May 6, 2013, 12:40 PM

A bigger helping of web sales

The five leading Top 500 food and drug merchants grab 56% of sales.

Lead Photo

Last year was another respectable year of growth for the 23 Top 500 online retailers ranked in the guide’s food and drug category.

The combined sales of all food and drug merchants ranked in the 10th anniversary edition of the Top 500 Guide grew year over year about 12.5% to $4.78 billion from $4.25 billion.

In comparison, Top 500 retailers in the mass merchandise category—which includes No. 1 web retailer Amazon.com Inc. —grew the most at about 24.3% to $94.60 billion in 2012 from $76.10 billion in 2011. Top 500 computers and electronics retailers grew the slowest at just under 2% to combined sales of $23.71 billion from $23.29 billion.

In the food and drug category, the biggest merchants are extending their domination.

The top five Top 500 food/drug merchants—Walgreen Co. (No. 36), Peapod LLC (No. 55) and Weight Watchers International (No. 61), FreshDirect LLC (No. 75) and Green Mountain Coffee Roasters (No. 81)—accounted for 56.1%, or about $2.68 billion, of all web sales in the category, compared with 53.6%, or about $2.28 billion, in 2011.

The big food and drug merchants continue to get bigger through a combination of acquisition and new business expansion. In 2012 Walgreen, which posted Internet Retailer-estimated web sales of $900 million, had fully integrated its acquisition of Drugstore.com, which Walgreen purchased in June 2011. Green Mountain also says new and existing customers from acquisitions, such as Canadian coffee retailer Van Houtte Inc. and others, helped to grow its top-line e-commerce revenue year over year about 28% to $365 million from $286 million.

Meanwhile the online grocery market’s oldest player, Peapod, which grew web sales 9.6% to $525 million in 2012 from $479 million in 2011, continues to grow through more regional expansion, says co-founder and CEO Andrew Parkinson. Equally important, however, is helping Royal Ahold NV, the Dutch company that acquired Peapod in 2001, grow its international e-commerce business, Parkinson says.

In February, Royal Ahold  announced plans to double its e-commerce sales to about 1.5 billion euros ($2.01 billion) by 2016—and made a key acquisition to get started. Royal Ahold, which owns and operates European grocery store and drugstore chains such as Albert Heijn and Etos in addition to Peapod, and chains such as Stop & Shop and Giant in the U.S., purchased Bol.com, another Dutch online mass merchant, for about 350 million euros ($469.8 million).

Now with a more diversified e-commerce operation in Europe and an established online retail base through Peapod in the U.S., Peapod going forward will help Ahold to build and maintain a better technology platform, Parkinson says. “E-commerce is a very complex business and we’ve built and maintained a lot of systems over the years,” he says. “We are helping them to build a better digital experience and becoming a bigger digital grocer.”

More on Top 500 retailers, metrics and analysis is contained in the 2013 Top 500 Guide.

To read previous Top 500 Insider stories, click here.

The 2013 Top 500 Guide 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 new 2013 Top 500 Guide is available here.

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