10 of the Fastest Growing eCommerce Retailers to Watch
It’s no surprise that eCommerce sales are on fire. Retailers continued to show outsized eCommerce gains in the second quarter with Best Buy leading the way. Best Buy’s eCommerce sales increased by 242% in the second quarter versus last year as customers working and learning at home stocked up on the new essentials: laptops and tablets. Best Buy’s appliance sales were also strong, up 14.5% providing the strongest showing of all of Best Buy’s categories.
"Products that help people work, learn, connect and cook at home, like computing, appliances and tablets, were the largest drivers of our sales growth for the quarter," said Corie Barry, Best Buy’s CEO. "Trends across most categories and services improved materially throughout Q2 as we opened our stores more broadly for shopping, especially categories like large appliances and home theater that benefit from more experiential shopping," added Barry.
Target also had an exceptional quarter with eCommerce sales increasing by 195%. Target was ready for this moment having invested heavily in its omni-channel capabilities over many years. Overall Target’s comparable sales were up 24.3% setting a new record. Fueling this growth was strong demand for same day services like Drive Up, Order Pick Up and Shipt which were up by 273%. In store pick up of eCommerce orders also saw significant growth in the second quarter, increasing by more than 60%. Curbside pickup had the most impressive results, increasing by more than 700% last quarter.
Target and Walmart are like the new department stores selling everything from electronics to home décor to a department mainstay, clothing. Customers can perform one stop shopping at these retailers lessening their reliance on Amazon and spelling trouble for smaller retailers with a limited assortment and poor eCommerce capabilities. “For many, Target has been a destination of choice and, in some ways, has become what the traditional department stores once were: an engaging destination where people can browse, be inspired and buy across a whole range of different products,” says Neil Saunders, Managing Director for GlobalData Retail.
In the first half of this year Target acquired a staggering 10 million new digital customers. “Our second-quarter comparable sales growth of 24.3% is the strongest we have ever reported, which is a true testament to the resilience of our team and the durability of our business model. Our stores were the key to this unprecedented growth, with in-store comp sales growing 10.9% and stores enabling more than three-quarters of Target’s digital sales, which rose nearly 200%,” says Target’s CEO Brian Cornell.
Both Walmart and Target have been eating into Amazon’s territory. Amazon’s share of the eCommerce market in the United States decreased from 42.1% in January 2020 to 38.5% while Target’s share rose from 2.2% to 3.5% and Walmart’s increased from 4.2% to 5.0% during the same time period. Target’s CEO says that Target increased market share by more than $5 billion in the first half of 2020.
This underscores the important role stores play in eCommerce success. More than 90% of Target’s Q2 sales were fulfilled from its 1,880 stores. Amazon understands the importance of stores and it’s the reason why Amazon has close to 600 stores. Customers shopping at the new Amazon Fresh supermarket chain Amazon opened in California last week can return and pick up their Amazon purchases from the store. Since everyone isn’t home when a delivery arrives having stores provides an avenue for customers to pick up items.
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Gap’s eCommerce sales were also significantly up, by 95%, in the second quarter. “To have a quarter where 50% of our business came from online, at our scale, we are really excited to build from this” says Gap Chief Executive Sonia Syngal. But Gap is still struggling with in-store sales down by 48% last quarter. Athleta’s sales grew by 6% in the second quarter and is the only Gap banner that experienced a sales increase in the second quarter.
Online sales were up 74% at Athleta while in-store sales declined by 45%. This is in contrast to Banana Republic whose online sales increased by 26% and in-store sales decreased by 71%. Sales overall were down by 52% at Banana Republic. A positive development came from Gap’s sale of masks to individuals and in bulk to businesses. Gap made $130 million in mask sales in the second quarter. Selling face masks likely introduced Gap to new customers which the company will try to hold on to.
While the likes of Best Buy and Target are basking in the glow of record eCommerce sales those sales are not expected to be permanent. “This growth is definitely going to go down next year,” says Forrester analyst Sucharita Kodali. “Anybody who has any proclivity to buy online has bought online. Anything they would have needed, they purchased.