Five top performers in online retail

April 15, 2016 03:48 PM

The success of an online retail business can be measured in a number of ways. They include sales volume, how fast the business is growing in comparison to other merchants in its category and the market as a whole, how often its customers convert on its website and its effectiveness at such key e-commerce strategies as mobile commerce and social media marketing.

Those are just a few of the areas where web-only apparel retailer Nasty Gal Inc. shines. The merchant, which Sophia Amoruso launched in 2006 as an eBay-only store for reselling punk-style women’s apparel, scored the No. 1 spot in Internet Retailer’s just-released proprietary scoring system designed to measure online merchants’ success in comparison to their peers and the e-retail market.

Below is a list of the Top 5 performers in the newly released Internet Retailer 2016 Top 500 Guide, and a brief summary of how each merchant earned that rank:

No. 1: Nasty Gal (Score: 79 out of 100)

  • Nasty Gal receives 19.9% of its traffic from social networks, according to web traffic measurement firm Millward Brown Digital, which is more than nine times higher than the average 2% received by other Top 500 merchants. Nasty Gal has long outperformed its peers in building a loyal social following and creating sharable content—it has 1,264,185 fans on Facebook, for example, more than fashion retailers The Limited and Dolls Kill combined, and Nasty Gal has 2,032,071 followers on Instagram, three times the average for Top 500 merchants.
  • Nasty Gal also scored high marks for its 92.4% five-year compound annual growth rate compared with the 22.4% average for the Top 500. The retailer also outpaced many others in 2015 web sales growth, growing 20.0% online in 2015 to an Internet Retailer-estimated $384.0 million from $320.0 million. In comparison, the Top 500 merchants collectively grew web sales 13.5% in 2015.

No 2: Urban Outfitters (Score: 76 out of 100)

  • Urban Outfitters Inc. grew online sales by 32.0% in 2015—to $1.259 billion from $953.8 million—more than twice as fast as the 14.5% growth in the U.S. e-commerce market as a whole.
  • The apparel and accessories retailer also gets a higher-than-average score for being ranked No. 10 of 140 in its category in terms of online sales.
  • Urban Outfitters outgrew many of its direct apparel competitors, as its 32.0% growth is more than double the collective growth of 13.9% in the apparel category.

No. 3: Apple (Score 74 out of 100)

  • Apple Inc. earned high marks for strong website performance. Its home page loads in 0.758 seconds, according to web traffic measurement firm Dynatrace—a pace that’s nearly six times faster than the 4.47-second average among Top 500 merchants. 
  • It also gets a top score for being ranked first in online sales in the books/music/video category out of 24 merchants, and for growing its online sales at an above-market rate of 18.2% to an Internet Retailer-estimated $24.36 billion from $20.62 billion.

No. 4: Google Play (Score of 74 out of 100)

  • In the past five years, digital content retailer Google Play (No. 15) grew online sales at a compound annual growth rate of 84.8%, four times higher than that Top 500 average and more than six times higher than the median five-year growth rate for the Top 500.
  • Google Play grew web sales 34.6% in 2015 to $3.50 billion from $2.60 billion, well above the growth of the Top 500 and the U.S. e-commerce market. Google Play also got high marks for that growth, which was roughly double the 17.7% growth of all Top 500 merchants in the books and music category.
  • Google Play also scored points for ranking second in its category.

No. 5: The Home Depot (Score 73 out of 100)

  • The Home Depot Inc. (No. 7) gets high marks for its 38.5% five-year compound annual growth rate, compared with the 22.4% average and 12.9% median of the Top 500 merchants. Home Depot also ranks No. 1 in the hardware and home improvement category.
  • The merchant also scores high marks for its size. With roughly $4.67 billion in 2015 web sales, Home Depot brought in more than two and a half times the web sales of its closest competitor Lowe’s, which drove $1.77 billion in online sales last year. Home Depot accounts for 31.2% of all Top 500 sales in the hardware and home improvement category.

Internet Retailer factored the following 10 metrics into each score:

  • 2015 web sales.
  • 2015 web sales growth.
  • Five-year compound annual growth rate for web sales.
  • Merchant rank in its merchandise category.
  • A comparison of each merchant’s 2015 growth rate to the collective growth rate of all Top 500 merchants in the same category. (For example, how the growth of one book retailer compares to all other book retailers).
  • Conversion rate index (or a measure of how often retailers’ customers convert in comparison to its most direct competitors).
  • Average ticket index (or a measure of average order value in comparison to its most direct competitors).
  • A check of whether a retailer has a mobile-optimized site.
  • The time it takes the retailer’s website to load.
  • The percentage of traffic each merchant receives from social networks.

Not factored into Internet Retailer’s Performance Score system are profits or costs of goods sold. The bulk of the merchants ranked in Internet Retailer’s global e-commerce publications are private, and it’s difficult to determine their profitability.

Had Internet Retail considered profitability, it’s likely Nasty Gal, for example, would not score as high, as the merchant—after years of record growth and three multimillion-dollar funding rounds—announced in February plans to cut 10% of its staff in a “strategic restructuring.”

More information on how North American’s largest online retailers scored on performance is available in the newly released Internet Retailer 2016 Top 500 Guide.

Purchasing Options: 

2016 Top 500 Print - $149
2016 Top 500 Digital Edition - $149
2016 Top 500 Bundle (Print & Digital) - $249
2016 Top 500 Online Database - $359




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