Leaders of the pack
July 1, 2016 11:27 AM
No matter how you cut it, Wayfair Inc. had a big year last year. It grew its number of active customers to 5.4 million from 3.2 million a year earlier, its estimated conversion rate jumped to 1.7% from 1.15%, its average ticket soared 48% to $222 from $150, its sales grew 85% year over year to $2.040 billion from $1.101 billion and, earlier this year, Internet Retailer named Wayfair the Best Digital Marketer in E-commerce, based on an analysis of marketing data across email, search and social media.
Those robust results helped Wayfair net three nominations in the second annual Internet Retailer Excellence Awards last month: for the E-Retail Growth Award, E-Retail Marketer of the Year and Internet Retailer of the Year. The online-only retailer’s results helped it edge out Amazon.com Inc., Etsy Inc., Nike Inc. and Nordstrom Inc. to win Internet Retailer of the Year, which is awarded to a Top 1000 retailer that demonstrates “extraordinary performance in all aspects of e-commerce activity and on all major e-commerce metrics.”
While the retailer also jumped nine spots to No. 24 in the Internet Retailer 2016 Top 500 Guide, it isn’t satisfied. “Our job is never really done,” said Jane Carpenter, the retailer’s director of public relations, in accepting the award June 8 at a banquet at Chicago’s Hyatt Regency McCormick Place, where the 2016 Internet Retailer Conference & Exhibition took place. “We’re really focused on creating the world’s best e-commerce experience for the home.”
Within the housewares and home furnishings category, Wayfair trails only Williams-Sonoma Inc. in terms of e-commerce market share among Top 500 retailers. And given its rapid growth pace—its five-year compound annual growth rate is 42.13% compared to Williams-Sonoma’s 15.66%—it could surpass Williams-Sonoma as soon as this year.
Wayfair’s success has stemmed from eyeing an opportunity—Amazon doesn’t dominate housewares and home furnishings in the same way it dominates other categories—and running with it. “Amazon excels when you know what you want and can type it into a search box,” says Wayfair CEO Niraj Shah. “We’re in a category where consumers don’t want the same things in their home as everyone else, and they don’t necessarily know what to put into a search box. It’s about style, it’s visual. They know it when they see it.” (For more on Wayfair CEO Niraj Shah, see this issue’s cover story here.)
The creativity Wayfair has demonstrated in displaying home goods in inspiring arrays and its diligence in delivering often large items effectively are representative of the achievements of the companies nominated for this year’s awards. Each of the 47 nominated companies across 13 categories, including three categories focused on manufacturers, wholesalers and distributors that sell to other businesses online, has found innovative, effective ways to compete in a competitive e-commerce market that’s increasingly dominated by Amazon. (Amazon itself was nominated for two awards, Internet Retailer of the Year and Global E-retailer of the Year). Roughly 33.0% of U.S. e-commerce sales occurred on Amazon last year, and that’s a 9.7 percentage point rise in Amazon’s market share from just three years earlier. While Amazon’s shadow looms over the market, Internet Retailer Excellence Award winners like Wayfair, Dollar Shave Club and Boxed Wholesale LLC have found unique ways to leverage the power of the internet to beat larger competitors.
“While we compete with Costco, our customers have better things to do than to go to Costco, like watching Game of Thrones,” said Julia Blanter, Boxed’s head of content, as she accepted the Emerging Retailer of the Year award. The retailer’s secret, she said, is its customer focus. “The customer experience is so important to us.”
Of course, a so-called customer-first mindset only goes so far. If consumers don’t know about a retailer, or don’t think to buy from a retailer as they embark on a shopping search, then that retailer isn’t likely to succeed. That’s why three Internet Retailer Excellence Awards focus on marketing: E-Retail Marketer of the Year, Best Marketing Video of the Year and B2B E-Commerce Marketer of the Year. Three awards also focus on the burgeoning business-to-business e-commerce market that is already estimated to be more than twice the size of the U.S. retail e-commerce market and is set to reach $1.13 trillion by 2020, according to Forrester Research Inc. Several other awards, such as the E-Retail Growth Award and Mobile Commerce Award, draw on Internet Retailer’s exclusive research data that provides a comprehensive, quantitative perspective on how merchants are performing online.
The awards showcase the most effective strategies for selling online as each of the nominees offers an interesting story that can inspire others within e-commerce, Kurt T. Peters, Internet Retailer’s executive editor, said during the ceremony.
To choose the recipients, Internet Retailer editors and panels of outside judges reviewed hundreds of entries representing some of the biggest and most-established brands within the industry, while also including numerous newcomers. Those entries came from the retailers themselves, technology and service vendors, as well as Internet Retailer’s editors who combed through the hundreds of companies they engage with every year. While the awards ceremony featured numerous sponsors, none of the sponsors played any role in the selection of the nominees or winners.
The awards span nearly every aspect of e-commerce—from marketing to design to B2B as they seek to encompass the various elements that contribute to a success online.
Not surprisingly, many of those pieces go hand in hand, which may help explain why three of this year’s winners—Dollar Shave Club, Uniqlo Ltd. and W.W. Grainger Inc.—won awards for the second year in a row, though each in a different category than the one they won in 2015.
Dollar Shave Club, for instance, won the E-Retail Growth Award in 2015 for its 242% year-over-year growth in 2014. That growth was driven in large part thanks to the retailer’s entertaining, educational marketing efforts, which helped it win this year’s Marketer of the Year award.
This year’s win recognized Dollar Shave Club’s multichannel “#RazorBurns” ad campaign that featured decrepit razors that harass their owners and remind them that they’re stuck shaving together because it is too expensive to change blades. As part of the multifaceted campaign, which included TV commercials and social media ads, the retailer encouraged consumers to write and share #RazorBurns memes, with the retailer sharing the funniest ones on social media and elsewhere.
The campaign helped the retailer boost its social media mentions 24% and its organic search traffic 10%. Perhaps not surprisingly, the campaign helped the retailer maintain its strong growth: Dollar Shave Club’s 2015 online sales soared 70% last year to an Internet Retailer-estimated $110.5 million from $65.0 million a year earlier.
Similarly, Uniqlo in 2015 received the Newcomer of the Year award, which was awarded to a retail website that grew its sales most dramatically to emerge from relative obscurity to a ranking in the Internet Retailer Top 1000. The Japan-based retailer, which began selling in North America in 2012, quadrupled its North American e-commerce sales in 2013 and then doubled them in 2014.
This year the merchant won Global E-Retailer of the Year thanks to its investments and strong growth in online markets around the world. Uniqlo is a multichannel retailer with more than 1,700 stores in 17 international markets and dedicated e-commerce sites in Japan, China, Europe and the United States. It also sells in China on Alibaba Group Holding Ltd.’s Tmall marketplace.
And while e-commerce represents only a small share, between 5-10%, of the retailer’s overall sales, Uniqlo last year took significant steps to strengthen the links between its online and offline operations by working with consulting firm Accenture to build a global e-commerce platform that connects its stores and websites.
Building bridges between stores and online is a challenge for every multichannel retailer, which is why Internet Retailer this year added the Omnichannel Retailer of the Year award to recognize the merchant that does the best job using its online and mobile assets to complement other sales channels.
Target Corp. won the award thanks to the slew of successful omnichannel initiatives it has rolled out in recent years, such as offering shoppers the option to pick up an item bought online in a store (consumers collect 15% of Target.com orders this way) and its ability to fulfill orders from its stores (460 stores have fulfillment capabilities that handled 30% of the retailer’s e-commerce sales in 2015, the retailer says).
Still, like Wayfair, Target isn’t satisfied with its progress. “We have a long way to go,” said Thom Lewis, the retailer’s vice president of site merchandising, as he accepted the award. Transforming the way Target operates is “exciting” and “challenging,” he said, as well as essential as the ways that consumers are shopping keep changing.
Just as Dollar Shave Club disrupted the razor industry and Wayfair found a niche selling home furnishings online, e-commerce offers a seemingly endless array of retailers eyeing, and seizing on, opportunities. While the industry is moving at a rapid clip, for one night it took a step back to recognize what works.