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Small Businesses Dominate E-Commerce

But power is concentrating around Amazon and eBay, report says.

The names Amazon and eBay may be synonymous with e-commerce, but it’s still the small merchants and solo shops that make up the vast majority of online businesses.

According to a new report by IBISWorld, small companies represent more than 75 percent of the e-commerce market. Most of these have fewer than five employees, while 45 percent of online sellers operate their businesses single-handedly.

That dynamic may be changing. The two largest e-commerce firms, Amazon and eBay, have quickly grown in both revenue and influence, IBISWorld reports. Even though, together, they account for just 11 percent of industry revenue, their power is expected to grow as they acquire other companies and expand their product mixes to appeal to a wider consumer base.

“Smaller companies are struggling to maintain their bottom line due to rising competition,” the researcher notes.

That’s not to say the outlook for small online merchants is hopeless. There are still plenty of ways to succeed in e-commerce, such as establishing a niche marketing strategy or using creative merchandising techniques like product bundling to stand apart from the large retail sites. (For more online marketing strategies, visit The Online Seller).

E-commerce is one of the fastest growing industries in the United States, according to IBISWorld. Having grown an average of 10.4 percent a year since 2007, it is expected to grow 11.9 percent this year to reach $219.2 billion. The researcher attributes the rapid adoption—even during economic recession—to wide availability of broadband Internet and online payment services like PayPal.

About the author

Crista Souza
Crista Souza is founding editor of TheOnlineSeller.com. A journalism graduate of San Jose State University, she spent 13 years as a business and technology reporter in Silicon Valley. Crista has been writing about B2C and C2C ecommerce since 2008. Opinions expressed here may not be shared by The Online Seller and/or its principals.



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