Here are six key takeaways from our new top 10 ecommerce companies forecast:
Note that our list of the top 10 US retail ecommerce companies is updated biannually and was most recently updated in February 2020, September 2020, and February 2021.
Amazon will remain the No. 1 US ecommerce retailer by a significant margin in 2021:
Amazon’s forward-thinking investments in delivery speed, fulfillment services, and digital grocery set the company up for success during the pandemic. It is in the best position of any company to reap the benefits of the long-term ecommerce trends accelerated by the pandemic. For example, Amazon is poised to capture a large chunk of the growing digital grocery market with its offerings through Amazon Fresh and Whole Foods. In addition, small and medium-sized businesses (SMBs) are leaning more heavily on ecommerce sales, which means Amazon’s bustling marketplace of third-party vendors will fuel further sales growth. We expect Amazon’s US marketplace sales will grow by 16.5% to $220.39 billion in 2021, which amounts to 60.0% of Amazon’s total US ecommerce sales.
The big-box retailer will emerge as the clear No. 2 ecommerce seller this year:
Walmart has been leveraging its massive brick-and-mortar footprint to drive ecommerce sales via click and collect, and in 2020, the company launched new initiatives that will help it compete more directly with Amazon. There’s Walmart Express Delivery, a 2-hour delivery service for groceries and other items, and Walmart+, a Prime-like subscription service that offers members unlimited free delivery and other perks. In its Q4 2020 earnings report, Walmart said its ecommerce business had its highest quarterly growth rate of the year, mentioning grocery and delivery services in the US specifically. According to the company's president and CEO Doug McMillon, Walmart will use this momentum to accelerate its investments in digital. “As our fulfillment capacity grows, we'll use it to improve the customer experience, expand our first-party assortment, grow our marketplace, and build our fulfillment services business," McMillon said.
The retailer's ecommerce sales will grow faster than any other ecommerce company this year:
The company has essentially taken a page from Walmart’s playbook, using its physical locations to drive click-and-collect offerings. Target is also investing in the digital grocery sector with Shipt, which delivers products from Target and other retail partners. At a virtual investor day in March 2021, Target announced that it will invest billions of dollars over several years to more efficiently fulfill online orders, and it also plans to open five new warehouses in major urban hubs in 2021.
Target, as a big-box retailer, will have an advantage as more consumers shop for essential items online. Target sells products that fall within the three fastest-growing verticals in ecommerce this year: apparel, food and beverage, and health and personal care products. This gives it a competitive edge over the likes of Best Buy and The Home Depot, which mostly sell products within a single vertical. On the flip side, it also means that Target has to compete with Amazon and Walmart for sales of digital grocery and other everyday products. In addition, not only is Target's digital footprint much smaller than those of both Amazon and Walmart, but it also has a much smaller brick-and-mortar footprint than Walmart does. (Walmart has about 4,743 stores in the US, versus Target’s 1,904.) This will make it harder for Target to carve out a larger share of click-and-collect sales.
Best Buy and The Home Depot
Both retailers generated greater sales numbers in 2020 than expected prior to the pandemic, but Best Buy was the clear winner.
Best Buy and The Home Depot will see sales cool off in 2021, as demand for consumer electronics and home improvement won’t be as great when the pandemic subsides. However, Best Buy’s pandemic momentum will help it maintain its place in the top five, growing by 13.0% to reach $20.34 billion in US ecommerce sales. We expect The Home Depot will grow by 13.2% to $20.02 billion, but it won’t reach the same levels as Target, resulting in its No. 7 placement.
Kroger and Costco
Digital grocery will fuel growth for Kroger and Costco. These two businesses make up a small percentage of total ecommerce sales, but the influx in digital grocery shopping will make Costco and Kroger the No. 3 and No. 4 fastest-growing ecommerce companies in 2021, respectively.
Leveraging brick-and-mortar and partnering with tech companies are key digital strategies for both companies.
The clothing retailer fell out of the top 10 in our September 2020 update, as it became clear that demand for clothing and accessories would not be as high in 2020 compared with the increased demand for products like groceries, personal care, and consumer electronics.
Demand for apparel and accessories will return in 2021 as consumers emerge from the pandemic. However, Macy’s won’t receive enough wallet share of the clothing rebound to place it back in the top 10. We expect Macy’s US ecommerce sales will grow by 9.0%, reaching $8.87 billion. For context, we expect Amazon’s apparel and accessories business alone will grow by 21.4%, reaching $58.75 billion in US ecommerce sales.