CommerceHub

More Products Lead to More Growth in Online Retailing

online retailing

Erik Morton, Vice President, Strategy & Corporate Development, CommerceHub

Client data suggests retailers see an average 12% increase in sales for every 10% increase in the number of unique products they sell.

It’s no secret that e-commerce is growing. Consumers are increasingly choosing to shop through mobile and desktop devices, which shifts retail spending from brick-and-mortar stores to online channels.

The U.S. Department of Commerce recently reported that e-commerce grew 15% to $391B in 2016. Despite this powerful secular trend, not all online retailers are benefiting to the same degree. According to data from Internet Retailer, Amazon took 46% of U.S. e-commerce growth in 2016 and held a commanding 31% share in the U.S. So the total market might have grown 15% in 2016, but after Amazon took its share, other online retailers grew their businesses by only 12% collectively.

Consumers are choosing Amazon because of the superior shopping and delivery experience, which is centered on Amazon’s large product assortment and its Prime program. Investment firm Robert W. Baird estimated in mid-2016 that, of the approximately 400 million products available for sale on Amazon, roughly 46 million are available with free two-day shipping to Amazon’s roughly 50 million Prime members.

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