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E-commerce sales to exceed $6T by 2024—report

  • Annual e-commerce growth will remain positive in the coming years but is expected to moderate as bricks-and-mortar retailers reopen
  • Worldwide e-commerce only sales easily surpassed $4 trillion in 2020 and can now be expected to top $6 trillion by 2024
  • Almost 150 million people shopped online for the first time during the pandemic, and this number of new shoppers will continue to rise
  • Amid surging demand for foreign goods, online cross-border sales experienced a 21% spike in growth during the first half of 2020

Industry stakeholders can expect the e-commerce market to continue to grow in the coming years after expanding sharply in 2020 due to Covid-19, but growth is expected to slow as bricks-and-mortar retailers reopen, according to a new report from Transport Intelligence (Ti).

Annual e-commerce growth will remain positive in the coming years but it is expected to moderate as bricks-and-mortar retailers reopen on a more permanent basis, reducing the need for many consumers to shop online, said the Ti report “How Covid-19 changed the global e-commerce logistics market.”

However, many consumers have become accustomed to shopping online during the pandemic and are unlikely to give it up entirely, meaning online retailers are likely to retain some of these consumers once lockdown measures ease.

“Growth appears to be more stable over the next few years as life adjusts to the new normal. e-commerce will continue to grow just not quite as dramatically,” said the whitepaper.

According to eMarketer, worldwide e-commerce only sales passed $3 trillion for the first time in 2019. So strong was growth in 2020, however, that sales easily surpassed $4 trillion in 2020 and can now be expected to top $6 trillion by 2024.

As part of its sales growth, online retail is also forecast to take an increasing share of overall retail sales, making it apparent that bricks-and-mortar sales will not return to pre-pandemic levels.

In 2021 it looks as though the drivers of e-commerce market development will change still further, said the report. As the Covid-19 pandemic recedes the change it has instigated will continue to ripple across the market for years to come.

Increased cross-border market competition

The Ti whitepaper also highlighted how the Covid-19 pandemic has led to increased competition in the cross-border market.

According to eMarketer, almost 150 million people shopped online for the first time during the pandemic, and this number of new shoppers will continue to rise. e-commerce’s growing traction has gained attention from brands wishing to capitalize on this growth. This has led to increased competition in the e-commerce market, domestically and internationally.

Cross-border e-commerce is gaining traction. Across the world, the demand for foreign goods is surging. As the Coronavirus spread and consumers became more comfortable purchasing online, they were also introduced to a variety of international brands.

According to Global-e, online cross-border sales experienced a 21% spike in growth during the first half of 2020. In preliminary results for the fourth quarter of 2020, DHL reported that more than 45% of its Time Definite International volume comprised business-to-consumer (B2C) shipments, having risen from around 33% in 2019 and further illustrating the rise in demand for cross-border sales.

The ongoing growth in cross-border e-commerce poses many challenges, however, said the report. Logistics providers face the increased importance on value-added services such as trade compliance, customers, taxation expertise and documentation and returns handling. Meanwhile, retailers have the additional challenge of tailoring websites and inventories to specific countries.

When it comes to delivery, consumers have stated that the main drivers for choosing cross-border purchases are savings, shipping, and quality. However, the logistical challenges those services create receive little attention. Additionally, questions concerning how those challenges inflict costs are either passed onto consumers or absorbed by the retailer.

These issues could be mitigated by moving inventory into multiple markets, closer to where the demand is. Doing so would ensure reliable and quick delivery and is advantageous for the returns process.

However, this presents a new set of challenges that will need addressing. Essentials such as building up a physical warehouse presence with duplicated inventory require additional capital and operational expenditure, as does staffing those locations and investing in automation technology to operate them.

Additionally, the introduction of IT and data analytics that can determine appropriate inventory allocation to each warehouse, market, or country can drive down costs.

Despite the challenges presented by cross-border e-commerce operations, the growth potential is enormous. The Covid-19 pandemic has emphasized its potential further, said the report.

Photo by rupixen.com on Unsplash

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