Online Retailers Are Growing S-l-o-w-e-r Than Retail Chains (With One Exception)

Think online retailers are growing faster than their bricks-and-mortar competitors? They're not—with one not-at-all-surprising exception. That's according to Internet Retailer, which reported its freshly crunched numbers for the top 500 e-tailers on Tuesday (May 2).

In fact, over the past decade, both catalog retailers and retail chains have an average sales growth rate that's higher than 499 of those top 500. Catalogs grew at an average annual rate of 17 percent and bricks-and-mortar chains grew at 16.7 percent per year, while for most pure-play e-tailers the number is only 15.6 percent.

Of course, the Web-only retailer that demolishes the curve is Amazon (NASDAQ:AMZN), which has an average annual sales growth rate of 65 percent.

This explains a lot. Not just bricks-and-mortar chains' preoccupation with Amazon (which turns out to be justified), but also the hefty e-commerce growth rates that Web-only merchants seem to have but that bricks-and-mortar chains haven't been able to match with their own online retail operations. Was the secret really getting rid of all the expensive real estate that were serving as showrooms for e-tailers?

No, it turns out, the secret to e-tailers' high growth rates was just having Amazon's numbers to raise the curve. Nobody else was doing remotely as well online.

Ironically, that assumption that there's a vast, shadowy army of highly successful Web retailers has been one of the biggest spurs to in-store innovation over the past few years. Would so many bricks-and-mortar chains have gone live with in-aisle checkout, finally gotten off the dime with RFID tags for inventory control and dramatically beefed up their loyalty programs and CRM systems without their fear of all those successful online retailers? Would business-wide inventory and omnichannel retailing be anything but an interesting idea without that threat? Probably not, at least at most chains.

It turns out that vast shadow just came from Amazon—which really is the hypersuccessful e-tailer that chains fear. Knowing that doesn't actually make Amazon any easier to compete with. But it does give bricks-and-mortar chains 499 fewer things to worry about.

For more:

- See this Internet Retailer story

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