Retailers with strong e-commerce offerings are defying sluggish sector average growth rates by double-digit margins amid the evolving structure of global retail. Chinese and US e-commerce giants, Alibaba, JD.com and Amazon, averaged 30% growth in 2016, while the rest of the global retail market managed just 4.3%, according to the retail growth index, Defying Gravity, from OC&C Strategy Consultants and Financo.
The survey assessed a group of 4,000 retailers, with those earning over £250m (about HKD$2555m) and growing by at least £100m (about HKD$1022m) brought forward to the index. This group was ranked according to most recent revenue growth to create a list of the top 200 global retailers.
Two of the world’s leading e-commerce platforms are from China - Alibaba and JD.com – which saw an average growth of 37% in 2016 while the global retail average was 4.3%
JD.com came in second in the 2016 global retail growth charts, adding £8.0bn (about HKD$81.76bn) in revenue, after Amazon which added £23.5bn (about HKD$240.17bn).
Retail Growth % CAGR 2011-2016
Amazon leads the pack among the larger businesses, after growing by 27% (adding £23.5bn in revenue) in 2016, followed by China’s JD.com which grew by an impressive 41% (adding £8bn in revenue). This was followed by Home Depot (7%; £4.9bn;), and Lidl, owned by the Schwartz Group (7%: £4.8bn). Other Chinese retail giants on the list include Alibaba.com, (33%, £2.9bn); vipshop, (41%, £1.9bn) and Suning (10%, £1.5bn).
Top Retailers by absolute growth
With access to an estimated 40% of UK households and members spending twice as much as non-members, Prime has been a key growth driver for Amazon.
Alexa is now poised to continue the momentum, with user numbers expected to hit 128 million by 2020 – each of them typically spending about 10% more than non-users.
Alibaba has unlocked the "magic formula" according to the research. The secret lies in Alibaba’s ability to connect the dots across the entire purchase journey including seller services, logistics partners, brick and mortar stores and online entertainment and search solutions.
Online pure-players beat sector average growth
E-commerce businesses also dominate the top of the growth table for retailers under £2.5bn, with online pure-players leading the way.
Ranking first, meal kit provider Blue Apron grew by 134% (£370m) in 2016 – almost double the rate of luxury online fashion platform Farfetch in second, which saw a 70% (£268m) revenue boost. British e-commerce retailer The Hut Group came in at third, having grown by 50% (£168m).
These new platform-based businesses are also beating their sectors by large margins. Blue Apron dwarfed the food and beverage industry’s average growth rate of around 3%, while Farfetch and fellow British online fashion platform ASOS, which grew by 70% and 28% respectively, towered above the apparel sector’s average growth of 2%.
"Alibaba and Jingdong (JD.com) have soared to the top ranks in the China Index thanks to their multi-touchpoint ecosystems, attracting and retaining shoppers through multiple daily interactions and transaction," explained Pascal Martin, Partner at OC&C Strategy Consultants.
Alibaba and Jingdong (JD.com) have soared to the top ranks in the China Index thanks to their multi-touchpoint ecosystems.
"Together with VIPshop (VIP.com), another pure-play online retailer, they have become hugely powerful household brands for Chinese consumers. They are closely followed by Suning and Gome – both deeply engaged in transforming their distribution model toward a multi-channel vision. With three pure-play E-Commerce giants among China’s top five retailers vs. only one in the UK and US respectively, it is clear where China retail is headed. "