US Retailers, Grocery Market Share

Part
01
of three
Part
01

Home Depot and Costco

Home Depot and Costco had online sales of $8.55 billion and $5.54 billion, while their in-store sales were $99.65 billion and $132.9 billion in 2018, respectively. Homedepot.com had 131.5 million visits in October 2019, while at the same time Costco.com had 53.7 million visits.

Home Depot

  • Home Depot operates in the United States, Puerto Rico, U.S. Virgin Islands, Canada, and Mexico
  • The total in-store sales for all regions were $99.65 billion in 2018. (calculated)
  • The total online sales for all regions were 7.9% of the total net sales, which equals to $8.55 billion (calculated).
  • Homedepot.com had 131.5 million visits in October 2019, while the average online traffic from May 2019 to October 2019 was 147.25 million visits (calculated).
  • The average visit duration for the Homedepot.com website is 4 minutes and 44 seconds.
  • The largest portion of the online traffic is from the United States and makes 95.34% of all traffic to the website.

Costco

  • Costco operates worldwide and has warehouses in the United States, Puerto Rico, Canada, Mexico, United Kingdom, Japan, Korea, Taiwan, Australia, Spain, Iceland, and France.
  • The total in-store sales for all regions were $132.9 billion in 2018. (calculated)
  • Costco has e-commerce websites in the United States, Canada, Mexico, United Kingdom, Taiwan and Korea.
  • The online sales for all regions are estimated to be around 4% of the total net sales, which equals to $5.54 billion in 2018. (calculated)
  • Costco.com had 53.7 million visits in October 2019, while the average online traffic from May 2019 to October 2019 was 54.08 million visits (calculated).
  • The average visit duration for the Costco.com website is 4 minutes and 24 seconds.
  • The largest portion of the online traffic is from the United States and makes 97.02% of all traffic to the website.

Research Strategy

We searched the Home Depot and Costco websites, including press releases, financial statements, and annual reports. We found that these companies only publish information about their net sales and comparable sales. However, we identified the percentage that online sales have in net sales for both companies, so we used it to triangulate the value of online sales and then calculated the in-store sales by subtracting the online sales from the net sales. In order to identify the online traffic for the Home Depot and Costco websites, we used a web analytics website Similarweb to find out the number of visits and then used data from the past six months to calculate the average online traffic. Please note that Home Depot and Costco both have separate websites for different regions, so we decided to use Homedepot.com and Costco.com sites, which are mostly used by people in the United States. An overview of our calculations is presented below.

Calculations

Home Depot online sales

We used the following formula:
Home Depot online sales = Home Depot net sales * Home Depot online sales percentage

Home Depot net sales = $108,203,000,000
Home Depot online sales percentage = 7.9%

Home Depot online sales = $108,203,000,000 * 7.9%
Home Depot online sales = $8,548,037,000

Home Depot in-store sales
We used the following formula:
Home Depot in-store sales = Home Depot net sales - Home Depot online sales

Home Depot in-store sales = $108,203,000,000 - $8,548,037,00
Home Depot in-store sales = $99,654,963,000

Home Depot average online traffic

We used the following formula:
Home Depot average online traffic = (May 2019 traffic + June 2019 traffic + July 2019 traffic + August 2019 traffic + September 2019 traffic + October 2019 traffic) / 6

May 2019 traffic = 164,500,000
June 2019 traffic = 162,500,000
July 2019 traffic = 155,500,000
August 2019 traffic = 139,000,000
September 2019 traffic = 130,500,000
October 2019 traffic = 131,500,000

Home Depot average online traffic = (164,500,000 + 162,500,000 + 155,500,000 + 139,000,000 + 130,500,000 + 131,500,000) / 6
Home Depot average online traffic = 883,500,000 / 6
Home Depot average online traffic = 147,250,000

Costco online sales

We used the following formula:
Costco online sales = Costco net sales * Costco online sales percentage

Costco net sales = $138,434,000,000
Costco online sales percentage = 4%

Costco online sales = $138,434,000,000 * 4%

Costco online sales = $5,537,360,000

Costco in-store sales

We used the following formula:
Costco in-store sales = Costco net sales - Costco online sales
Costco in-store sales = $138,434,000,000 - $5,537,360,000
Costco in-store sales = $132,896,640,000

Costco average online traffic

We used the following formula:
Costco average online traffic = (May 2019 traffic + June 2019 traffic + July 2019 traffic + August 2019 traffic + September 2019 traffic + October 2019 traffic) / 6

May 2019 traffic = 54,500,000
June 2019 traffic = 53,500,000
July 2019 traffic = 58,000,000
August 2019 traffic = 54,700,000
September 2019 traffic = 50,100,000
October 2019 traffic = 53,700,000

Costco average online traffic = (54,500,000 + 53,500,000 + 58,000,000 + 54,700,000 + 50,100,000 + 53,700,000) / 6
Costco average online traffic = 324,500,000 / 6
Costco average online traffic = 54,083,333
Part
02
of three
Part
02

Amazon, Walmart, Dollar General

Amazon generated $122.987 billion, Walmart $16 billion, and Dollar General $1.7 billion from online sales. Amazon is the 4th most visited website in the United States.

Amazon

Walmart

Dollar General

  • In 2018, Dollar General in-store sales was $23.9 billion.
  • Dollar General online sales for 2018 was $1.7 billion. (calculated)
  • Dollar General had 7.83 million visits in October 2019 with 96.79% of its online visitors from the United States.
  • The average stay for Dollargeneral.com was 3 minutes 3 seconds.

Research Strategy

To provide the revenue of the companies through their online and in-store channels, we leverage information published on their annual reports and media sources. For Dollar General, the company only provided its total revenue and revenue from its stores. We calculated the online revenue of Dollar General by subtracting its in-store revenue from the overall company revenue. For Walmart, we were able to determine its in-store revenue by calculating it from its estimated online revenue published by Forbes.

Calculations

Dollar General

Dollar General net sales = $25.6 billion
Online sales = net sales - in-store sales
Online sales = $25.6 billion - $23.9 billion = $1.7 billion

Walmart

Walmart net sales = $500.343 billion
In-store sales = net sales - online sales
In-store sales = $500.343 billion - $16 billion = $484.343 billion
Part
03
of three
Part
03

Online Big Box Retailer Trends

Three of the key e-commerce trends for big box retailers include expanding pickup options, personalization of their online offer, and the rise of private label.

EXPANDING PICKUP OPTIONS

  • "Buy online pickup in store" model is the main way in which big box retailers can differentiate themselves and gain a competitive edge on e-commerce giants like Amazon.
  • Retailers like Wal-Mart, Target and Home Depot have all invested in optimizing their physical store layouts to facilitate order pickups. They are expected to continue modifying their locations in this way, with the constant pressure from Amazon to improve their e-commerce models.
  • Curbside pickup, an especially popular option among box stores' online customers, allows shoppers to avoid high delivery fees, shorten delivery time, as well as see their order before accepting it.
  • Thanks to the advantages of curbside pickup, supermarket chains like Wal-Mart and Target improved their online sales of meat and produce, by 66% and 85% respectively.
  • Retailers also benefit as it is easier for them to manage their inventory and the customers are more likely to make additional purchases when they come to pick up their orders.
  • To gain an advantage over competitors, large retailers are introducing further innovations in this area, such as in-app directions. Also, Target offers Target Drive Up option, thanks to which customers can have their order loaded directly to their car.
  • Overall, 61% of omnichannel retailers surveyed by Shopgate say that expanding "buy online pickup in store" options is their priority.
  • Also, 63% of shoppers want to use curbside pickup, 56% are interested in having their order loaded into the trunk of their car, and 50% admitted that they made an online purchase only because there was an option to pick it in the store.

PERSONALIZATION

  • Personalization is a top priority for customers. 70% are discouraged when they are treated impersonally, 63% would provide personal data to get personalized offers and discounts, and 47% will shop at Amazon if the website they are browsing doesn't show relevant recommendations.
  • According to Forbes, offering a personalized shopping experience is a must for retailers, if they want to succeed in the highly competitive digital environment.
  • The same article claims that big retailers, like Ikea, Nordstrom, Target, and Wal-Mart have already realized that and started to adjust their strategies accordingly.
  • For example, last year, Wal-Mart revamped their website, which now shows more relevant recommendations, based both on the personal browsing history and items that are trending locally.
  • For box stores, personalization across all of their channels is another way to gain a competitive advantage over their main competitors. Experts believe that major e-commerce players like Amazon and Walmart mastered it on their websites, but they are behind in terms of personalizing their mobile and email offers.
  • Some big box retailers, such as Nordstrom, Home Depot and Best Buy, capitalize on it by offering a superior mobile experience in terms of personalization.
  • The same three large retailers scored the highest among the box stores in the latest Retail Personalization Index by Sailthru.
  • Home Depot was applauded for leveraging product and customer data, as well as their heavy investments in email personalization, while Best Buy got noticed for the use of AI in their email marketing and for innovative features, such as "On My Way," which informs sales personnel when a customer is coming to pick up an online order.
  • Overall, multiple experts agree that personalization is the key element of online retail experience, and will continue to be in the future.

THE RISE OF PRIVATE LABEL

  • In early 2019, Retail Dive predicted that it would be the year of the growth in the online sales of private label products.
  • It was observed that main competitors in the e-commerce space are launching more private-label brands, with Target alone adding eight in the last year.
  • Major big box stores are at the forefront because it's another way to gain an edge on e-commerce only players like Amazon.
  • Nielsen also believes that private label is growing as a category. The company thinks that in the US, e-commerce is boosting this trend by offering grocery retailers new ways to compete and differentiate.
  • Wal-Mart holds a 48% share of CPG online private label revenue, compared to a 27% share two years ago.
  • At the same time, according to the report by CBInsights, Wal-Mart has been seeing high online conversions from its private-label products.
  • Overall, Wal-Mart has the highest number of private-label units sold among all online retailers. Target and Costco are two other box stores in the top ten.
  • It is important to note that customers are interested in more private label products, with 8 in 10 buying them to save money and 44% wanting more unique options in this category.
  • While experts believe that it's easier to sell private-label products online, with more options to advertise and recommend them, retailers, including box stores, are still learning how to use it to their advantage.

RESEARCH STRATEGY

We started by looking for pre-compiled lists of key trends in big box stores' e-commerce, or expert articles that would explicitly discuss such trends. However, they were not available on major business, digital marketing, and e-commerce sites, websites for e-commerce consulting companies, or in reports by research companies.

During our research, we discovered that big box retailers are frequently mentioned in reports, lists and articles related to trends in omnichannel retailing or e-commerce. We decided to pick relevant trends that appear at least twice in such sources. We further confirmed that they can be considered key trends in big box stores' e-commerce by finding multiple examples of how they are being implemented by large retailers. When possible, we also added quantitative data to show that those trends are important to customers and affect sales.
Sources
Sources

From Part 01
Quotes
  • "Online sales, which consist of sales generated online through our websites for products picked up in our stores or delivered to customer locations, represented 7.9% of net sales and grew 26.2% during fiscal 2018."
  • "We operate in the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico."
  • " We assess our sales performance by evaluating both net sales and comparable sales."
Quotes
  • "Net sales for e-commerce represented approximately 4% of total net sales in 2018."
  • "Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan."
  • "Costco currently operates 768 warehouses, including 533 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, two in Spain, one in Iceland, and one in France. "
From Part 03