Online retail market foreseeable to surge past $6.8 trillion by 2028.
Revamped Report:
Speedy Scuttlebutt:
You're all set to hear the latest scoop on the digital shopping front. Despite a slowdown in the past two years, global online retail sales are forecasted to surge from $4.4 trillion in 2023 to a whopping $6.8 trillion by 2028, growing at a mammoth 8.9% compound annual growth rate, according to a new Forrester report.
In the U.S., online sales are projected to swell from $1 trillion in 2023 to an impressive $1.6 trillion by 2028, accounting for 28% of total domestic retail sales. Although China takes the top spot with $1.8 trillion in online sales last year, the U.S. and China together dominate about two-thirds of the global e-commerce sector.
While online sales are on an upward trajectory, brick-and-mortar stores are far from dead. By 2028, some 76% of total global sales are expected to come from offline retail, adding up to a staggering $21.9 trillion.
In-depth Insights:
The report reveals that online shopping continues to resonate with a sizeable chunk of American consumers, despite the slowdown following the COVID-19 pandemic. Jitender Miglani, principal forecast analyst at Forrester, states, "We expect online sales to regain momentum from shopping offers and AI initiatives in the coming years."
With information from 40 countries accounting for 88% of the world's GDP, the report shows that the growth of online sales mainly stems from the surge of marketplaces, social commerce, online grocery buying, Buy Online Pickup In-store (BOPIS), quick commerce, livestream selling, and Direct-to-Consumer (DTC) selling.
Recent reports also suggest that, despite a shift in spending patterns, online sales in the U.S. are still up 7% from last year for the period January 1 to April 30.
Physical stores remain a vital component of the shopping experience. A 2023 report by the International Council of Shopping Centers indicates that a new store opening can boost online shopping in the area by 13.9%, while closing a brick-and-mortar location can lead to a 11.5% decrease in online sales for a brand.
In response to these trends, a growing number of DTC brands are ramping up the pace of opening pop-up shops and permanent brick-and-mortar locations, and forming wholesale partnerships to expand their consumer base and cater to customers wherever they shop. It's all part of a shift towards a hybrid operating model that blends online and offline retail experiences. According to a recent NuOrder report, wholesale is the most profitable investment channel for brands.
"A hybrid business model that incorporates both online and offline elements is crucial for modern retail growth," Miglani says. "It leverages the strengths of both digital and physical platforms to offer a seamless customer experience, providing flexible and convenient touchpoints for engagement, and creating a cohesive omnichannel experience."
- The pandemic's slowdown impact on online shopping seems to be temporary, as Forrester's new report projects a surge in global online retail sales, reaching $6.8 trillion by 2028.
- In the midst of this growth, online sales in the U.S. are projected to reach $1.6 trillion by 2028, accounting for 28% of total domestic retail sales.
- Despite the booming online retail sector, offline retail sales are anticipated to constitute a majority of global retail sales by 2028, amounting to a colossal $21.9 trillion.
- The report indicates that AI initiatives and shopping offers are likely to propel online sales growth in the coming years.
- Marketplaces, social commerce, online grocery buying, Buy Online Pickup In-store (BOPIS), quick commerce, livestream selling, and Direct-to-Consumer (DTC) selling are key drivers of the growth in online sales worldwide.
- In an effort to adapt to these trends, DTC brands are integrating a hybrid business model that combines online and offline retail experiences, including pop-up shops, permanent brick-and-mortar locations, and wholesale partnerships. According to a recent NuOrder report, wholesale is the most profitable investment channel for brands.
