Though online shopping is quite ubiquitous today, there was a time when it was a complete novelty. The first online sale took place in 1994, when a man sold a Sting CD to a friend through his website, NetMarket, the first online retail platform.
Since then, ecommerce as a business model and ecommerce companies have exploded in scope, totally redefining the global retail landscape in the process. Global ecommerce sales are expected to reach $5 trillion in 2022 and $6 trillion by 2024. In the United States, ecommerce accounts for more than 13% of total sales.
What is ecommerce?
Ecommerce, short for “electronic commerce,” is a business model in which products and services are bought and sold over the internet.
It also concerns the transfer of money and data that make these transactions possible. Although many consumers associate ecommerce only with products, the term encompasses any and all commercial transactions made possible by the internet—whether it’s buying a sweater from a manufacturer in New Zealand, or hiring a handyman’s services through Craigslist.
top ecommerce companies
The growth of ecommerce has been driven both by digitally native global online marketplaces, like Amazon and Alibaba, as well as traditional brick-and-mortar retailers that have expanded their own ecommerce presence, like Target and BestBuy. While each of these retailers are operationally similar in terms of ecommerce basics, they have also carved out their own unique niches in the ecommerce landscape by focusing their product ranges or developing unique fulfillment strategies.
Amazon is a US multinational technology company that focuses on ecommerce, in addition to cloud computing, digital streaming services, and AI. It is considered one of the “Big Five” American technology companies alongside Alphabet, Apple, Meta, and Microsoft, and is itself one of the largest ecommerce companies worldwide. The company was founded in Bellevue, Washington, in 1994 by Jeff Bezos, originally as an online marketplace for books. It has since expanded to selling a huge array of products, earning it the moniker of “The Everything Store.”
Beyond selling products directly, Amazon also acts as a platform for third-party vendors to sell their products, and 60% of sales on Amazon are made by third parties. From a consumer’s perspective, there is no difference between a product sold by Amazon and one sold by a third party. From a vendor’s perspective, the sales can either be Fulfilled by Amazon (FBA), where the products are warehoused and shipped by Amazon, or they can be Fulfilled by Merchant (FBM), where the third-party vendor stores and ships the products—however, they must adhere to Amazon’s shipping and packaging standards.
One of the clear leaders of the ecommerce space globally, Amazon closed the year 2021 with $470 billion in revenue and has over 200 million average monthly visitors to its site.
eBay is a US multinational ecommerce corporation based out of San Jose, California. Founded by Pierre Omidyar in 1995 as an online auction site, eBay is one of the few standout survivors of the late early 2000s dot-com bubble—a stock market crash caused by excessive over-speculation of online companies in the late 1990s. Today, eBay is a multibillion-dollar ecommerce business that facilitates both consumer-to-consumer sales on a best-offer basis as well as traditional priced-as-is sales. The site is free to use for buyers, but sellers are charged a fee for listing items. eBay’s annual net revenue was about $10 billion as reported in March 2022, a significant jump from the $8.9 billion reported for the year prior. The site averages about 109 million visitors a month.
Shopify is a Canadian multinational ecommerce company based in Ottawa, Ontario. It offers a proprietary digital commerce platform allowing small businesses to engage in ecommerce and sell their products through online stores and point-of-sale systems. It was founded in 2006 by Tobias Lütke and Scott Lake who, in an effort to open their own online store for a winter sports equipment company called Snowdevil, grew dissatisfied with the ecommerce products currently available on the market. Lütke, trained in computer programming, built Snowdevil its own online store using an open-source web application framework. Shopify later released a mobile app, extending this framework to other retailers, in 2010. The company has since established itself as one of Canada’s fastest-growing ecommerce ventures, and a global leader in the ecommerce logistics space. It offers small business owners superior ecommerce digital storefront infrastructure, an expertly engineered and organized back end, and seamless integration with their own logistical operations. Revenue for the year 2021 was $4.611 billion in US dollars, and average monthly unique visitors for ecommerce sites powered by Shopify have reached 1.16 billion.
Etsy is a US ecommerce platform focused on the sale of handmade and vintage products, including jewelry, clothing, home decor, furniture, craft supplies, and tools. The site follows the tradition of physical craft fairs, giving small business owners personal, digital storefronts where they can list their goods for fees of $0.20 per item. Etsy reported revenue of $12.2 billion in 2021, and received more than 464 million site visits in February 2022.
Craigslist is a US classified ad website, similar to classifieds found in the back of newspapers, with sections for jobs, housing, items for sale, gig services, discussion forums, and more. Craig Newmark, the list’s namesake, started the company in 1995 as an email Listserv to friends focusing on events in the San Francisco Bay Area. That Listserv morphed into a website in 1996 and has since expanded into other advertising and sales categories. It now covers metropolitan areas in 70 countries. Craigslist draws about 300 million visits a month as of 2021 and generated an estimated $660 million in revenue that same year.
Meta Platforms, formerly known as Facebook, is a US multinational technology company based in Menlo Park, California. The company is perhaps most famous as the parent company of social media platforms Facebook, Instagram, and WhatsApp. It also operates Facebook Marketplace, which functions similarly to Craigslist in terms of offering consumer-to-consumer sales and gig services, and ecommerce functionality for Instagram, which allows users to click through on Instagram posts to purchase featured products. Meta generated an estimated $117.93 billion in revenue for 2021, with an estimated 1.79 million active users on Facebook Marketplace and roughly one billion active users on Instagram.
Walmart is a US multinational retail company that operates a chain of “supercenters,” or big-box stores, as well as a major ecommerce website of the same name. The company has been a household name in the US since the 1960s as the preeminent low-price mega-retailer, and now, one of the world’s largest retail corporations. It has stores in all 50 US states and a significant presence (both physical and digital) in Canada and Mexico as well. It has leveraged this brick-and-mortar footprint toward a successful ecommerce model by utilizing existing stores as warehouses for online orders—customers can buy items off the store shelf through Walmart.com, as opposed to off the shelf of a single warehouse located hundreds or thousands of miles away. Walmart’s revenue in 2021 was about $582.8 billion, and Walmart.com sees about 100 million unique visitors a month.
Target is a US big-box department store, the second-largest such retailer in the country after Walmart. It operates more than 1,800 stores throughout the country and has an extensive ecommerce footprint alongside its brick-and-mortar operations. Like Walmart, Target sells a wide range of consumer goods, from fashion items and home decor to electronics and groceries. And like Walmart, Target uses its brick-and-mortar stores as alternative warehousing for online orders shipped around the country. Target delivered about $106 billion in revenue in 2021 and enjoys more than 192 million visits a month.
BestBuy is a US multinational consumer electronics retailer based in Minnesota. Founded by Richard M. Schulze and James Wheeler in 1966 as a stereo store called Sound of Music, it rebranded under its current name to sell a wider range of electronics in 1983. In addition to its brick-and-mortar retail stores, BestBuy operates a robust ecommerce service through its website, BestBuy.com. BestBuy’s domestic U.S. revenue in 2021 was about $43.3 billion, which accounted for about 90% of revenue overall. The site enjoys an average monthly visitorship of about 48.4 million.
Alibaba Group Holding Limited is a Chinese multinational technology company offering services in ecommerce, internet service, and technological development. Founded in 1999 in Hangzhou, the company provides consumer-to-consumer, business-to-consumer, and business-to-business sales services and product search engines. It is often considered China’s answer to Amazon, a one-stop ecommerce retailer offering an expansive range of products. It goes beyond that comparison, however, in offering a substantial range of wholesale products for individuals and businesses to purchase and resell. Alibaba’s revenue for 2021 was about $109 billion, a 52% increase from 2020. Its US-facing site, AliExpress, enjoys an average of 421.1 million visits.
While the ecommerce landscape has undeniably been shaped by the growth of massive ecommerce companies like Amazon and Alibaba, there is still ample space for small businesses to leverage the model and make names for themselves. If you are considering adding ecommerce functionality to your small business, or starting a digitally native ecommerce venture from scratch, here are some questions you may want to consider:
Do you have a website or the means to design one (either
or with a web developer)?
If you already have a website, can it be used as is to launch an ecommerce arm, or will you need a redesign?
What ecommerce platforms are best suited for your business format—are you business-to-consumer, business-to-business, etc.?
What traffic goals would your ecommerce arm need to meet in order to make the investment worth it?