2013 UPDATE: Check out an updated version of this post with the latest stats!
Here at ReferralCandy we got to wondering how many ecommerce retailers there are in the USA and how much they make. Asking Google brought us some possible answers, but nothing about how they were derived, or why they might be the right ones. So we decided to look for numbers we could crunch ourselves to get a good guesstimate.
So where do we begin?
“Overall, the Top 500 retailers have a 77% share of the $198 billion U.S. e-retailing market.”
The Top 500 Guide also lists each retailer’s annual sales revenue. We plotted a graph of those 500 retailers and their revenues to see if there was anything useful we could find.
This is what we got:
That graph sure looked like it followed a power law. Could we figure out what the precise function was?
After removing the top 10 retailers (since they were “noisy”) and asking Excel for a little help, we found a function with a pretty good fit:
Now we’re getting close! Assuming that the power law held for retailers past the top 500, we now had a way of reasonably ascertaining the rank of any online store. Say we wanted the rank of someone running a side business making $12,000 a year. With a bit of math, we would be able to get the magic number of… 90,501.
Plugging in a few more numbers would give us the following table:
|Yearly sales of at least||Number of retailers|
Our power law formula also gives us a way of estimating the combined revenue of all the retailers making less than $1,000 a month (spoiler: around US$1 billion!).
So if we only considered online stores making more than $12,000 in sales a year, that comes up to about 90,500 retailers with a combined revenue of $197 billion in the U.S. That’s more than the population of the Seychelles!
So there we have it. Stay tuned for more number-crunching adventures! And feel free to ask any questions.
Image Credit: bfishadow