A special report from The Economist Intelligence Unit (The EIU) predicts that online retail will continue to expand its share of total retail sales, rising from 10 percent in 2019 to nearly 20 percent by 2025.
While the US will remain a crucial market, the majority of online sales will come from emerging markets in Asia, Latin America and the Middle East. Combining data and forecasts that cover 58 markets worldwide, the EIU estimates that global online retail sales expanded by 32 percent in 2020 to US $2.6trn, even while the overall retail market contracted by 20 percent.
After a record year, the pace of growth will inevitably slow from 2021, however online retailers are not going to give up the ground they have gained. With more people shopping online, retailers will need to devise winning strategies in three key areas; adopting next-generation technologies, warehousing and fulfilment, and harnessing a new generation of digital sellers.
“In a fiercely competitive sector, there will be both winners and losers from the market transformation, depending on retailers’ ability to shift online and retain customers,” says Barsali Bhattacharyya, manager of Industry Briefing at The Economist Intelligence Unit.
“Besides using the latest technologies to keep a finger on the consumer’s pulse, companies will need to explore which markets offer most potential, all the while navigating increased regulatory barriers, as well as cyber-security and labour risks.”
The ease of online shopping and options for home delivery have been very attractive to customers, who will continue to use these methods even when they can walk into shops again.
In 2020, expenditure on food and beverages rose by 5 percent, and online grocery expanded from a small base pre-Covid to account for the lion’s share of online sales in most markets. The EIU expects online grocery to retain its momentum over other categories of goods until at least 2023, when non-food retailing will begin to accelerate again.