This article was written by Chris Walton for Forbes.com on May 18, 2021 and is now available on Omni Talk.
Annually, eMarketer produces its list of the top 10 U.S. retail e-commerce companies. Most years the data is what one would expect. Amazon AMZN dominates the top of the list, and the only question is who takes up the remaining nine spots.
But this past year was different.
2020 was not like anything the world has ever seen because online sales exploded during the pandemic. Consumer behaviors shifted, new norms were established, and retailers lit up new digital capabilities that have become go forward staples of their businesses, like curbside pickup and third-party delivery partnerships.
While Amazon still dominated this year’s eMarketer 2021 list at almost $370 billion in estimated sales, Amazon is not the headline by a long shot.
The real story is far more poignant. Study the list here or below, and five important implications start to take shape about the future of retail.
- Amazon $367.19 billion
- Walmart $64.62 billion
- eBay $38.67 billion
- Apple $33.62 billion
- Best Buy $20.34 billion
- Target $20.23 billion
- The Home Depot $20.02 billion
- Kroger $15.04 billion
- Costco Wholesale $14.58 billion
- Wayfair $13.88 billion
Here are those implications in order of importance:
Here are those implications in order of importance:
#1 — Macy’s Isn’t There
In 2018, 2019, and 2020 (all reports linked for reference), Macy’s cracked the top 10 in every one of eMarketer’s online assessments. MORE FOR YOUThe World Is Entering A Post-Pandemic Future: Here’s What The Latest Consumer Data Says About What’s Next For RetailDigital-First Consumerism Is Driving An Online Spending BoomThe Shift From Grocery E-Commerce To Digital Grocery
In 2021? Not so much. This year Macy’s is distinctly absent.
This fact is telling on a number of fronts.
First, Macy’s online share position has dwindled every year since 2018. As others have risen, namely Target and Wayfair (more on the latter in a bit), Macy’s has been unable to keep pace.
Second, this year’s data shows that Macy’s digital capabilities were likely also not robust enough to springboard them to new heights during 2020, even when store closures drove sales online.
While apparel in general was a rough category for many retailers, no one should forget that Macy’s also only had 20 stores offering curbside pickup as of late April 2020. Macy’s, like so many other mall operators, had to figure out how to expand its omnichannel capabilities on the fly, while standalone off-mall locations like Walmart, Target, and others on the list either already had great systems in place or faced much fewer complexities.
And all that still says nothing of yet another threat also on the horizon. Macy’s may not be on the list, but neither is someone else that probably should be — Facebook/Instagram.
Facebook/Instagram is not a retailer per se, but it is a marketplace-like facilitator of commerce at this point, and psychologically it is the front door or lifeblood of thousands upon thousands of brands, whose annual sales impact, if aggregated, probably dwarves Macy’s and possibly even many others on the list as well.
Because, said another way, Facebook/Instagram is already the Macy’s of tomorrow.
#2 — Wowzers Wayfair!
Wayfair cracked this year’s top 10 list at just shy of $14 billion.
Just for comparison’s sake — Target and Best Buy each came in at $20 billion, while Kroger came in at $15 billion.
Which means that Wayfair, the online pureplay, does almost the equivalent online volume of the third largest U.S. retailer, Kroger, almost as much as Target, which also sells apparel and grocery, and nearly as much as Best Buy, a category killer similar to Wayfair but that also has roughly 1,000 physical U.S. stores.
Physical stores help from both a branding and as a convenience and cost savings alternative to traditional online shopping by way of order pickup. To think that Wayfair is doing almost 70% of Target’s and Best Buy’s online volume without any physical stores of material consequence is just insane.
If Wayfair ever does get its act together and start to open physical stores within the U.S., then just assuming a base level of online-to-total sales penetration of 30% would imply that there could be as much as $30-plus billion in physical store volume that Wayfair could one day add to its annual financial performance.
That figure would vault Wayfair into the top 15 of all total U.S. retail, not just online. It is a staggering figure to digest, and one that is there for Wayfair’s taking should it continue to build its brand and have the guts to go out and get it.
#3 – Costco’s Double-Edged Curbside Opportunity
Another number that just jumps off the page is the amount of online volume that eMarketer projects for Costco.
Almost $15 billion for ninth place on the list.
Costco coming in ninth place on the list may not seem like a big deal, but it is. Costco does that much online volume as of today almost exclusively through online delivery and/or via its third-party relationships with Instacart alone.
As opposed to other retailers, Costco has been utterly recalcitrant on curbside pickup. Prior to testing curbside in a few locations in New Mexico earlier this year, Costco had dug its heels in against the concept harder than a four year old on his or her way to the dentist.
All that notwithstanding, however, demand for curbside or order pickup is therefore likely sitting untapped within Costco’s online numbers, a statistic that is likely a plus for Costco but also likely manna falling from heaven for its competitors, too.
Demand for warehousing real estate is growing with no end in sight. Walmart has gone on record with its plans to build dozens or more microfulfillment warehouses throughout the country, and Target, similarly, has debuted what it is calling a “sortation center” in downtown Minneapolis, whereby Shipt drivers can already come and pick up orders directly from the center versus having to go into actual physical Target stores.
And then there’s Amazon.
Amazon has been piloting its Treasure Truck for years, a concept whereby Amazon customers meet Amazon trucks at locations throughout cities on specific dates and times to get hot prices on products, and, of course, Amazon may also know a thing or two about warehouse operations as well.
One universal truth is that customers always want great deals at great prices, so it should not come as a surprise if all these models start to morph and that consumers start to go to retailers’ own warehouses, rather than their own stores for pickup.
After all, Costco is really just a big warehouse that asks its customers to serve as default warehouse pickers and packers and last-mile delivery drivers, and it therefore may not be long before the competition gets wise to this fact and starts giving people everything they expect from a Coscto experience except the requirement of actually having to step foot inside of a Costco store itself.
#4 — Don’t Sleep On eBay
While eMarketer projects eBay to do almost $40 billion in annual online U.S. sales in 2021, in many ways eBay is still like the red headed stepchild of online commerce. It’s cute, it’s quirky, but day-to-day eBay never once felt like part of the ongoing pandemic commerce conversation. It is only when people see it in lists like this that they stop and go, “Oh yeah, eBay is part of the family, too.”
But that could all be about to change because $40 billion is one hell of a base, and eBay has also been making some big headlines of late.
Last week eBay became the first major e-commerce player to sell NFTs (non-fungible tokens) online, and, ever since new CEO Jamie Iannone came over from Walmart, eBay has also been poaching big name talent left and right. For example, recently eBay brought over Stefanie Jay, formerly the VP & GM of Walmart’s in-store and digital advertising business, to become eBay’s new Chief Business and Strategy Officer.
If anyone has a right to win in NFTs, it is eBay, a company whose founding legacy was built atop online auctions. Moreover, there is no telling what else the new CEO Iannone has up his sleeve, but something intoxicating must definitely be in his sales pitch because people don’t just leave big name companies and big name jobs with big titles to go to what was heretofore kind of an also-ran in the e-commerce space.
There’s instead likely something saucy and afoot at eBay.
#5 — WTF, Walmart?
If eBay is hot, Walmart is not.
The most important and startling figure on the entire eMarketer list is that Walmart only comes in at $64 billion.
$64 billion feels comically low coming out of a pandemic which should have been a huge boon to Walmart’s online grocery business and to its overall e-commerce base. Walmart has over 4,600 stores, sells multiple product categories within these stores and online, underwent a profligate brand spending spree under Marc Lore’s tenure to fortify its online marketplace, and yet Walmart is only projected to do slightly more than 3x what Best Buy is slated to do?
That only makes sense if something is off.
And, that “off” could be exactly what Jason DelRey reported last week — i.e. that Walmart’s position within grocery is tenuous.
While Walmart failed to return a request for comment on DelRey’s claims and for this article about its relative paltry volume assessment from eMarketer in time for publication, a few things are still quite clear.
First, Walmart’s e-commerce marketplace strategy under Lore was never anything special. It was a me-too Amazon or eBay strategy at best, and the numbers seen in eMarketer’s projections prove that.
But, second and more importantly, Walmart is also now fighting a grocery war on multiple fronts.
On one front, there’s Amazon with Prime and its growing legion of Amazon Fresh stores. And on the other fronts, there’s the growing digital smarts of competitors like Albertsons and Target, along with the increasingly powerful third-party delivery marketplaces, like Instacart and Shipt, that are redefining what the phrase “one-stop shop” means in the minds of consumers digitally and especially when quick delivery is important.
Or, translation, Walmart’s grocery business is under siege from the growing threats of Amazon’s physical footprint, the ferocity of its legacy competition, and the potential lost store trips from Walmart customers who over time will elect to shop directly from an online marketplace, like Instacart, that carries all the same brands one would find in a stripmall but not at a Walmart.
Walmart+, Walmart’s new subscription program, was supposed to be Walmart’s ace in the hole to spur digital demand, but thus far it too has been nothing more than an Amazon Prime-like copycat that is about as inspirational as Disney+ if Disney+ only came with the Star Wars prequels.
All joking aside at this point, however, Walmart and Walmart+ also desperately need a Disney plus-sized Mandalorian-like shot in the arm that shows just how much Walmart plans to differentiate itself from all the threats just named. Without such a bold statement (like gifting a Sam’s Club membership with signup or doing its own version of Amazon Go, only better, as examples), it is very difficult to see how Walmart maintains its position going forward.
Amazon will build out more grocery stores. Target, Albertsons, et al. will continue to do what they do only better. And the third-party services will figure out how to serve up marketplaces for quick delivery commerce that aren’t solely dependent on shopping at one retailer.
The short-term siren song of earnings amid a confusing pandemic are one thing, but long-term viability comes from a sustainable edge, and that edge can’t just be that Walmart will be good in the future because it was good in the past. Walmart needs a new twist on who it is, for if this year’s Top 10 list elucidates anything, it’s that Walmart may indeed already be on notice.