The Surprisingly Small Size of E-Commerce

Among the top retailers in the nation, online-only sellers are rare.

Wal-Mart's retail sales grew by 4.0% from 2011 to 2012.

Wal-Mart's retail sales grew by 4.0% from 2011 to 2012.

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For all the ink spilled over the rise of e-commerce, it may be surprising to learn that new data show web retailers to be, in fact, not all that big. According to new figures from the National Retail Federation, online-only retailers are almost nowhere to be found among the largest retailers in the U.S. However, that may be due in part to a subjective definition of what a "retailer" is.

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The federation released its list of the 100 largest U.S. retailers this week. Among the 100 largest retailers in the U.S., only two are online-only: Amazon.com (No. 11), with $34.4 million in U.S. retail sales last year, and Dell (No. 83), at nearly $4.4 million.

Below are the 10 largest retailers in the U.S., as measured by their 2012 U.S. retail sales.

Rank Company 2012 U.S. Retail Sales Sales Growth (2011 to 2012)
1 Wal-Mart $328,704,000 4.0%
2 Kroger $92,165,000 6.6
3 Target $71,960,000 5.1
4 Costco $71,042,000 10.6
5 The Home Depot $66,022,000 6.4
6 Walgreen $65,014,000 -1.2
7 CVS Caremark $63,688,000 6.7
8 Lowe's $49,366,000 0.2
9 Safeway $37,532,000 1.6
10 McDonald's $35,593,000 4.2
The NRF's STORES Magazine pointed out the lack of web-only stores' representation among the top 100 in its latest issue. However, that's not to say that e-commerce is failing, by any means: Online sales are expected to grow at a nearly 15 percent pace this year.

Rather, the figures indicate that despite the occasional predictions that e-commerce will push out brick-and-mortar retailers, it isn't going to happen anytime soon. According to market research firm eMarketer, e-commerce accounted for only 6 percent of all retail sales last year. Long-established brick-and-mortar retailers dominate the retail industry in part because they sell their own goods online in addition to in their stores.

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It's not just big-box behemoths like Wal-Mart and Target that have crowded out web-only retailers; specialty stores, like high-end home goods store Williams-Sonoma (No. 91), craft supply chain Michaels Stores (No. 88), and agricultural supply retailer Tractor Supply Company (No. 79), are also among the top 100.

While more online retailers could easily crack the top 100 in coming years, they may be hindered by the fact that they cannot show their wares in person.

"There's still a customer that wants to touch and feel," says Susan Reda, editor at STORES Media. Because many customers want to be able to try on their clothes and flip through books before buying, she says, "store-based retailing is never going to go away."

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Still, online-only retailers may be also be held back in the rankings by what the definition of "retail" does and does not include. An NRF spokesperson says that Groupon, for example, is not considered a "retailer" and is not included on the list. That company took in over $600 million in revenue globally in its most recent quarter.Likewise, some of the retail categories are areas where online-only retailers simply cannot compete.

"A lot of the companies that are listed in the [National Retail Foundation] figures are in categories that are not particularly online-friendly, says Clark Fredricksen, Vice President at eMarketer. "McDonald's, Starbucks, these are companies that have some online presence, but not a big one."

Indeed, the data includes some large restaurant chains. Likewise, grocery stores are also well represented among the top 100, and very few people buy groceries online. Even retail giant Amazon is only beginning its push into that market.

So while the data indicate that online retailers may be lagging, a company may have to perfect the art of selling fast food online before the tide shifts dramatically.

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