Once a niche alternative to traditional shopping, e-commerce has evolved into a dominant force in global retail – one now poised for another transformational leap.
E-commerce’s global growth trajectory
Underpinned by rising smartphone penetration, improved digital infrastructure, and accelerating innovation in fulfilment and payments, the industry could expand from $4 trillion in 2022 to as much as $20 trillion by 2040 according to McKinsey.
This trajectory, with a compound annual growth rate of 7–9%, promises to reshape the structure and geography of global commerce.
Global Retail Sales
At present, e-commerce accounts for approximately 20% of global retail sales, with retail and food e-commerce forming the two principal revenue streams.
Retail e-commerce – spanning goods such as clothing, appliances, and consumer electronics – could rise to 27–38% of the global retail market by 2040.
Meanwhile, food e-commerce, which includes grocery delivery and online restaurant orders, is projected to grow fivefold to $3–4 trillion in the same period.
Emerging Markets
Emerging markets offer fertile ground for further expansion.
In 2022, retail e-commerce penetration was a modest 12% in Latin America, 4% in the Middle East, and just 2% in Africa.
Yet, by 2040, those figures could rise significantly, thanks to improved connectivity and logistical advancements.
Smartphone use is a critical enabler: in sub-Saharan Africa, for instance, penetration doubled between 2018 and 2022, with further gains expected to add hundreds of millions of new users by 2027.
While developing economies expand access, mature markets are innovating at the frontier.
In North America and parts of Asia, e-commerce penetration is already high, driven by sophisticated last-mile delivery networks and evolving formats like social commerce and conversational commerce.
The latter, powered by generative AI and messaging apps like WhatsApp, is creating seamless, frictionless buying experiences that blend personal interaction with automation.
Social Commerce
Social commerce – a fusion of social media and online retail – is also gaining ground.
In China, sales via live-streamed social selling sessions surpassed $24 billion in 2023, accounting for over 30% of national e-commerce revenue.
Western platforms are now experimenting with similar formats, integrating influencer-driven commerce into mainstream consumer channels.
Emotional and storytelling-based categories – such as fashion, beauty, and home décor – are natural beneficiaries of this trend.
Another major trend is the shift towards value-oriented platforms.
Pinduoduo in China and its global counterparts Temu and SHEIN have upended expectations by offering low-cost, gamified shopping experiences.
Their success highlights the disruptive power of supply chain efficiency and mobile-native engagement models.
In parallel, direct-to-consumer (DTC) brands like Warby Parker and Casper are capturing share by bypassing traditional intermediaries, aided by platforms such as Shopify and embedded commerce in social networks.
Incumbents Face Rising Competition
Crucially, platform incumbents face rising competition.
In 2023, Amazon, Alibaba, and JD.com generated 15% of e-commerce platform revenue but enabled nearly 42% of total merchandise value sold online.
Their dominance stems from network effects and capital-intensive logistics, yet challengers in developing markets are gaining ground.
Mercado Libre in Latin America and Tencent’s WeChat ecosystem in China have carved out strongholds with region-specific payment and seller support systems.
The competitive outlook remains uncertain, shaped by swing factors including regulation, technology, and innovation in physical retail.
Tighter oversight could curb platform consolidation in certain markets.
Meanwhile, the adoption of AI – either as a tool for incumbents or an entry point for new players – could catalyse further disruption.
The potential digitisation of non-traditional retail categories, such as healthcare or education, also presents a significant opportunity.
The global e-commerce sector is thus poised at a complex inflection point.
The next chapter will be written not just by growth in transaction volume, but by shifts in who controls access to consumers, how purchases are made, and which technologies unlock new modes of buying and selling.
For the payments industry, the implications are profound – from integrating with new commerce platforms to enabling seamless cross-border and cross-format transactions – but its clear it still represents a huge opportunity.
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