Almost every commercial entity today provides its customers channels for e-procurement of products and services. Just how well is the eCommerce vertical doing, across the board? Tune in for a quantitative check and perspectives.

Summary

• Globally, the number of eCommerce-enabled companies has witnessed a 66% growth, over the last 12 months
• eCommerce companies with a traffic rank < 500K (the relatively big companies) have doubled during this time; companies with GMV = $10M+ have tripled
• Existing smaller players have gained momentum to gradutate to the mid-market and top-tier eCommerce segments
• If you are targeting mid-market and large eCommerce companies, your market has doubled or tripled in the last year.
• In the US, the rate at which existing websites / businesses become eCommerce enabled is five times that of new business registrations.
• The 'top of the funnel' that produces mid-market and large eCommerce companies with a 2-3 year lag is alive and kicking.
• A lift in eCommerce's contribution to retail sales unaided by a black swan event like Covid-19 is certain.

What's happening globally

Between June 2021 and June 2022, the number of eCommerce-enabled companies increased by 66% globally.

The Principle of Parsimony would support the argument that every business that is starting now, is starting out as an eCommerce business. So the long tail is swelling.

Yes, there has been a 60% increase in the number of companies with added eCommerce capabilities over the last year. But, check this out: companies with a traffic rank less than 500K, the critical point at which they start becoming commercially viable, have doubled over the last year. That simply means that it's not just 'digital-ization' of small business that is driving eCommerce growth but the graduation of mid-market is healthy as well.

Figure 1: Global change in number of eCommerce companies across different traffic segments

In fact, companies with $10M+ GMV have actually tripled. This is not just due to inflation.

What's going on

If the number of active eCommerce websites has increased by 66%, a lot of smaller ones from previous years have gained enough momentum that mid-market and top-tier eCommerce segments are seeing significant growth. This is good news. It means, if you are targeting mid-market and large eCommerce companies, your market has doubled or tripled in the last year.

Business building in the US

In the US, 5.4M applications were filed for new business registrations in 2021 ― a 21% increase from the previous year. Not every application goes through toward becoming a real business though.

Census data projects that around 350,000 new businesses will be started in 2022. Against this backdrop, it is evident that the rate at which existing websites / businesses in the US become eCommerce-enabled is five times that of the new business registrations.

Figure 2: New business formation in the US

Figure 3: Change in number of eCommerce companies across different traffic segments, in the US

And the winners are ……

Among eCommerce marketplace enablers, Shopify gained the most ― a 158% increase in the number of merchants in the 1M-3M traffic rank segment. The rising tide lifted Wix and WooCommerce as well, registering a 55% and a 41% increase respectively.

Is that all?

There is a Part 2 to this story. eCommerce as a percentage of retail GMV is slowing down or reverting to pre-pandemic levels. All the newly active eCommerce websites' economic activity is captured in this representation. But the good news is deferred. The 'top of the funnel' that produces mid-market and large eCommerce companies with a 2-3 year lag is alive and kicking. For every new business that starts, two or three existing businesses are turning on eCommerce. This should mean a lift in eCommerce's contribution to retail sales unaided by a black swan event like COVID.

Long eCommerce, unless we dip into a prolonged recession and the deflation it would cause.