The online retailers that shoppers like most


From October 2007

By Peter Johnston

Online purchasing and product research have become a major fact of life for the retail industry, and, as true multi-channel retailing matures, will be an increasingly significant factor for the foreseeable future.

Non-travel online retailing reached $170 billion in the United States last year, according to Shop.org. Sales for the second quarter of 2007 were up 23 percent year-over-year and are on track to reach $200 billion for the year. Non-travel online retail sales volume is expected to continue to grow at a 12 percent compound annual growth rate well into the next decade.

This special section, the Favorite 50 online retailers, has been created to give the industry a yardstick to measure what’s working in the e-commerce space. BIGresearch polled a large sample of online consumers to determine which websites were most frequently used for shopping – the basis for these rankings.

To no one’s surprise, Amazon – the world’s largest pure-play e-tailer – is in the top spot. During the course of its metamorphosis from discount online bookstore to a diverse Internet selling environment (and incubator not only for a startling number of micro-suppliers but of online marketing for Target), Amazon has focused relentlessly on two principles: customer service and innovation.

Amazon has recently begun selling gourmet foods and fresh produce as an extension of its non-perishable grocery business, for example, and continues to set the pace for online customer-relations marketing. The company recently announced second-quarter revenue of $2.89 billion, up 35 percent from the same period a year ago, and net income grew 350 percent to $79 million. Both figures were well ahead of what Wall Street was expecting, entitling founder and CEO Jeff Bezos to say, in effect, “I told you so.”

In second place is eBay, the website retailers (and others) love to hate. If Amazon is a brilliantly planned community, eBay is in some ways the Wild West, a place where pretty much anything goes, including the resale of a certain amount of product procured via organized retail crime. eBay management, which includes a lot of old retail hands, is aware of this and says it is trying to get it under control. However, the company’s philosophy basically remains, “this is an open space, and people are going to do what they do.” What once seemed like a short-term gimmick is now a large (2006 sales of just under $6 billion) and profitable (net income a hair under 18 percent of sales) business.

The site continues to attract both business and attention; the SUV driven by James Gandolfini’s title character in the recently-concluded HBO series “The Sopranos” was recently up for auction. “The interior,” according to the listing, “still smells slightly of cigar smoke.”

Third on the list is Wal-Mart, whose presence indicates that even the biggest bricks-and-mortar retailer can play in this space – and do well. Wal-Mart is no slouch at innovation itself: Having rattled the cage of Whole Foods (and others) with a well-publicized foray into organic foods and cosmetics, the company has also  set up a program to purchase and distribute fresh produce from local farmers. Like practically everything else Wal-Mart does, the e-commerce program is expanding rapidly.

Five of the remaining top 10 are the online operations of major chains: Best Buy, JCPenney, Target, Kohl’s and Sears. Their presence on the list is a testimonial to the way large traditional retailers are flexing their multi-channel muscles. They understand the importance of integrating online sales and service with the rest of the organization, and are finding effective ways to do it.

One of the exceptions is No. 8 Overstock.com, a blend of some of the attributes of Amazon and eBay. Like Amazon, Overstock.com is a pure e-tailer with a wide variety of merchandise; like eBay, it runs a busy auction site. The company’s primary specialty is, as the name implies, serving as a channel for discontinued and over-manufactured merchandise, which it offers at substantial discounts.

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