eCommerce Market size: The World of Soaring Online Sales
Shopping is no longer about stocking shelves and waiting for customers to flock to your store. Rapid technological developments transformed the world of retail. Goods are now sold via mobile and desktop.
And who doesn’t love the online shopping game! It’s the world of brand names and a vast array of affordable products at your fingertips. Buying a book, a gadget or groceries is faster than ever.
The remarkably successful eCommerce industry is continually expanding with profits soaring to new heights. So, when talking about the eCommerce market, size does matter.
The eCommerce market is worth trillions
According to eCommerce data, online stores worldwide generated more than $3.5 trillion in 2019. That figure is projected to grow further by $500 billion throughout 2020 and more than double in 2022.
These impressive numbers are hardly surprising. The mere convenience of online shopping that allows us to make purchases from the comfort of our homes is just one of the many reasons why the eCommerce industry is growing faster each year.
The internet permanently changed the face of retail. It gave rise to new shopping avenues and more ways to interact with brands. It also provided retailers with more options for reaching customers.Source: Statista
In recent years, mobile eCommerce, also known as mCommerce, has been playing an increasingly significant role in the grand scheme of things. Mobile devices were traditionally used for making calls and sending text messages, but today these pocket computers are more popular than some of their bulkier counterparts.
It’s increasingly common to hear about people using their smartphones for work, play, and of course, shopping.
China is the current eCommerce market leader
When it comes to the size of the international eCommerce market, China is the dominant force. The US is a distant second, but these two countries combined account for a third of global online sales.Source: Statista
An overview of the eCommerce market size by country unveils a number of significant trends in retail and how the market is shifting. The more obvious one involves American online stores and their declining traffic. Chinese companies like Alibaba Group, which owns Aliexpress among others, now operate globally.
They are outdoing the competition with bargain bin deals, attracting customers of all ages and from all income groups. Experts are predicting that the US share is likely to decrease to 16.9% of the global eCommerce market in 2020.
Meanwhile, China’s eCommerce market size is far more impressive. For example, online shoppers in China outnumber the total population of North America. In 2018, over 560 million Chinese customers made an online order. Analysts expect that number to reach 634 million in 2020.
The vast majority of the companies that dominate the Chinese market are homegrown and include Alibaba, Tmall, JD.com and Pindoudou. These four entities hold 80% of the market share and offer mobile apps and coupons. Smartphones are a huge hit in China, so it’s imperative for eCommerce retailers to offer an app for their store.
Internet shopping is increasingly popular with holiday shoppers across the world. After all, no one wants to put a damper on their holiday cheer by waiting in long queues at the local mall.
Black Friday instantly comes to mind when talking about overcrowded stores and massive sales. Meanwhile, colossal internet sales are fuelled by shoppers flooding online stores like Best Buy and Walmart in the hopes of grabbing a new TV set or another gadget at incredibly low prices.
Black Friday is followed by Cyber Monday, a day of great deals and discounts dedicated exclusively to online shoppers.
A growing number of Americans are choosing to stay away from those overcrowded discount aisles. They prefer to sit back, relax, and with a few taps on their phone, browse through the Black Friday/Cyber Monday deals. Retailers are well aware of these existing trends and are devoting more focus to eCommerce sales.
During Black Friday in 2018, online shops throughout the United States reported a record-breaking $6.2 billion in earnings.
The Chinese have a similar shopping holiday. It’s called Singles Day, and it’s the busiest day of the year for the eCommerce industry in the country, generating massive eRetail revenues. On November 11, brands and online stores offer discounts, 2FOR1 deals and similar offers that generate up to 80% of annual traffic.
Alibaba Group had their best Singles Day in 2018, netting a total of $31 billion. Of that sum, the company made $10 billion in the first hour of sales. The true eCommerce market size is further revealed when looking at sales numbers for Christmas, New Year’s Day and Valentine's Day.
In total, online holiday shoppers in the US spent $126 billion in 2018, marking a 16.5% increase from the year before. Christmas shoppers tend to spend a lot of money, purchasing an average of 16 gifts in 2018.
Who are the kings of eCommerce?
Every industry has a lot of small fish and a few big ones. The top eCommerce companies are the big boys on the block. They are the ones that everyone is trying to measure up to, and they have the profit margins that everyone dreams of. These are massive businesses generating billions in profit each month while helping propel the economies of their countries.
What started out as a small online bookstore 25 years ago evolved into one of the best places to shop online. Amazon is synonymous with eCommerce. With a multitude of offices around the globe, it offers all kinds of products as well as streaming services for movies and music.
One of the largest ecommerce companies in China is also one of the global leaders in this market. Founded in 1999 by Jack Ma, Alibaba has been crowned as the leader in online wholesale, operating in over 200 countries. The company has thousands of business partners that offer their wares through the online storefront.
The group has several shops and services under its belt, unifying them under their own payment processing system.
For many, eBay is the first thing that comes to mind when talking about online sales. The company that started out by selling a pen for $14.83 emerged as one of the biggest success stories from the 90’s dot-com bubble.
Although eCommerce did relatively well last year, eBay’s revenue fell by just over 2% in the final quarter of the year. But the company still remains one of the most powerful players in the industry.
Also known as JD.com, Alibaba’s biggest competitor has been in the business for nearly two decades. Favored by millions of users, this Beijing-based eRetailer is the most technologically advanced store in China.
It makes an important contribution to the mobile eCommerce market size with its quarter of a billion customers. Jingdong has exciting plans for the future, involving drones that can carry whole pallets of goods.
Another big player from the Asian market is a company formerly known as Buy.com. Rakuten is often referred to as the Amazon of Japan. Throughout its 22 years of operation, it founded its own bank, sponsored NBA and FIFA teams while launching the widely popular messaging app Viber.
They have even joined forces with Walmart to deliver groceries to Japanese citizens and are now fighting for a spot in the global video streaming market with Wuaki.tv.
The fashion e-commerce market size is nothing to scoff at, especially with companies like Zalando around. This Berlin-based retailer offers over 1,500 famous brands of clothing and is operating in 17 European states. The company has 700 million customers each quarter and promotes itself as the “the starting point of fashion in Europe.”
B2W Companhia Digital
B2W dominates the world of eCommerce in Latin America. It was launched in 2006 as a merger between Americanas.com and Submarino.com. It now holds 50% of the region’s market share and is gradually penetrating the US market.
Moreover, the company doesn’t limit their business to just online retail. It also markets products on television, through catalogues and on newsstands. This company is one of the prime examples of an omnichannel business.
Brick-and-mortar is still king
While the numbers show that online retail is increasingly popular among consumers, most people still get their shopping done the traditional way. So-called brick-and-mortar businesses are still more popular than online retailers. However, the ongoing eCommerce vs retail tussle is gradually shifting to favor online shopping.Source: Statista
In the past four years, the eCommerce market share nearly doubled, jumping from 7.4% to 14.1%. Analysts believe that eCommerce will take at least one-fifth of the market share in the coming years, especially with growing digital markets like India and China around.
Trends in recent years have also shown that mCommerce is on the rise. This gave way to expectations that markets with a strong mobile-first user base will further aid the development of eCommerce.
So, why isn’t it happening faster? Growth of online shopping has always been slow, even though some eRetailers appeared on the scene two decades ago. One of the earlier problems was access. A lot of people simply couldn’t go online due to their location, financial situation, or other factors. Another issue was delivering the purchased items.
Even today, shipping costs tend to be higher than the price of the actual product. Finally, there’s the adoption rate of new technology. The eCommerce market size couldn’t grow until consumers embraced the idea of buying items they couldn’t see and touch in person.
Therefore, modern retail involves integrating traditional approaches with visions for the future. Pretty much every big store will have a website where you can browse and order goods. More often than not, customers will visit the store in person and then order an item online. Shops even encourage this, offering coupons and special deals for online orders.
eRetailers in Asia are going one step further, offering even better deals through their mobile apps.
The rising trend of social shopping
The online retail industry is always on the lookout for new, exciting ways to promote and sell their products. As new generations become new customers, new trends are popping up all around the world. One of the more exciting ones is called social shopping.
It’s a big hit among the younger generations and involves the use of social media to get reviews and recommendations about products. By essentially combining social media and eCommerce, social shopping guides your purchase decisions.
Social media giants like Facebook and Instagram have evolved into full-fledged storefronts that are capable of generating significant revenue for the eCommerce industry. These platforms are an essential part of staying relevant in the digital age and connecting with your target audience. Properly utilizing these platforms guarantees more engagement and naturally more sales.
But, what does all this mean for your retail or eCommerce business? Well, Instagram and Facebook offer buttons that you can put on the products you’re promoting. This allows visitors to see what they are buying and saves them the trouble of scouring around your website to make a purchase. They just need to click or tap on that button.
Videos are also playing an important role on social media and have become a crucial tool in generating interest in the product and improving sales.
The future of eCommerce
eCommerce looks certain to maintain its upward trajectory as it lures more customers away from traditional retail. Online shopping is soaring in popularity in numerous countries while new generations are embracing all digital trends. Below are three crucial features for any online business.
One of the more recent eCommerce trends is seeing retailers decreasing their reliance on their webpages to reach consumers. Today, customers expect a flexible store, one where they can complete their order online but pick up the item at their local shop.
More importantly, that store needs to have synced-up its offline and online data and be widely available through different platforms. There are new platforms springing up almost everyday, and picking the ones that will drive up sales is extremely important when working in the eCommerce industry.
B2B vs B2C
Selling business-to-business could prove more lucrative than selling directly to consumers. The B2B eCommerce market size is expected to grow twice as big as B2C in 2020 with projected revenues of up to $1.18 trillion in the United States alone.
Chinese retailers are now actively pursuing wholesale and B2B sales with some of their largest retailers specializing in B2B. Currently, B2B purchases require too many steps, negotiations and verifications, so streamlining this process will be a step in the right direction.
This is another prominent part of eCommerce. The market’s size is greater thanks to mobile commerce, which has already proven itself more convenient and faster than desktop shopping. After all, more people are using their smartphones to access the internet, so the smart retailers need to hop on this train immediately.
The future is bright, faster and even more connected. The only thing is, will your business manage to keep up?
Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.
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