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eCommerce Report
March 15, 2018
In what has become an annual tradition, I’ve once again bribed store owners to fill
out a survey in order to understand how merchants are fairing in the eCommerce
jungle.
It’s called The State of the Merchant and it contains details on everything from
revenue growth, conversion rates, happiness levels, our favorite eccentric
billionaires, how much profit (and pain) Amazon is causing and more.
If you missed last year’s edition, you can see my 2017 State of the Merchant report
here.
We had over 450 store owners respond this year which was very encouraging.
That’s up almost 50% from last year. The additional data points will hopefully help
paint a more accurate picture.
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from $1.6 million last year.
Part of this increase may be just a variation in who replied. But I think much is due
Grow
to very strong growth this year and the fact thatYour Store to 7- Community
the eCommerceFuel
(who makes up a large percentage of theFigures & Beyond
respondents) is increasingly made up of
larger store owners.
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
13% of respondents were doing more than $5from
advice million in sales
my time and the
in the trenches.
survey members represent a billion dollars in revenue. It’s really fun to see the
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size and sophistication of the sample group Address
grow!
owners. It’d be great to see this figure grow, and it can unfortunately cause issues
for female entrepreneurs that guys don’t think about or have to deal with.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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All di erent types of business models saw strong growth, with private label and
merchants manufacturing their own proprietary products expanding the fastest.
In last year’s report, I reported that 45% of drop shipping businesses reported flat
or declining revenues. I’ve been bearish on drop shipping and even sold my drop
shipping business 18 months ago, partially because I was worried about the
business model becoming more di icult and less defensible.
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Revenue growth was 36.8% – up from 24.7% in
2017.
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So I was surprised to see some positive Figures & Beyond
drop shipping trends year-over-year.
The Pet, Food, Men’s Clothing and Toys categories led the pack with staggering
annual revenue growth on average above 55%. That number seems outlandish
and I’d imagine that if we had a larger 5,000 store owner sample to draw from it
would likely be dampened a bit.
But looking at the individual results nearly half of stores in the Pet category
doubled year-over-year, with the average revenues for the group around $2.5
million. So it wasn’t just a matter of a lot of small businesses doubling from $100K
to $200K and skewing the results. Growth in the category seemed very strong.
Tools and Home Improvement was the slowest growing category, clocking in at a
mere 13.6% compared to the 37% overall average. Sorry, Tim Allen.
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10/07/2019 2018 State of the Merchant Report | eCommerceFuel
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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“Your margin is my opportunity” might be the most infamous quotes in all of
eCommerce, coming of course from Amazon’s Je Bezos. So in a year where
Amazon continued to gobble up market share and paid tra ic costs also increased
(see below) I was surprised to see very little margin erosion.
Gross margins were 39.2% on average, compared to 39.6% last year. Net margins
also weren’t impacted as much as I would have suspected. They were 17.4%,
down just a touch from 17.7% last year.
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A modest increase, although not as much of a jump as I would have expected to
see and not enough to drastically o set the margin pressure from other areas. I’d
speculate the strong increase in conversion rates (discussed below) were part of
Grow Your Store to 7-
the reason margins held up as well as they did.
Figures & Beyond
For the first year ever, I asked merchantsLearn
to report their
how I built Average
(and Order Value.
sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
As you might suspect, manufacturers and private label stores had the lowest AOV
while drop shippers had the highest. It reminds me of when I drop use to drop
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ship $2,500 GPS powered trolling motors. With no up-front capital costs, drop
shippers are more likely to sell more expensive items which drives a higher AOV.
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Note: While normally called Average Order Value, I used the median as number of
sky-high data points (is someone selling 747s? Luxury yachts?) would have
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https://www.ecommercefuel.com/ecommerce-report-2018/ 6/37
10/07/2019 2018 State of the Merchant Report | eCommerceFuel
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It’s easy to bemoan a world in which Google, Amazon and Facebook are
increasingly monetizing their platformsGrow Your Store
while shrinking toof7-organic tra ic
the pool
opportunities and reach. Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
But it turns out that for the majority of store owners, free, organic tra ic is still
figure stores. No flu . Just proven strategies and
their #1 source. In fact, more merchantsadvice
reported organic
from my time in as
thetheir #1 tra ic source
trenches.
This is a shocker. I thought for sure we’d see the number of people reporting
organic tra ic as their top channel decline.YES, TELL ME HOW
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What’s not surprising is that merchants reported cost per acquisition on their paid
channels increased almost 15% over the last year. Anecdotally, I’ve been hearing
from lots of di erent advertisers that Facebook ads having been getting
increasingly expensive so this wasn’t a surprise.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
Last year we discovered that 55% of store owners would rather be attacked by a
swarm of bees vs. a bear. I thought I’d be a bit less sadistic this year and ask
everyone which billionaire they’d most like to have lunch with.
Je Bezos surprisingly (or perhaps not so surprisingly) was last with only 22.2% of
people opting to dine with the King of eCommerce. And this was before Musk and
the SpaceX team pulled o a successful launch of the Falcon Heavy putting a Tesla
Roadster into space.
I heard Musk likes BBQ so maybe keep that in mind when you call with that lunch
invitation.
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YES, TELL ME HOW
Conversion rates were the metric that surprised me the most this year. Last year’s
overall conversion rate was 2.10% and it jumped to 2.62% this year, up almost
25%.
As any CRO will tell you, getting a 25% li on a single site is an impressive feat. But
to see a conversion boost on a macro level is just wild.
At first, I thought there was some other explanation or that I had made a mistake.
Perhaps merchants had migrated in droves to higher-converting business models?
From drop shipping to manufacturing?
So I began to look at the conversion rates across all models and saw the same
thing: an increase across the board. Drop shipping conversion rates went from
1.29% to 1.74%. Proprietary manufacturing rates went from 2.33% to 3.07%. Ditto
with Hybrid, Reseller and Private Label models.
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Last year’s conversion rate was 2.10% and it
jumped to 2.62%, up almost 25%.
Grow Your Store to 7-
Figures
To be honest, I’m not sure how to explain & Beyond
such a jump.
consumers are just spending more. Perhaps the larger-sized business respondents
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on average are more sophisticated and have better converting stores.
YES,inTELL
Or maybe the 70+ crowd is finally coming out ME HOW
full force to shop online, pushing
up rates everywhere! (Hmmm, less likely). Whatever the reason, it’s a great sign for
7-figure merchants. POWERED BY
If accurate, the jump in conversion rates might help explain why margins have
stayed more-or-less the same this last year despite pressure from Amazon and
upward creeping paid tra ic costs.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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We all know Amazon is growing quickly and taking over eCommerce. But exactly
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how quickly?
I think the most telling stat here is how much of the overall revenue merchants are
generating came from Amazon vs. other channels. Using rough numbers to
illustrate, of our $1 billion in collective survey revenues $200 million would have
come from Amazon last year in 2017.
One year later in 2018, that number has jumped to $276 million – a 38% jump in
just one year.
Despite concerns I hear weekly from store owners worried about being overly
dependent on the platform, more and more store owners are seeing Amazon
become their #1 sales channel.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Amazon merchants are growing at a significantly faster rate that their non-Amazon
counterparts.
Stores predominantly selling on the behemoth are growing at over 50% annually
vs. just 30% for stores not selling on Amazon at all. Income growth follows a
similar trend.
Margins between on-and-o Amazon merchants are fairly close too. One
interesting year-over-year trend: the net margin gap between Amazon and non-
Grow Your Store to 7-Figures & Beyond
https://www.ecommercefuel.com/ecommerce-report-2018/ 12/37
10/07/2019 2018 State of the Merchant Report | eCommerceFuel
Amazon sellers widened a bit this year to a full 1.1% di erence vs. 0.3% last year.
This is possibly due to increasing Amazon fees eroding the bottom lines of Amazon
sellers.
And as you’d guess, merchants manufacturing and private labeling their own
products were the type of stores that sold the most through Amazon. Given the
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insanely competitive nature of trying to resell commodity products, drop shippers
and resellers reported the lowest levels of Amazon revenues.
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The most fascinating Amazon takeaway is not how quickly revenue is growing via
Amazon but rather the steep increase in complaints.
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Complaints about Amazon are up 3x from 2017,
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nearly 5 times faster than Your Store
growth to 7-
from the
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channel.
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
At first blush, I expected the complaints would largely be about disenfranchised
drop shippers and resellers complaining they couldn’t join the Amazon gravy train.
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That Amazon was destroying their old-school business model.
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Amazon in Europe and an increased focus on exporting to and selling in non U.S.
markets.
(Why? Of the 10% of their revenue that Australians report from Amazon, I’d guess
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that much comes from sales Australian merchants are doing outside the country
given Amazon just launched there this fall. Private Community Members can check
YES,launch
out the entire discussion on Amazon Australia’s TELL MEhere).
HOW
Quick glances at revenue growth rates, margins and conversion rates POWERED
also reveal
BY
markets that largely seem more attractive and less competitive than the U.S. If
merchants are willing to overcome some of the logistical and cultural issue
involved with selling abroad it appears there are are some nice fertile fields
available outside the States.
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hosting solution with us as well via a podcast sponsorship).
As part of our Private Community for 7-Figure Sellers, we’ve built a proprietary
Grow Your Store to 7-
so ware directory that tracks in real-time the so ware used by our 1,000+
members. Our tool scans our member’sFigures
stores on a&weekly
Beyondbasis to determine
what shopping carts, review platforms and
Learnother tools(and
how I built they’re using to 6run
sold) numerous andtheir
7-
figure stores. No flu . Just proven strategies and
stores.
advice from my time in the trenches.
We also ask our members to review the so ware they’re using and incorporate this
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into our directory. With 4,000+ so ware reviews submitted by our members we
have a pretty good idea of how members are liking di erent tools.
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(Interested in checking out the So ware Directory? You can apply for
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eCommerceFuel Membership here.)
Shopify has continued their multi-year streak of strong growth and adoption
among 7-figure store owners. Last year, they had 65% of the market share among
the top three carts our members used. In 2018 that’s climbed even further to 73%.
And they continue to hold the record for top satisfaction with a 4.7/5 star rating.
Stamped.io also saw a massive jump in adoption this year, more than doubling
from 14% to 31% market share among the top
Grow three
Your Storesolutions.
to 7-FiguresThis was largely
& Beyond
https://www.ecommercefuel.com/ecommerce-report-2018/ 16/37
10/07/2019 2018 State of the Merchant Report | eCommerceFuel
driven by their strong feature set and a ordable pricing relative to other o erings.
Yotpo saw the biggest drop in adoption by our members this year sliding from 46%
to 28% market share among the top 3 review tools. The biggest reason? Pricing.
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Members are generally very happy with their features but large pricing increases
caused a lot of members to move to other solutions (like Stamped.io) and was the
reason behind most negative star ratings.
Grow Your Store to 7-
Magento continued to see a modest slip in adoption, a trend that was more
Figures & Beyond
pronounced in previous years as many merchants (myself included) jumped ship.
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
Speaking anecdotally, they seemed to be moving
advice to easier-to-administer
from my time in the trenches. carts like
Shopify when cart and feature customization wasn’t a critical requirement of their
business. My guess is that the large exodus weAddress
Email saw from other carts to Shopify will
slow substantially in 2019 and beyond. Why?
YES, TELL ME HOW
Partially because Shopify owns so much of the market, and partially most owners
remaining on other carts likely have a strong business case for doing so: custom
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features, unique platform strengths, etc. For a deep dive on the cart landscape
you can listen to my review and thoughts on Shopify, Magento and WooCommerce
in 2018.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Want to increase your net worth 24% year-over-year? Get yourself a 7-figure
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eCommerce store!
Existing store owners sure saw a very nice uptick in their net worth over the last
year. I’d attribute this largely to the strong results discussed above. A surging U.S.
stock market (up 25%) and housing market in 2017 likely didn’t hurt either.
If you’re fighting with your accountant over what a “reasonable” salary to pay
yourself is, don’t worry. Below you’ll find the average salaries listed for store
owners in your revenue bracket.
(For those not familiar with this issue, many company owners struggle with where to
set their salaries. The lower you set it, the more tax savings you o en receive. But if
you set it too low, you face potential penalties from the IRS. So coming up with a
reasonable salary that can be backed up when challenged by the IRS has historically
been di icult.)
Grow Your Store to 7-Figures & Beyond
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10/07/2019 2018 State of the Merchant Report | eCommerceFuel
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Workaholics POWERED BY
The average store owner works a 47-hour week, which surprised me. There’s a lot
of perks to running your own business, but reasonable hours usually aren’t
considered to be one of them.
Yes, it’s a little longer than your traditional 40-hour work week. But I found it
encouraging that as a group we’re not all having to put in 70+ hour work weeks –
o en assumed mandatory – to build and grow meaningful businesses. Awesome!
I assumed that owners of larger businesses would be working like crazy to keep up
with crazy growth and needy employees. That running a high 7- or 8-figure
business would just totally consume your life.
Owners with stores over $5 million in sales worked an average of 51.7 hours per
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week. Yes, more hours but not nearly the workaholic figure I expected. That
number didn’t change even when I looked at stores doing over $10 million in
revenue!
Grow Your Store to 7-
Figures
The fact you can run an eight-figure business & Beyond
and still manage to have some
semblance of a personal life is incredibly encouraging news.
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
Finally, just like we found last year, thereadvice
was from
verymy little
timecorrelation between net
in the trenches.
worth and happiness or store type and happiness. It’s one thing to hear it in
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studies from uppity ivy-league universities, but a whole di erent thing to see it in
the data you personally collect.
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Unhappy? Starting an eCommerce store and getting rich probably isn’t going to
help. Focus on nurturing and improving your relationships instead. POWERED BY
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I’m making the raw data set from this survey available under an attribution, non-
commercial license. As long as you reference and link back to eCommerceFuel,
Grow Your Store to 7-
please feel free to use this data for blog posts, reports, etc.
Figures & Beyond
You can download the 2018 data set here andhow
Learn lastI built
year’s 2017
(and sold) data set here.
numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
Thank You and Congratulations
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First o , thank you to everyone who took the time to reply to the survey and made
this report possible! It’s no small ask to spend
YES, 10-15 minutes
TELL ME HOW of your day
answering questions and I greatly appreciate your involvement. Thank you!
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Each year I give away a round-trip airline ticket anywhere in the world to one lucky
survey participant as a way to say thank you for being involved. This year the
round-trip ticket goes to Brad Maggard of MaggardRazors.com – congratulations
sir!
Last year the winner used their ticket to tour Europe. I’m excited to see where
you’ll go, Brad.
A special thanks to Michael Tremeer for his help crunching this survey data and
spotting interesting trends. If you’re looking for someone to help you turn data
from your business into insights you can leverage to grow your business make sure
to connect with him at Milu Consulting and/or checkout his own insightful post on
the survey data here.
And finally, a very special thanks to Steve Chou who despite incessant moaning
Grow
and whining each year about the survey’s Your Store
length to 7-Figures
somehow finds&the
Beyond
time to fill it
https://www.ecommercefuel.com/ecommerce-report-2018/ 21/37
10/07/2019 2018 State of the Merchant Report | eCommerceFuel
out. I appreciate you reaching deep, Steve – thank you. You are a true friend.
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And if you’re a high-six, seven- or eight-figure store owner and interested in joining
us inside the eCommerceFuel Private Community you can learn more and apply
for membership right here.
Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
The Full Infographic
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Feel free to embed or share this infographic but please attribute and link to this
YES,full
eCommerceFuel post. You can download the TELL ME HOW
image here.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
Email Address
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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eCommerceFuel. You can download the full image here.
Grow Your Store to 7-
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41
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Like
Learn how I built (and sold) numerous 6 and 7-
Share figure stores. No flu . Just proven strategies and
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36 Comments
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Vivek
March 20, 2018 at 3:26 am
Amy Hatch
March 20, 2018 at 11:52 am
ANDREW YOUDERIAN
March 20, 2018 at 12:12 pm
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DIEGO
March 20, 2018 at 11:55 am Grow Your Store to 7-
Figures
Thanks for sharing Andrew! Great to see&Stamped.io
Beyondsoaring past Yotpo;
when we were searching for our
Learnreviews solution
how I built and
(and sold) where6comparing
numerous and 7-
them both Yotpo was not only overpriced
figure stores. Nobut
flu .arrogant.
Just provenStamped on the
strategies and
advice from my time in the trenches.
other hand was friendly, priced appropriately and easy to work with.
The market has voted and as is the trend with ecommerce, the best will
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succeed. May 2018 be another great year for all merchants.
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ANDREW YOUDERIAN
March 20, 2018 at 12:13 pm
Thanks Diego! Yeah, Stamped has really done a good job of getting
their product out there and o ering a great product/price combo.
Glad they’ve worked out well for you. Hope all is well!
Trent Dyrsmid
March 20, 2018 at 12:05 pm
ANDREW YOUDERIAN
March 20, 2018 at 12:13 pm
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Nick
March 20, 2018 at 12:07 pm
Great content, love the 2018 update! Especially the personal finance
section, I believe some of thatGrow
info is Your
new. Store to 7-
Figures & Beyond
Do you have any information on what store owners do with their store
Learn how I built (and sold) numerous 6 and 7-
profits? Assuming they have 100% ownership.
figure stores. No flu . Just proven strategies and
advice from my time in the trenches.
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ANDREW YOUDERIAN
March 20, 2018 at 12:14 pm YES, TELL ME HOW
Thanks Nick! The closest kind of info I have in terms of how they
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reinvest their money is the stock/real estate/cash split I ask about.
That was the only thing I asked about. Definitely up for considering
new questions for next year, was there something specific you’d like
to see?
Nick
March 20, 2018 at 12:34 pm
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Either way, thank you Andrew for creating these reports!
They’ve been a very helpful benchmark on my own journey.
Grow Your Store to 7-
Figures & Beyond
Learn how I built (and sold) numerous 6 and 7-
ANDREW YOUDERIAN
figure stores. No flu . Just proven strategies and
March 20, 2018 at 1:00 pm
advice from my time in the trenches.
Gauging motivation and end goals, very interesting. I’ll add
to my list of questions
Email to consider adding for next year.
Address
Thanks!
YES, TELL ME HOW
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Dave Bayless
March 21, 2018 at 9:25 am
I think that would be a great addition to an already
valuable bit of analysis, Andrew!
Dave Bayless
March 21, 2018 at 9:33 am
It would really be interesting to see if business goals
varied across business types. Are the goals of a drop
shipper di erent from those of a manufacturer of
proprietary product? Fascinating stu . Great
suggestion, Nick!
DAVID
March 25, 2018 at 5:24 pm
I know what I do – reinvest and stu them in the bank waiting for
something cheap to buy.
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Michael Tremeer
March 20, 2018 at 6:25 pm
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ANDREW YOUDERIAN
March 20, 2018 at 7:14 pm
YES, TELL ME HOW
Brad Bernhart
March 21, 2018 at 12:11 am
ANDREW YOUDERIAN
March 21, 2018 at 12:26 am
Xiaohui Wang
March 21, 2018 at 6:15 am
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ANDREW YOUDERIAN
Arshad Bahl
March 22, 2018 at 3:05 pm Email Address
Its also super neat to see Food on the growth list here and the Food
community here is super awesome to work with. POWERED BY
ANDREW YOUDERIAN
March 23, 2018 at 4:23 pm
Stephan Pire
March 22, 2018 at 6:25 pm
My G-d, great work Andrew! Mind if I translate this in French quoting you
and keeping a link to the source?
Peter Awad
March 23, 2018 at 12:58 pm
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P.S. My favorite part? Your comments on Steve.
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ANDREW YOUDERIAN
March 26, 2018 at 2:30 am
TAL MOORE
March 25, 2018 at 11:06 am
ANDREW YOUDERIAN
March 26, 2018 at 2:31 am
Hey Tal! Anything for you, sir. Glad you enjoyed it and hope
you’re doing well!
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JAKE WALLIS
March 29, 2018 at 3:57 am
Grow
Average ecommerce conversion ratesYour Store1%
are between to–7-
2%. Even if
Figures
merchants are doing everything & Beyond
right, they can still expect to gain the
sale around 2% of the time. This
Learnishow
why partnering
I built (and sold)with a payment
numerous 6 and 7-
figure stores.
gateway (Stripe, G2A PAY, 2Checkout) is No flu . Just
a good proven strategies
strategy. Luckily and
advice from my time in the trenches.
merchants, through such partners, have a wide range of tools at their
disposal to optimize their eCommerce and mCommerce conversion
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rates.
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SANKET NADHANI
March 30, 2018 at 1:48 am
This is great. Most other reports focus on all ecommerce stores (thus
muddling the data) or on the Top 100, so this is super useful. Thanks for
putting it together.
ANDREW YOUDERIAN
April 4, 2018 at 1:16 pm
Robert Iverson
April 21, 2018 at 6:07 pm
Hey Andrew,
Great report!
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It would be really cool to have a drill down into B2B vs. B2C.
Albert at Jazva
May 1, 2018 at 2:34 pm POWERED BY
Awesome report and very valuable infographic! Thanks for sharing this
resource!
This is really useful information (and especially the fact that Branson is
#1 billionnaire). Thanks for putting this together!
-Guy
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