Here at ReferralCandy we got to wondering how many e-commerce retailers there are in the USA and how much they make. Asking Google brought us some possible answers, but nothing about how they were derived, or why they might be the right ones. So we decided to look for numbers we could crunch ourselves to get a good guesstimate.
So where do we begin? We found this June 2012 article about the Internet Retailer Top 500 Guide which had this nugget:
Overall, the Top 500 retailers have a 77% share of the $198 billion U.S. e-retailing market.
The Top 500 Guide also lists each retailer’s annual sales revenue. We plotted a graph of those 500 retailers and their revenues to see if there was anything useful we could find.
This is what we got:
That graph sure looked like it followed a power law. Could we figure out what the precise function was? After removing the top 10 retailers (since they were “noisy”) and asking Excel for a little help, we found a function with a pretty good fit:
That’s better. Now we’re getting close! Assuming that the power law held for retailers past the top 500, we now had a way of reasonably ascertaining the rank of any online store. Say we wanted the rank of someone running a side business making $12,000 a year. With a bit of math, we would be able to get the magic number of… 90,501. Plugging in a few more numbers would give us the following table:
| Yearly sales of at least | Number of retailers |
| $12,000 | 90,501 |
| $25,000 | 54,686 |
| $50,000 | 33,983 |
| $100,000 | 21,118 |
Our power law formula also gives us a way of estimating the combined revenue of all the retailers making less than $1,000 a month (spoiler: around US$1 billion!).
So if we only considered online stores making more than $12,000 in sales a year, that comes up to about 90,500 retailers with a combined revenue of $197 billion in the U.S. That’s more than the population of the Seychelles!
So there we have it. Stay tuned for more number-crunching adventures! And feel free to ask any questions.
Image Credit: bfishadow
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Hey, great article! I’ve been trying to find stats like these for my economics paper. Can you use your findings to answer:
1) Total number of e-commerce stores in the US?
2) Number of stores <2m
3) Number of stores between 2-10million
4) Number of stores between 10-50 million
5) Number of stores greater than 50 million
Thanks!
Just checking your figures against http://tomrobertshaw.net/2012/02/feb-2012-ecommerce-survey/ and they seem on the low side – unless the long tail (below $12k) is really long!
That article states that the Magento platform makes up 20% of the 33,632 e-commerce sites in the top 1 million websites. The total number of Magento sites in this top 1 million is only 6,795. If we assume that Magento makes up 20% of all e-commerce stores and we know there’s 150,000 Magento stores that puts the global e-commerce stores at around 750,000. The US has about 33% of the global e-commerce market, which would be about 250,000 stores. You have far fewer stores with your calculations…like I said maybe the long tail is really long or maybe my calculations are flawed.
Love to know what you think,
Steve
Hey Steve,
The formula from the article should be able to help you with those questions. I would also look at the Top 500 Guide (http://www.internetretailer.com/top500/list/).
Yeah it feels like the long tail is, in fact, really long. Anecdotally, the Etsy platform had 800,000 active sellers with total sales of $895.1 million at the end of 2012 (http://www.etsy.com/press). If you assume sales in those online stores follow a power-law distribution, then most of them are going to have sales below $12k.
Hope that helps!
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Do you have stats for total number of retailers. I am looking for physical retailers.