TWICE E-tail Top 25: Online CE Sales Growth Slows

Amazon’s grip may be relaxing as vendors’ online pricing policies level the playing field
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NEW YORK – Amazon.com may still be the king of the online jungle when it comes to CE sales, but the digital channel is proving to be less of a be-all and end-all than many physical retailers once feared.

According to TWICE’s second annual ranking of America’s top CE e-tailers, produced with TWICE market research partner The Stevenson Group, No.1 Amazon.com consolidated its marketplace grip with a 15.4 percent sales increase last year, giving it 44 percent of the online CE sell-through of the 25 etailers tracked.

But according to Stevenson research VP Bob Tancula, Amazon’s grip may be relaxing as vendors’ online pricing policies level the playing field, and the cyber-store pays more for its market share gains and incremental revenue.

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At the same time, more effective multichannel strategies that better integrate retailers’ physical stores, and a so-so year for CE, are also slowing online growth for big-box chains. Indeed, online sales actually declined for Walmart, Sears, Sam’s Club, Staples and GameStop, and edged up only marginally for Apple and Office Depot.

What’s more, remove Amazon from the Top 25 mix and the channel-sales ratio remained constant year over year, at 77 percent physical to 23 percent online.

The report, which was expanded this year from 20 to 25 companies, also revealed some major shifts among the Top Ten players. While No. 2 Apple maintained its 11 percent share of Top 25 revenue, Best Buy leapfrogged Walmart to become the No. 3 CE e-tailer, with 9 percent of Top 25 sales.

The gain, reflecting a nearly 4 percent increase in online revenue, raises Best Buy’s web mix to 12.3 percent of sales, as the company continues to upgrade its e-commerce site, infrastructure and operations under chairman, president and CEO Hubert Joly’s Renew Blue revitalization strategy.

Conversely, Wal-Mart Store’s multi-billion-dollar investments in digital and multichannel retail, where part of the focus has been on fresh food delivery, have yet to gain traction in the CE sector, with online sales slipping nearly 13 percent at Walmart.com and nearly 23 percent at Sam’s Club.

The biggest dip, 17.8 percent, was seen at Systemax, as the company essentially pulled the plug on its TigerDirect B-to-C operations to focus on the more lucrative business, education and government sectors. That the company’s 34 big-box superstores could only muster 30 percent of total retail sales underscores its consumer-channel woes.

The decline dropped Systemax from seventh place to 10th, moving Target up to No. 9 with a bullet as online sales soared 17 percent and recently installed chairman/CEO Brian Cornell, ex of Sam’s Club, injects $1 billion into the discounter’s technology and supply chain coffers.

The biggest gainer … would you believe RadioShack? Even in its pre-bankruptcy death throes, turnaround efforts, store closures and assortment edits by former CEO Joe Magnacca contributed to a 62 percent sales spike online, begging the question of what if the former Walgreens exec had more time.

Despite e-tail’s challenges in 2014, in the end online sales ultimately grew 5.6 percent for the TWICE Top 25, handily outpacing the industry’s flat CE sales overall.

Methodology

The TWICE Top 25 CE E-tailers Report ranks the leading domestic CE dealers by online sales of consumer electronics through the combined ecommerce and mobile-commerce channels.

Sales figures are based on information that was supplied by retailers responding to a 300-dealer survey by TWICE and research partner The Stevenson Company. Absent retailers’ input, estimates were developed from Stevenson’s syndicated TraQline quarterly market tracking surveys of 150,000 shoppers; industry sizing based on wholesale shipment figures from the Consumer Electronics Association (CEA) and other sources; and average retail price points by product.

All estimates were further refined through the use of public filings with the Securities and Exchange Commission (SEC), TWICE industry analyses, retail analysts’ financial reports, published data and other external sources.

Once the estimate was determined to be a reasonable assumption of the retailer’s CE sales, the figure was broken out by product category based on the TraQline surveys.

Sales figures by total and by category for 2014 were then compared to 2013 sales tallies, and adjusted if necessary to more closely track total reported revenue growth.

Businesses must meet the following criteria to be considered consumer electronics retailers and to qualify for inclusion in the Top 25 report:
• sells new products directly to consumers;
• has physical retail store locations, or has a significant online presence;
• sells consumer electronic products as one of its principal lines of business;
• does not offer consumer electronics products primarily to sell its transmission services, i.e. wireless carriers, cable operators, satellite radio/TV providers; and
• sells merchandise that is considered consumer electronics products as defined by the CEA.

Sales are considered to be the revenue received for the products sold primarily to consumers, including CE hardware and accessories and personal computers.

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