May 23, 2007, 12:00 AM

A look at who’s up and down among the 2007 Top 500

Three specialty retailers were the fastest growing merchants in the 2007 Top 500 Guide. The category with the largest number of retailers posting year-over-year decreases in e-commerce revenue was the personal computer and consumer electronics space.

Mark Brohan

Research Director

2006 will be remembered as a boom year for many online specialty retailers, but several web merchants in the personal computer and consumer electronics space wound up the year with a loss.

Three specialty retailers – Lumber Liquidators, No. 263 in the Internet Retailer Top 500 Guide, Diapers.com, No. 396 in the Internet Retailer Top 500 Guide, and Working Persons Enterprises, No. 449 in the Internet Retailer Top 500 Guide – were the fastest growing merchants in the Top 500 Guide. The category with the largest number of retailers posting year-over-year decreases in e-commerce revenue was the personal computer and consumer electronics space.

In 2006, the personal computer and consumer electronics space included six retailers – CompSource Inc., No. 392 in the Internet Retailer Top 500 Guide, Comp-U-Plus, No. 147 in the Internet Retailer Top 500 Guide, eCOST.com Inc., No. 111 in the Internet Retailer Top 500 Guide, eXtreme PC Gear.com, No. 489 in the Internet Retailer Top 500 Guide, and Gateway Inc., No. 54 in the Internet Retailer Top 500 Guide, – with declining sales. Another 13% – 24% of all merchants in the category posted revenue gains of less than 10%.

Selling computers and electronics online is becoming harder and retailers can no longer compete merely by offering shoppers the lowest price. Many online electronics retailers, including eCost.com, which ended 2006 with web sales of $101.2 million, down 41.5% from $173.1 million in 2005, are looking to rebound in 2007 by diversifying their range of services and by adding more products.

Following eCost, the online retailers posting the biggest drop in web sales included Gateway, down 25% to an Internet Retailer estimated $222.9 million; The Sharper Image Corp., No. 122 in the Internet Retailer Top 500 Guide, down 20.5% to $85.2 million; eXtreme PC Gear .com, down 18.8% to $6.5 million; Headsets.com Inc., No. 452 in the Internet Retailer Top 500 Guide, down 13.9% to $8.1 million; Mrs. Fields Famous Brands LLC, No. 371 in the Internet Retailer Top 500 Guide, down 10.9% to $14.4 million; Books-A-Million Inc., No. 251 in the Internet Retailer Top 500 Guide, down 10% to $26.2 million; Toys "R" Us Inc., No. 39 in the Internet Retailer Top 500 Guide, to an Internet Retailer-estimated $384.3 million; ComfortChannel.com, No. 487 in the Internet Retailer Top 500 Guide, down 7.5% to $6.5 million; and SimonDelivers.com, No. 159 in the Internet Retailer Top 500 Guide, down 7.3% to $60 million.

In 2006, the retailers posting the biggest gains year-over-year in web sales were niche merchants and companies with established brands. For instance, Staples Inc., No. 2 in the Internet Retailer Top 500 Guide, was the leading chain retailer in the 2007 Top 500 Guide, posting 2006 web sales of $4.9 billion, an increase of 29% from $3.8 billion in 2005. In comparison, runner-up Office Depot, No. 3 in the Internet Retailer Top 500 Guide, grew its web sales year-over-year by 13.1% to $4.3 billion in 2006.

Among catalog/call center companies, CDW Inc., No. 8 in the Internet Retailer Top 500 Guide, which controls 20.7% of Top 500 personal computer and consumer electronics segment, generated the most web sales in 2006. CDW increased web sales by 13.1% in 2006 to $2 billion from $1.8 billion in the prior year, followed by QVC Inc., No. 14 in the Internet Retailer Top 500 Guide, which grew web sales by 23.6% to $1.2 billion last year from $1 billion in the prior year.

Following market leader Amazon.com, No. 1 in the Internet Retailer Top 500 Guide, Newegg.com, No. 10 in the Internet Retailer Top 500 Guide, with $1.5 billion in 2006 e-commerce revenue was the second biggest web-only merchant, followed by Netflix Inc., No. 18 in the Internet Retailer Top 500 Guide, with 2006 sales of $996.7 million.

Dell Inc. No. 4 in the Internet Retailer Top 500 Guide, which grew web sales by only 6.46% in 2006 to an Internet Retailer-estimated $3.9 billion from $3.7 billion in the prior year, was the biggest online merchant among consumer brand manufacturers.

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