5/30/13

Sales growth bonds the Top 500 specialty merchants

Niche retailers in the 2013 Top 500 Guide have a good year.

Mark Brohan , Research Director

The specialty merchandise category of the Internet Retailer 2013 Top 500 Guide is a diverse collection of merchants that includes web sellers of party supplies, musical instruments, equestrian products and other product niches.

But Top 500 specialty merchants have one thing  in common: growing sales. In 2012 the combined sales of the 40 web merchants ranked in the specialty category grew their combined sales 17.5% to $4.48 billion from $3.81 billion in 2011. Among all Top 500 retailing merchandise categories, the specialty category is the fifth-fastest growing of 15 categories in the 2013 guide behind books/music/video, up 25.9%; mass merchant, up 23.6%; hardware/home improvement, up 23.5%; and apparel/accessories, up 22.9%.

The specialty retailers in the Top 500 demonstrate that niche web merchants with unique products and other attributes that separate them from mass merchants and the big retail brands that dominate other Top 500 merchandise categories can rank among the industry leaders.

Stroll LLC (No. 223), which owns and markets the audio-based language learning tools known as Pimsleur, is the fastest-growing specialty merchant with sales that grew about 143% to $85 million in 2012 from $35 million in 2011. The next fastest growing specialty merchants include PetFlow.com (No. 406), up about 135% to $30 million in 2012 from $12.8 million in 2011; Party City Corp. (No. 230), which increased web sales year over year 100% to $80.4 million from $40.2 million and Balsam Brands (No. 360), a niche provider of Christmas decorations and items, up about 53.3% year over year to $35.0 million from $22.8 million. The specialty merchant with fifth-fastest growth title is musical supplies direct marketer Sweetwater (No. 207) with web sales that grew 36.6% to $97 million in 2012 from $71 million in 2011.

The biggest merchant in the category was Shutterfly Inc. (No. 49). With 2012 sales that increased 35.3% to $640.6 million from $473.3 million in 2011. Double-digit growth in sales and order volume made 2012 a banner year for Shutterfly, an online snapshot processor and photo album retailer. For the year ended Dec. 31, Shutterfly also reported the number of purchasing customers grew 31.5% to 7.1 million from 5.4 million in 2011, while orders increased 28.3% to 16.3 million from 12.7 million. Average order value decreased 1.9% to $37.58 from $38.30 and net income increased 64.3% to $23.0 million from $14.0 million.

Shutterfly attributes revenue growth to several strategic moves in 2012. In September, it bought mobile app developer Penguin Digital. And in June Shutterfly inked a deal with Hallmark Cards that enables Shutterfly customers to create customized Hallmark greeting cards. In April  it closed on a bid of $23.8 million for Eastman Kodak’s Gallery For the fourth quarter Shutterfly reported net sales of $351.8 million, a 33.4% increase compared with $263.8 million in the fourth quarter of 2011. The number of paying customers grew by 31.3% to 4.2 million from 3.2 million and total orders grew 32.7% from 5.2 million to 6.9 million.

In January 2013 Shutterfly launched a new mobile commerce iPhone app. The free app combines photo storage, viewing and photo gift creation in one place. A Shutterfly app user can create a personalized gift in minutes.

To read previous Top 500 Insider stories, click here.

More on these and other metrics and analysis is contained in 2013 Internet Retailer Top 500 Guide.

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.

Topics:

balsam brands, business finance, e - commerce, Eastman Kodak, Hallmark Cards, Internet Retailer, iPhone, niche web merchants, party city corp., Photo sharing, Shutterfly, Shutterfly Inc., Specialty, specialty retailers, stroll llc, Sweetwater, Target Corporation, Top 500 Insider, Top500Insider, web merchants, web sales

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