Will e-commerce keep growing?

A recent study projecting the compound annual growth rate (CAGR) of e-commerce sales from 2023 to 2027 reveals intriguing trends. Countries like India and Brazil lead the charge with a growth rate hovering around 14%. This is closely followed by nations like Argentina and Turkey, each showing an impressive growth of approximately 13.5%. Mexico, Russia, and China are also significant contenders, with growth rates slightly above 12%. South Africa, Italy, and the USA are not far behind, showcasing growth around the 11% to 12% range.

These figures, when compared to the global average of about 11%, indicate a robust expansion in both emerging and established markets. Amazon and Alibaba have been at the forefront of this revolution. Amazon's dominance in Western markets, particularly the USA, is marked by its customer-centric approach and vast product assortment. Alibaba, on the other hand, has revolutionized e-commerce in China and other Asian markets with platforms like Taobao and Tmall, offering a wide range of products and services.

A fascinating trend is the emergence of social media platforms like Facebook and TikTok as significant e-commerce players. The concept of live sales and the integration of shopping features into these platforms have opened new avenues for personalized and interactive shopping experiences. This shift is indicative of how consumer behavior is evolving, favoring platforms that offer a blend of social interaction and e-commerce.

Looking back at 2010-2022, the growth of e-commerce was primarily driven by increased internet penetration and the convenience of online shopping. In 2010, global e-commerce sales were around $572 billion. By 2020, this number had skyrocketed to approximately $4.28 trillion, showing an almost eightfold increase over a decade. In 2010, e-commerce accounted for just 4.6% of total retail sales worldwide. By 2020, this figure had jumped to about 18%, demonstrating the increasing preference for online shopping. The United States and China emerged as the e-commerce giants. In 2020, China's e-commerce sales were estimated at about $2.3 trillion, while the U.S. saw sales of around $800 billion.

By 2020, nearly 70% of e-commerce traffic came from mobile devices, indicating the growing importance of mobile-friendly platforms. The outbreak of COVID-19 and the subsequent lockdowns and social distancing measures led to an unprecedented surge in e-commerce. In 2020, as the pandemic hit, there was an immediate spike in online sales. In the first quarter of 2020 alone, e-commerce grew by 14.8% in the US, a stark contrast to the 2.4% growth in the same quarter of the previous year. Essential goods, including groceries and healthcare products, saw a significant jump in online sales. For instance, in the US, online grocery sales grew by 54% in 2020.

The pandemic induced a shift in consumer behaviour, with more people opting for online shopping to avoid physical stores. This change is expected to have lasting effects, with many consumers likely to continue shopping online post-pandemic.

The pandemic's effect on e-commerce was global. In regions like Latin America, e-commerce growth was phenomenal. Brazil, for example, saw a 40% increase in e-commerce sales in 2020. Small and medium-sized businesses rapidly adapted to e-commerce platforms to survive during lockdowns. Platforms like Shopify saw a surge in new store creations, growing by 62% in the second quarter of 2020.