The Wall Street Journal
reports that the US Securities & Exchange Commission recently asked major traditional retailers to break out specific figures regarding their online sales, rather than simply reporting percentage growth rates. It turns out those actual numbers, combined, don’t equal their nemesis Amazon.
Amazon’s 2012 revenues were $61.1 billion. However Amazon’s margins are less than razor thin.
Though many of the retailers mentioned in the WSJ article now see a healthy percentage of annual sales from the Internet, some, like Target, underperform the market. Target disclosed that “online sales currently make up less than 2 percent of its $73 billion in overall sales.”
The current percentage of e-commerce sales of overall retail is 5.8 percent according to the US Commerce Department.
The following are estimates for the online sales (per Internet Retailer) of a number of major US retailers and the corresponding percentages (my calculation) of their annual revenue:
Staples: $10.3 billion (42 percent)
Wal-Mart: $7.7 billion (17 percent)
Sears: $4.2 billion (10.5 percent)
Office Depot: $4.1 billion (38 percent)
Best Buy: $3.3 billion (6.4 percent)
Macy’s: $3.2 billion (11 percent)
Target: $1.5 billion (2 percent)
The underlying assumption in the article is that e-commerce represents the future of commerce; and retailers whose e-commerce sales are low are thus in trouble. That’s a false notion and representative of outdated thinking.
In-store sales will continue to dominate e-commerce. Moreover, traditional retailers have a clear advantage over most e-commerce sites other than Amazon. However, consumers increasingly want retailers to be channel agnostic. Consumers want the convenience of shopping online, coming into stores or buying online and picking up in stores. There are very few e-commerce-only sellers that can compete accordingly.
US retailers that are doing the best job with this so-called “omni-channel” approach (including integrating mobile) will be the winners. E-commerce will continue to grow, but it’s only a small part of the overall retail story.
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