E-commerce sales grow four times faster for U.S. Top 500 merchants than total retail sales

 BY MARK BROHAN Research Director

The U.S. web merchants ranked in the newly released 2015 edition of The Top 500 Guide turned in another strong year in 2014, growing web sales 16% while total U.S. store sales grew just 2.4%. Canada-based Top 500 retailers increased their online sales by 29%, well ahead of total retail growth of 4.8% in that country.

It was online stores and not physical stores that spurred growth among all U.S. retailers in 2014. In fact the U.S. web merchants ranked in Internet Retailer’s just-released 2015 Top 500 grew far faster than stores and overall retail in the United States in 2014, and faster than overall e-commerce growth. 

In 2014 the U.S. merchants ranked in Internet Retailer’s 2015 Top 500 Guidegrew their combined sales 16.2% to $256.27 billion. That's nearly six times faster than all U.S. store sales that grew 2.4%. All merchants ranked in the Top 500 increased their cumulative web sales 15.7% to $296.51 billion. Overall the U.S. e-commerce market grew 15.4% to $304.91 billion, according to the U.S. Department of Commerce. Total retail sales increased 3.5% to $3.15 trillion, when excluding from Commerce Department figures sales of fuel and autos, and receipts from restaurants and bars, items rarely purchased online.

The 16% growth rate of the U.S. Top 500 merchants and 15% growth in U.S. online retail sales in 2014 was more than four times greater than the growth in U.S. retailing as a whole, according to the 2015 Top 500 Guide (more on the Top 500) E-commerce in Canada also grew faster than total retail and the Canadian Top 500 web merchants faster still.

Last year the 12 Canadian merchants ranked in the new Top 500 Guide increased their combined sales 29% to $1.84 billion. In comparison, total retail sales in Canada increased 4.8% to 505.60 billion in Canadian dollars (US$399.85 billion), according to Statistics Canada, the government data-collection agency, while online retail sales in Canada increased 14.8% to an estimated $17.8 billion in 2014, says Forrester Research Inc.

Once again Amazon is the top-ranked Top 500 retailer with web sales in 2014 that increased 17.1% to an Internet Retailer-estimated $79.48 billion. Amazon reported net sales of $88.98 billion in 2014, a 19.5% increase from nearly $74.45 billion in 2013. But to make a cleaner revenue comparison with other Top 500 merchants Internet Retailer backs out revenue that is not directly associated with the online sales of physical goods or digital content, such as its Amazon Web Services unit that provides web-based data storage and server capacity. Overall, Amazon accounted for 31% of all U.S. Top 500 sales and 26.1% of all U.S. e-commerce sales.

Led by Amazon, North America’s biggest Top 100 merchants, and especially the Top 10, once more account for the vast majority of all Top 500 sales. In 2014 the collective sales of the Top 100 grew 15.8% to $254.61 billion, representing 85.9% of Top 500 web sales. The top 10 increased their combined sales 16.7%to $151.94 billion and accounted for 59.7% of all Top 100 sales.

There was considerable consolidation and acquisition activity among Top 100 merchants, resulting in some big jumps in top-line growth. Even though Staples Inc. (No. 4)  and Office Depot (No. 6) are ranked separately in the 2015 Top 500 Guide because their proposed $1.17 billion deal announced in February has yet to be finalized, a combined Staples/Office Depot operating under the Staples brand would have combined Internet Retailer-estimated annual web sales of $15.53 billion and total combined sales of $34.35 billion. Those combined numbers would make Staples easily the biggest office supplies retailer online and off, and would move Staples ahead of Wal-Mart Stores Inc. as the No. 3 online retailer in the Top 500.

Breaking down Top 500 retailers by their primary sales channel, web-only merchants once again accounted for the largest number of Top 500 merchants, 193, and the most sales, $125.47 billion. They also grew their online sales the fastest at 18.1%. It’s worth noting that while Amazon continues to dominate the e-retail market it grew more slowly than the other web-only merchants in the Top 500, which together averaged 19.8% growth versus 17.1% for Amazon.

The 154 retail chains in the Top 500 represented the second-largest merchant segment, and they collectively grew e-commerce 16.1% to $100.38 billion. The 76 consumer brand manufacturers were up by a combined 12.3% to $40.99 billion. The Top 500 merchants with the slowest collective annual growth rate were the 77 catalog and call center companies, including such TV shopping channels as QVC and HSN, which grew year over year by 8.8% to $29.67 billion.