Forrester: Global Online Retail Sales To Grow 8.9% Annually, Reaching $6.8 Trillion In 2028

Rhea-AI Summary

Forrester (Nasdaq: FORR) forecasts global online retail sales to grow from $4.4 trillion in 2023 to $6.8 trillion by 2028, with an 8.9% CAGR. Despite this growth, 76% ($21.9 trillion) of global retail sales will remain offline. Advanced economies like the US, UK, and South Korea lead in e-commerce due to higher digital literacy and internet penetration. Emerging markets in Asia Pacific, Eastern Europe, and Latin America are rapidly catching up due to increasing smartphone adoption and mobile commerce.

In the US, online retail sales are projected to reach $1.6 trillion by 2028. Western Europe is expected to see online sales grow from $508 billion to $773 billion by 2028. Asia-Pacific will witness growth from $2.2 trillion to $3.2 trillion, with China leading the region. Southeast Asia's top six markets will see sales rise from $93 billion to $193 billion, driven by high CAGRs in the Philippines and Vietnam.

Positive

• Global online retail sales expected to grow at an 8.9% CAGR, reaching $6.8 trillion by 2028.
• US online retail sales projected to reach $1.6 trillion by 2028.
• Western European online sales anticipated to grow from $508 billion to $773 billion by 2028.
• Asia-Pacific online sales forecasted to rise from $2.2 trillion to $3.2 trillion by 2028.
• Southeast Asia's top six markets to see retail e-commerce sales increase from $93 billion to $193 billion by 2028.
• Strong growth in emerging markets due to increasing smartphone adoption and mobile commerce.

Negative

• Despite the growth, 76% of global retail sales will remain offline by 2028, highlighting the continuing dominance of traditional retail.
• Canada lags behind the US in e-commerce penetration due to lower population density and market size.
• Eastern Europe's online retail penetration remains half that of Western Europe, indicating slower adoption.

Insights

Market Research Analyst

The report's projection of an 8.9% CAGR in global online retail sales leading to $6.8 trillion by 2028 is significant. This growth highlights the shifting consumer preference towards online shopping, driven by rising digital literacy and smartphone usage.

Retailers' investments in generative AI (genAI) and the expansion of online marketplaces are key drivers. GenAI can enhance personalized shopping experiences by leveraging customer data to suggest products, thus increasing sales and customer retention. Additionally, the rise of online marketplaces provides smaller retailers with a broader platform, increasing competition but also potential market reach.

Although e-commerce is booming, the projection that 76% of global retail sales will remain offline by 2028 underscores the importance of an omnichannel strategy. Retailers must integrate online and offline experiences seamlessly to cater to diverse consumer preferences.

Geographical variances in e-commerce maturity are also critical. While advanced economies like the US and UK are leading, emerging markets in Asia Pacific and Latin America present growth opportunities due to increasing internet penetration and mobile commerce.

Understanding these dynamics can inform investment decisions, particularly in tech-driven retail innovations and market-specific strategies.

Rating: 1 (Positive)

Financial Analyst

The anticipated growth in online retail sales represents a lucrative opportunity for investors. An 8.9% CAGR suggests robust demand and potential revenue streams for e-commerce companies, technology providers and logistics firms involved in the supply chain.

However, the projected $6.8 trillion market size by 2028 must be contextualized against the backdrop of economic uncertainties and potential regulatory changes that could impact global trade dynamics. Investors should also consider currency fluctuations and geopolitical influences that might affect international sales.

Retailers' investments in genAI and the continued expansion of online marketplaces could drive operational efficiencies and enhance profit margins. However, these investments require significant capital and the returns may vary based on execution and market conditions.

Revenue growth in emerging markets poses both opportunities and risks. While these regions offer high growth potential, they also come with challenges such as infrastructure limitations and varying consumer behavior patterns.

Overall, the long-term growth prospects are promising, but investors should balance their portfolios with a mix of established markets and emerging opportunities to mitigate risks.

Rating: 1 (Positive)

Retailers’ investments in genAI, the rise of online marketplaces, and higher digital literacy will continue to drive global online retail sales growth

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Forrester (Nasdaq: FORR) forecasts that total global online retail sales will grow from $4.4 trillion in 2023 to $6.8 trillion by 2028 at an 8.9% compound annual growth rate (CAGR). According to the report Global Retail E-Commerce Forecast, 2024 To 2028, which provides a five-year forecast for total, online, and offline retail sales for 40 countries globally, despite the growth in e-commerce, 76% (or $21.9 trillion) of global retail sales will still occur offline in 2028. As a result, retailers must continue to invest in omnichannel strategies that provide a seamless shopping experience, both online and offline.

The report further states that retail e-commerce maturity varies globally. Advanced economies including the US, the UK, and South Korea are more mature due to higher internet penetration and digital literacy. As smartphone adoption and mobile commerce become more widespread, however, emerging markets in Asia Pacific, Eastern Europe, and Latin America are catching up. This rapid adaptation is transforming the global e-commerce landscape, presenting new opportunities for businesses and consumers alike.

Looking ahead at 2024 and beyond, Forrester expects continued growth momentum for online retail sales globally. Following are some noteworthy highlights from the report, broken down by global region.

The Americas:

• In the US, online retail sales are expected to reach $1.6 trillion by 2028, accounting for 28% of total US retail sales.
• E-commerce is more mature in the US compared to Canada, with Canadian online retail sales expected to reach $83 billion by 2028. Canada lags the US in e-commerce penetration due to lower population density, a smaller market size, and slower consumer adoption.
• In Latin America, online retail sales in the top six countries — Brazil, Mexico, Argentina, Colombia, Peru, and Chile — will grow from $109 billion in 2023 to $192 billion by 2028.

Europe:

• In Western European countries — including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK — online retail sales are expected to grow from $508 billion in 2023 to $773 billion in 2028, with online retail penetration increasing from 15% to 20%. The UK will continue to be the biggest market for retail e-commerce, followed by Germany, France, Italy, and Spain.
• In Eastern Europe, online retail penetration is half that of Western Europe. Forrester forecasts that online retail sales for the top five Eastern European countries — Russia, Poland, the Czech Republic, Romania, and Hungary — will increase from $72 billion in 2023 to $126 billion in 2028, with Russia and Poland leading the region.

Asia-Pacific:

• In Asia-Pacific, online retail sales for the top five countries — China, South Korea, Japan, India, and Australia — are expected to increase from $2.2 trillion in 2023 to $3.2 trillion in 2028, with China leading the region. China and South Korea are the top two countries globally in terms of e-commerce penetration and will each have online retail penetration of more than 40% by 2028.
• In Southeast Asia’s top six countries — Indonesia, Thailand, Vietnam, Malaysia, the Philippines, and Singapore — retail e-commerce sales reached $93 billion in 2023 and will rise to $193 billion by 2028 to capture 17.4% of total retail sales. Indonesia leads the region in online retail penetration, followed by Malaysia and Singapore. The Philippines and Vietnam will see a CAGR of more than 20% over the next five years, outpacing other countries in the region.

“The growth of online marketplaces, social commerce, livestream selling, and direct-to-consumer commerce will accelerate global online retail sales growth over the next five years,” said Jitender Miglani, principal forecast analyst at Forrester. “However, e-commerce maturity and growth opportunities vary vastly by region. Retailers and brands must therefore have a thorough understanding of the key drivers of retail and e-commerce growth in their priority markets and tailor their strategies appropriately, to succeed.”

Resources:

• Read Forrester’s report, Global Retail E-Commerce Forecast, 2024 To 2028 (client access required).
• Learn more about Forrester’s Global Retail E-Commerce Forecast, 2024 To 2028, in this blog.

About Forrester
Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, customer experience, digital, marketing, sales, and product functions use customer obsession to accelerate growth. Through Forrester’s proprietary research, consulting, and events, leaders from around the globe are empowered to be bold at work — to navigate change and put their customers at the center of their leadership, strategy, and operations. Our unique insights are grounded in annual surveys of more than 700,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; more than 100 million real-time feedback votes; and the shared wisdom of our clients. To learn more, visit Forrester.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240530846364/en/

Press

Hannah Segvich

hsegvich@forrester.com

Source: Forrester

FAQ

What is the forecasted growth rate of global online retail sales by 2028?

Forrester forecasts an 8.9% compound annual growth rate (CAGR), reaching $6.8 trillion by 2028.

How much are US online retail sales expected to reach by 2028?

US online retail sales are expected to reach $1.6 trillion by 2028.

What percentage of global retail sales will remain offline by 2028?

76% of global retail sales will remain offline by 2028.

Which regions will see significant growth in online retail sales?

Asia-Pacific, Southeast Asia, and emerging markets in Eastern Europe and Latin America will see significant growth.

How will Western European online retail sales change by 2028?

Western European online retail sales are expected to grow from $508 billion in 2023 to $773 billion by 2028.

Which countries lead in e-commerce penetration in the Asia-Pacific region?

China and South Korea lead in e-commerce penetration in the Asia-Pacific region.

What is the expected CAGR for the Philippines and Vietnam in Southeast Asia?

The Philippines and Vietnam are expected to see a CAGR of more than 20% over the next five years.