells for $59 for a single copy plus $9.95 for shipping and handling. To order, click here.

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