As we move closer to the second quarter of
2005 it is important to look at which E-tailers were most
successful in overall sales volume in 2004. As internet
marketers we must be aware of which companies we should
promote more aggressively as they had the largest mass
appeal to the consumer. The Top 300 retail web sites
accounted for 57% of the approximate $150 billion worth of
merchandise that was sold online in the U.S. last year,
according to a major new research study published this month
by Internet Retailer. The Top 300 Guide ranks the 300
largest retail web sites by their 2004 Internet sales volume
and contains many details of their operation, including
annual growth, web site traffic, average sales ticket,
conversion rate, number of SKUs on the site, vendors,
management, corporate ownership and contact data.
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The Top
300 Guide (the result of six months of detailed journalistic
research by Internet Retailer) contains a profile on each of
the web sites that make up the Top 300 ranking and the data
on each illustrate how remarkably fast the e-retailing
industry has matured, becoming a significant, increasingly
profitable and highly efficient merchandising channel in the
U.S. retailing industry. The Guide’s data relating to the
performance of the online channel are as impressive as the
total web sales figure it reveals. The Top 300 web merchants
last year recorded an estimated 21.4 billion visits to their
sites. Of those, an estimated 635 million led to an online
sale, a conversion rate of over 4%, well above the 2% rate
that only a couple of years ago was considered standard. The
Top 300 web merchants also reported an impressive average
sales ticket for 2004—$92. Both measurements reflect
operating gains web retailers have achieved thanks to recent
investments they have made in such web-based technologies as
advanced site search, web analytics, search engine
marketing, personalization software and content management
systems.
As is the
case with offline retailing, general mass merchants now
comprise the largest category on the web, accounting for 29%
of sales generated by the Top 300 sites. Sales in this group
are dominated by Amazon.com Inc., which is the overall
leader in the Top 300—accounting for a stunning $5.3 billion
in sales, or 7.5% of all sales on the web. As a clear
measure of Amazon’s dominance, the second-largest retail
site on the Internet generates $2.8 billion in annual sales,
slightly more than half of Amazon’s volume. That site
belongs to Dell Inc., whose web site allows visitors to
design the PC they purchase online to meet their particular
needs.
But the
study reveals a surprising collective online market share
for the two other types of players in the e-retailing
space—virtual (web-only) merchants and consumer brand
manufacturers. For a group that was given up for dead soon
after the dot-com bust that took down such high-profile pure
plays as Webvan Group Inc. and Kozmo.com, the virtual
merchants which survived the shakeout are well represented
in the Top 300 ranking, accounting for fully 24% of total
Internet sales measured in the Top 300 research study.
Consumer brand manufacturers, led by big PC makers Dell and
Hewlett-Packard Co. (the fourth largest e-merchant) and by
consumer electronics giant Sony (ranked sixth), operate
retail web sites that account for 20% of the online sales of
the Top 300. But not all manufacturer sites in the survey
are those of electronics producers. The retail web sites of
shoe makers, such as Reebock (ranked #84) and Nike (#96);
greeting card makers, such as Hallmark (#67) and American
Greetings (#117); and even chocolatiers, such as Hershey
(#202) Godiva (#243), all made it into the Top 300.
With one
obvious exception, the Top 300 retail sites proportionately
represent the product make-up found in the broader retail
market. That exception is food, the category Webvan tried
but failed to revolutionize. Since then, food retailing has
become the backwater of online merchandising. Even though 14
food companies have sites in the Top 300, together they
account for just 2% of total web sales for the group. Only
three of those are owned by supermarket chains, including
Albertsons (#149), Safeway (#154) and the Peapod.com
subsidiary of Royal Ahold (#51). By contrast, 26 supermarket
and convenience store chains rank among the top 100
store-based retail chains, and together account for 10% of
all retail sales in the U.S.
Wal-Mart.com ranks 11th among the Top 300 with $723 million
in online sales, Sears is the country’s seventh-largest
e-retailer with $1.2 billion of web sales and Target is the
tenth-largest with $907 million of web sales.
The rule
of 80/20 seems to be in affect here as much as ever. There
are thousands of online retailers yet the bulk of the money
being spent by consumers is spent on the small 20% that is
able to catch the consumer’s appetite. With this focus and
data it should be helpful to networks, agents, brokers etc..
as we plan a strategy for the rest of 2005.
David Fishman
dfishman@wrpmedia.com
