Web merchants posted strong e-commerce sales in 2008, an early analysis of data for Internet Retailer’s forthcoming 2009 Top 500 Guide shows.
For the 75 Top 500 web merchants that so far have provided Internet Retailer with actual year-end numbers, combined e-commerce sales rose by 19% to $8.33 billion in 2008 from $7 billion in 2007. In contrast, total retail sales last year grew by 1.4% to an estimated $2.40 trillion, according to the National Retail Federation.
The preliminary analysis of Top 500 retailers, which includes 51 web-only merchants, 14 catalog companies, eight chain retailers and two consumer brand manufacturers, reveals that chain retailers grew the fastest with combined e-commerce sales of $2.5 billion in 2008, up 31.9% from $1.91 billion in 2007. The next fastest growing category among this early 75 was web-only merchants, which grew combined sales by 19.3% to $3.65 billion last year from $3.06 billion in the previous year, followed by catalog companies with combined 2008 e-commerce sales of $2.01 billion, an increase of 7.5% from sales of $1.87 billion in 2007.
With only two companies reporting sales so far, consumer brand manufacturers posted a decline in web sales for 2008, dropping by 8.5% to $140.4 million from $153.4 million in 2007.
In a small sample such as this, a few large retailers can skew the figures. But even factoring out sales for Costco.com and Netflix.com, which have huge sales compared to other retailers in this initial 75 ($1.70 billion, up 42%, and $1.36 billion, up 13%, respectively), the Top 500 analysis shows that online retailers grew combined sales by 14.4% in 2008 over 2007.
The fastest growing web merchants in this early analysis are GourmetGiftBaskets.com, a newcomer to the Top 500, which grew web sales by 172.7% in 2008 to $12 million from $4.4 million in 2007. Karmaloop LLC., a multi-channel retailer of trendy clothes for younger shoppers and No. 359 in the current Internet Retailer Top 500 Guide, grew web sales by 135.3% in 2008 to $40 million from $17 million.
As the recession continues to deepen and multi-channel retailers look to capitalize on any growth opportunity in 2009, they will invest heavily in e-commerce, says Nikki Baird, managing partner at research firm RSR Research. “The growth is coming from the web,” Baird says. “Even as retailers look to contain costs, they are going to give priority to infrastructure projects that will produce the best return on investment and that’s going to happen online.”
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