July 11, 2012, 11:05 AM

A channel apart


The fastest-growing Second 500 web-only retailers chase niche markets.

Lead Photo

Web-only retailers in the 2012 Second 500 Guide grew sales by 18.4%, to about $1.85 billion in 2011.

Parentgiving.com isn’t the only e-commerce site offering products for the care of aging parents and spouses. But the web-only retailer has built a solid base of customers who view it as the place to go for products and information on the care of older consumers.

Online-only retailers in Internet Retailer’s 2012 Second 500 Guide like Parentgiving Inc. (No. 902) have found a specialized market they can serve and serve well. By providing products that assist in the process of caring for consumers’ older relatives and friends, the web-only retailer has a growing base of loyal customers, with more than 35% of its business in the first half of 2012 coming from return shoppers. The e-retailer nurtures that loyalty by providing valuable information, such as a library with more than 300 articles on such topics as Housing Options and Nutrition Necessities that address care for elderly parents or spouses. That content helps Parentgiving achieve high positions in natural search, says Keith Maddox, CEO of the Montclair, NJ-based online-only retailer.

“We have a full-time editor on staff and produce a lot of content, including news,” Maddox says. “We want to be experts in senior care and we invest a lot in training customer service reps.”

Parentgiving is one of the fastest-growing web-only retailers in the 2012 Second 500 Guide, increasing 2011 web sales by about 146% to $2.64 million from $1.07 million in 2010.

Sales online are growing for niche web merchants such as Parentgiving because they know the special needs of the consumers they target—and how they want to shop. What’s more, because they sell only on the web these retailers have the flexibility to make sharp shifts quickly in response to consumer behavior and financial results.

Some key points to consider:

  • Online-only retailers ranked in the Second 500 Guide grew web sales by 18.4%, to about $1.85 billion in 2011 from $1.56 billion in 2010. These retailers represented 57% of the online sales of the Second 500 and slightly outperformed the overall growth rate of all Second 500 retailers, whose sales grew by 17.7% overall, from $2.78 billion in 2010 to $3.27 billion in 2011.
  • In terms of growth rate, Second 500 retailers selling only on the Internet edged Top 500 web-only retailers who grew their combined sales—excluding Amazon.com Inc.—by 17.8% to $25.31 billion from $21.48 billion in 2010. With Amazon, web-only retailers in the Top 500 increased their web sales in 2011 by 20.4%.
  • 108 of the 299 web-only Second 500 retailers, or 36%, matched or exceeded the overall Second 500 growth rate. The top 25 retailers in the category averaged 27.6% in sales growth. GolfClubs.com (No. 842) led the top 25, growing by 660% to $3.8 million from $500,000 in 2010.

What unites web-only retailers is what sets them apart from other merchants, namely that they can focus all their marketing, merchandising and technology resources on one sales channel. The fastest-growing retailers in Internet Retailer’s 2012 Second 500 Guide also have a knack for finding the sweet spot in their respective markets. They have discovered a niche market and then turned their full resources to serving that niche and building strong ties to their customers, says Tip Rose, executive director in Resource Interactive LLC, a digital marketing agency and e-commerce consulting firm

“These retailers are not dependent on the numbers from physical stores,” Rose says. “That speaks to their ability to grow in line with the Top 500. Regardless of how big an organization is it can still be fairly savvy when it comes to search marketing, site experience and technology.”

For the first time the Second 500 is available in three formats: print, digital and as part of the all-new and completely updated Top500Guide.com. Information on how to order the fully updated 2012 Second 500 Guide is available here.

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