Between 2000 and 2010, ecommerce was dominated by a few big players: Amazon, eBay, AliBaba, and a few others. But today, there are more and more small ecommerce stores popping up. In fact, in June of 2014, we found that there were 110,000 ecommerce companies with annual revenue greater than $1 million. That’s a lot.
This made us wonder — for those prospective founders interested in starting their own ecommerce store, what kind of expectations should they have? How much can a brand new ecommerce store expect to make in this environment?
Lucky for us, we have a massive data set at our disposal. We were able to answer this question once and for all using data from our 2015 Ecommerce Growth Benchmark. Here’s what we found.
Average Monthly Revenue for a New Ecommerce Site
The chart below shows the average revenue for the first 36 months after an ecommerce store opens its doors.
According to this chart, at three months the average ecommerce site is generating just over $150,000 in monthly revenue, by the end of year one in business they are averaging almost $330,000 in monthly revenue, and after three years they’re bringing in over $1 million in revenue every month; an increase of over 230% between year one and year three.
So, that was easy, right? On average, an ecommerce site has generated over $20 million in revenue by the end of year three in business.
Not so fast.
At first pass, this seems to provide a quick answer for how much an ecommerce site can make, but it doesn’t give the whole picture. As we mentioned at the beginning, ecommerce behemoths like Amazon often muddy the story on ecommerce potential. While Amazon wasn’t included in this research, we did find a group of companies that dramatically outperform the average. And while these companies are inspiring stories, they still don’t tell us what “normal” looks like.
So, to look closer, we split our sample of ecommerce retailers into quartiles based on total revenue in their third year of existence. This lets us analyze the fastest growing companies, identified in the first quartile, compared to companies in the second, next-fastest quartile, and so on.
Average Monthly Revenue for a New Ecommerce Site by Quartile
Now let’s look at average monthly revenue again, but this time broken out by quartiles, through the first three years of business.
This chart paints a very different picture than the first chart. Here you see that the top quartile of companies are growing at a considerably faster rate than everyone else, and their growth is skewing what “normal” looks like for the rest of the pack.
By segmenting the companies, we get a glimpse at how the top performers are impacting the industry-wide average we saw in our first chart. And by taking these top performers out of the picture, we’re able to answer the question “how much money can a new ecommerce company make?” a little more accurately.
At three months, the average ecommerce site (those in quartile two to quartile four) was generating just over $63,000 in monthly revenue, at one year they were averaging $127,000 in monthly revenue, and after three years they were clearing $352,000 in revenue every month; an increase of over 175% between year one and year three.
So, to get back to our question of how much money can an ecommerce website make. Take a look at total revenue broken out by the same four quartiles.
After three years in business, total revenue breaks down as follows:
- Q2 companies have reached over $12 million in total revenue
- Q3 companies have reached over $5 million in total revenue
- Q4 companies have reached over $2 million in total revenue
Meaning the average in total revenue for these ecommerce companies is just over $6.5 million after three years.
So there it is. On average a new ecommerce company can expect to bring in just under $39,000 of revenue in their first month in business, and generate $6.5 million in total revenue after three years.
If you’re interested in learning more about the growth patterns of today’s ecommerce companies, check out our 2015 Ecommerce Growth Benchmark.