The Scale and Scope of Online Retail

This paper studies the growth of online retail over the period 1999–2012, using confidential firm-product-level data for Canada. The revenue of online retailers is decomposed into the contributions of product scope (the number of product categories) and product scale (average revenue per product category). During this period of rapid online sales growth, product scope dropped dramatically from an average of 59 product categories per firm in 1999 to 5 product categories per firm in 2012. Using data on Amazon.ca's expansion, I find suggestive evidence that this reduction in product scope may have been driven by increased competition in the online retail sector.