Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
The big get bigger, but there’s room for smaller retailers to move up, says Internet Retailer publisher Jack Love.
Retailers in Internet Retailer’s 2012 Top 500 Guide grew 2011 web sales by 18.6%, outpacing the overall retail marketplace, which grew at 16.1%. And while Amazon.com Inc. (No. 1) grew by 41% last year, from $34.2 billion to $48.1 billion, the three fastest-growing retailers had 2011 web sales of $50 million or less.
“The three fastest-growing retailers have come from the minor leagues, because they figured out a unique way of selling and marketing online,” Jack Love, publisher of Internet Retailer, told attendees today at the Internet Retailer Conference and Exhibition in Chicago.
The fastest-growing retailers in the 2012 Top 500 Guide were Jackthreads.com (No.440 ), which grew 355% in 2011, from $4.4 million to $20.2 million; Chegg (No. 274 ), with an estimated 346% web sales increase to $50.0 million from $11.2 million; and Party City (No. 302), which increased online sales by 200%, from $13.4 million to $40.2 million. Jackthreads is a web-only private sale retailer of trendy apparel for young men, Chegg is an online textbook retailer and Party City is a retail chain that carries party supplies and costumes.
Overall, the Top 500 retailers have a 77% share of the $198 billion U.S. e-retailing market, Love said. “But we never ignore the other 23%. We think of that group as the minor leagues, the companies that will one day move into the Top 500. The new leaders of the industry are going to come from that 23%.”
Among the heavyweights in the Top 500, Amazon and Wal-Mart Stores Inc. (No. 4) will duke it out for long-term retailing dominance in the United States, Love said. From 2001 to 2011 Amazon has grown at an average of 31% per year and Wal-Mart at 9%. In the 15 years since each company went public, Amazon’s compound annual growth rate has been 70.6%, compared with Wal-Mart’s 42.0%.
Projecting Amazon’s annual sales growth at 30% and Wal-Mart’s at 9%, Amazon will overtake its chief competitor in 2023, Love projects. “I’m not saying it’s going to happen, but this is where the trend lines are going,” he said. “I believe this is where Amazon is going.” And Wal-Mart will need to continue shifting its focus to online retailing or it will not maintain its edge, he adds.