A Look Ahead: Global E-commerce Trends and Growth
E-commerce sales worldwide projected to reach a staggering $6.8 trillion by 2028
In the world of online retail, it's full steam ahead. Despite stagnation in the past two years, worldwide e-commerce sales are predicted to surge from a whopping $4.4 trillion in 2023 to a staggering $6.8 trillion by 2028. This explosive growth comes at an impressive compound annual growth rate of 8.9%, according to a brand-new Forrester report.
In the United States alone, online sales are projected to soar from $1 trillion in 2023 to an astonishing $1.6 trillion by 2028. These numbers represent a staggering 28% of the country's total domestic retail sales. As for powerhouses? Only China, with its impressive $1.8 trillion in online sales last year, edges out the US. The two nations combined account for about two-thirds of the global e-commerce market.
Yet, brick-and-mortar stores aren't fading into obsolescence just yet. By 2028, a whopping 76% of total global sales are still expected to come from traditional offline retail, amounting to an impressive $21.9 trillion.
E-commerce hasn't lost its allure for consumers, even as the COVID-19 pandemic fades into memory. A survey by the researchers found that while shopping in physical stores has resurged, online sales continue to resonate with a significant chunk of consumers in the US.
"Despite store closures and social distancing during the pandemic driving a massive surge in e-commerce growth, recent years have seen a reversal as consumers flocked back to physical stores. But looking ahead, we anticipate that online sales will find momentum once again, with shopping offers, and AI initiatives leading the charge," said Jitender Miglani, the principal forecast analyst at Forrester, in a blog post.
The report, compiled from data from 40 countries responsible for 88% of the world's gross domestic product, points to several promising areas of growth, including marketplaces, social commerce, online grocery buying, BOPIS (buy online, pick up in-store), quick commerce, livestream selling, and DTC (direct-to-consumer) sales among others.
In the near term, an Adobe online sales report showed that while US consumers may be cautiously trimming their online spending, sales on these platforms are still up 7% compared to a year ago, for the period between January 1st and April 30th.
While online sales inch closer to recording impressive growth, brick-and-mortar stores remain crucial players in the shopping experience. A separate report by the International Council of Shopping Centers revealed that the opening of a new store can increase online shopping in the area by 6.9%, a figure that jumps to an impressive 13.9% for DTC brands. Conversely, closing a physical store can lead to a dip in online sales for a brand of 11.5%.
As trends continue to shift, more DTC brands are doubling down on their presence in physical stores, opening pop-up shops, permanent stores, and wholesale partnerships to better connect with customers and adapt to the new retail landscape. Experts call this move a move towards a hybrid operating model, as more and more brands recognize the potential pitfalls in relying too heavily on e-commerce alone.
In fact, a NuOrder report found that wholesale was the most profitable investment channel for brands looking to expand and connect with new customers.
"The hybrid business model that integrates both online and brick-and-mortar elements is crucial for modern retail business growth," Miglani noted in an email. "By combining the strengths of both platforms, we can offer customers a seamless, flexible, and convenient shopping experience. Integrating channels also creates a cohesive omnichannel experience."
- The COVID-19 pandemic may have faded, but online sales continue to resonate with consumers, indicating a potential surge in e-commerce growth in the future.
- While AI initiatives could play a significant role in driving this growth, traditional offline retail is still expected to contribute a significant portion of global sales by 2028.
- The hybrid business model, which integrates both online and brick-and-mortar elements, is becoming increasingly crucial for modern retail business growth.
- The Forrester report suggests that marketplaces, social commerce, online grocery buying, BOPIS, quick commerce, livestream selling, and DTC sales are promising areas of growth in the global e-commerce market.
- Despite continued growth in online sales, the opening of a new physical store can increase online shopping in the area by 6.9%, while closing a physical store can lead to a dip in online sales for a brand of 11.5%.
- Wholesale partnerships emerged as the most profitable investment channel for brands looking to expand and connect with new customers, according to a NuOrder report.
