How Many Online Stores are there in the U.S. (2013 edition)?

Published September 18, 2013 by Dinesh Raju+ in Ecommerce
how-many-online-stores-in-the-us

Our last post on the number of online stores in the U.S. turned out to be quite a hit. So we decided to update it this year with Internet Retailer’s new Top 500 Guide for 2013 to see if there was anything new we could discover. Would we find the same power law? Would there be more stores this year? We were curious to find out.

We dug into the problem the same way as we did last year (see how we did it here). A quick trip to the U.S. Census Bureau also let us know that the total Ecommerce sales for 2012 grew to $225 billion (a 13.6% increase from $198 billion in 2011).

Crunching the numbers, we plotted a new graph of the top retailers and their revenue for 2012. Some interpolation of the data points to figure out the new curve (hat tip: Excel) gave us the following:

 2012 Power Law Curve

Interesting… we got a different power law function (in red) this year but it still fit the data points really well with an R-squared value of 0.99. With the new formula, we also had a way of figuring out how many stores had a least some given amount of sales revenue for 2012. We put these new numbers alongside the ones for last year to get:

Yearly Sales of at least Number of retailers in 2011 Number of retailers in 2012 Year-on-Year Growth
$12,000 90,501 102,728 13.5%
$25,000 54,686 61,728 12.8%
$50,000 33,983 38,157 12.3%
$100,000 21,118 23,587 11.7%

(As a sanity check, we also added the year-on-year growth rates and they were roughly in line with the overall Ecommerce sales growth rate of 13.6% for 2012. Nice!)

While admiring our handiwork, one kink in the graph stood out. Most of the derived power law curve fit the actual Top 500 list quite nicely. But as it started approaching the 500th store, it looked like the actual revenue numbers were starting to dip away. We saw this trend last year as well. Was this cause for concern?

Well probably not and here’s why. It would be pretty easy to pick out the top 10 or 50 retail stores in the U.S. since everyone would have heard of them. Once you got out to the 500th store though, it would start getting tricky. According to the Internet Retailer Top 500 Guide, the 500th store makes $18,690,000 in yearly revenue. But since not all stores need to disclose their revenue, there might be a store somewhere that made more than $18,690,000 in 2012 which the Top 500 Guide missed out. And if it was included in the list, the curve of actual store revenues would dip down at a slower rate and would be a closer match to the power law curve.

So it looks like there are more online stores now and Ecommerce is growing. Now if only we could find ourselves a magic fridge. See you in the next post!

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Dinesh Raju

Dinesh is CEO and co-founder of ReferralCandy. During his time in Carnegie Mellon, he sweet-talked robots into playing soccer. He can occasionally be found taming the office Wifi network and exploring new frontiers on Spotify.