The e-commerce sector has transformed dramatically over recent years, with a notable shift during the pandemic when many retailers and consumer packaged goods (CPG) companies experienced accelerated online growth.
However, as consumers have partially regressed to brick-and-mortar stores, online sales growth has slowed.
According to recent research by Boston Consulting Group (BCG), e-commerce is projected to account for 41% of global retail sales by 2027, a jump from 18% in 2017, underscoring the lasting impact of digital retail trends.
BCG’s study, titled Winning Formulas for E-Commerce Growth, examines these trends through a global survey of 825 retail and CPG companies.
Covering revenues from $50 million to over $10 billion, the research highlights that while e-commerce is aligning with pre-COVID growth trends, the landscape has fundamentally evolved.
Martin Barthel, BCG partner and study co-author, notes, “The rivalry between emerging entrants and established incumbents has heightened, driven by the purchasing patterns of Baby Boomers and Gen-X.”
These generations hold considerable sway in the e-commerce market, reshaping industry priorities.
In 2022, e-commerce growth rates varied by region, with Europe seeing a modest 3% increase, and both the US and Asia reaching 7%.
By 2027, global e-commerce growth is expected to sustain a compound annual growth rate (CAGR) of 9%, almost double the 4% CAGR forecasted for physical retail.
Notably, growth in e-commerce is outpacing traditional retail, though it may not fully match pre-pandemic growth expectations of 12% to 14%.
The study further categorises companies into “winners” and “laggards” based on six e-commerce maturity indicators, such as digital investment ratios, organisational structure, and team agility.
Approximately 27% of retailers and 20% of CPG companies fall into the “winners” category, experiencing annual post-pandemic growth above 30% and confident in continued growth.
By contrast, around 21% of retailers and 25% of CPG companies are “laggards,” reporting limited growth (10% or less annually) and reduced optimism.
Despite this gap, BCG’s Robert Derow suggests, “Many markets and categories are still years from e-commerce maturity, making it worthwhile for businesses to invest in winning capabilities.”
Separate research from Juniper Research forecasts the volume of digital goods e-commerce payments to more than double, reaching 188 billion by 2029, driven primarily by emerging markets such as India and Brazil.
Investments in digital infrastructure and access to high-speed Internet are making digital goods more accessible, while mobile money solutions, like M-Pesa in Africa, are facilitating payments for users without traditional bank accounts.
According to Lorien Carter of Juniper Research, e-commerce merchants should “optimise their platforms to support local payment methods” to better serve this growing market.
Subscription services are also seeing rapid growth in regions like the Indian subcontinent, with companies increasingly offering flexible pricing and localised services.
This trend emphasises the need for providers to harness machine learning for personalised recommendations, catering to a diverse user base.
The study suggests that e-commerce providers who adapt quickly to local demands and preferences will be better positioned to capture the next wave of digital growth.
As e-commerce’s influence grows globally, these findings signal a crucial opportunity for businesses to double down on their digital strategies, with targeted investments in technology, infrastructure, and user experience that cater to both established and emerging markets.
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