Last year, the global e-commerce market witnessed a decline in the exponential growth it had enjoyed in recent years. Find out what fulfilment facilities can expect for the year ahead in global e-commerce trends.
By BEUMER Group
In 2022, the global e-commerce market witnessed a decline in the exponential growth it had enjoyed in recent years. While the falloff in growth is expected to continue in the year ahead, the slowdown will be minimal.
At least, that’s what the market research is indicating. We look at some of the statistics around global e-commerce and its growth rates and the trends that e-commerce fulfilment facilities should watch for in the coming year.
Global e-commerce has seen skyrocketing growth over recent years, driven in no small part by the global pandemic.
However, in mid 2022 we did see forecasts that predicted a decline in growth with eMarketer reporting that global e-commerce sales would increase by just 9.7 percent. This would be, eMarketer anticipated, by far the slowest pace of expansion since it had started tracking the figure in 2011.
It noted, however, the declines in e-commerce growth around the world would be minimal over the next years.
Indeed, online purchases are expected to reach 20.8 percent in 2023, a two percentage point increase in e-commerce market share from two years ago, which were at 17.8 percent of all sales. And that growth is expected to continue, reaching 23 percentage by 2025.
According to the Global and United States E-commerce Market Report and Forecast, the global e-commerce market size (worth USD 7750530 million in 2022) is forecasted to grow to USD 20313450 million by 2028 with a CAGR of 17.
For fulfilment centres and logistics operators, the future of global e-commerce continues to look very bright, despite weathering a slight decline.
Within the global e-commerce market, online retail sales will reach $6.51 trillion by 2023 according to Statista.
Many national markets have already witnessed double-digit e-commerce growth since 2020, when it comes to online retail sales. Take the following for example:
In 2022, the top five e-commerce markets were China, US, UK, Japan and South Korea and are expected to continue ranking as the top markets until 2025. The e-commerce sales figures from these leading markets look like this:
These are some of the statistics and forecasts about the health of the global e-commerce market. And what of global movements that could impact logistics operators? We take a look at that next.
We know that nothing stands still and even after suffering a two-year economic slump, global markets continue to face significant uncertainties.
Amidst this unpredictable environment, we consider the following five trends are the most pressing and deserve attention for e-commerce fulfilment facilities.
There is little doubt that concerns around the global pandemic have, at least for now, given way to concerns of geopolitical conflicts, high inflation, energy insecurity and nervousness around a pending global recession.
In October 2022, the World Economic Forum reported that concerns over runaway inflation surpassed those about COVID-19, poverty and social inequality and unemployment and jobs.
Source of image: World Economic Forum
While people continue to spend money, global brands can’t avoid the pressure of inflation, macroeconomics and geopolitical situations.
It is predicted that even for cash-rich companies, investments in technology (such as e-commerce solutions) and technological capabilities will help advance growth. For the logistics operator, increased automation and use of digital solutions will be more important than ever in order to respond and modify their processes to meet evolving circumstances.
For years, the cornerstones of supply chain management have been globalisation, low-cost supplies and minimal inventories.
However, COVID-19 broke supply chains around the world and its impact cannot be understated. It forced companies to build supply chain resilience and assess how future interruptions can be avoided and systems reestablished quickly if need be.
Unfortunately, supply chain disruptions are becoming ever more frequent and harsh. According to McKinsey, disruptions to manufacturing production occur now about every 3.7 years.
Experts predict that systems could “normalise” in 2023. But even if they do, the pandemic exposed global logistic network vulnerabilities to future political instability, natural disasters, and regulatory changes.
Supply-chain resilience has, therefore, emerged as business-critical.
One of the forces driving the growth of online retail commerce is the global use of smartphones and tablets.
Both retailers and shoppers are increasingly using mobile shopping apps, with one in five US shoppers reporting using them multiple times per day. Branded shopping apps, 5G wireless and social shopping have all converged to make this mobile commerce – or m–commerce – smoother.
In fact, mobile-commerce was predicted to take up 6 percent of total retail sales in 2022, a rise from 4.1 percent in 2019. And by 2025, social commerce sales – those taking place on platforms such as Facebook, Instagram and TikTok – are estimated to triple.
Nearly half of China’s consumers already shop on social and we can expect to see further growth across all markets with the rise of branded shopping apps, more SMS and Facebook Messenger marketing campaigns and greater social commerce content on TikTok and Instagram.
An extension of these m-commerce channels is also emerging in the increasingly popular live shopping.
For the uninitiated, this phenomenon is based on the belief that the future of shopping is video. It provides an experience most closely resembling in-person shopping where buyers can watch people (eg. influencers) try on products in real time and comment. Think television shopping channels shopping of the 1970-80s that specialised in selling home goods, fashion and beauty products. The concept is the same but now takes place on mobile phones.
Live shopping has completely taken off in China where the live market is forecasted to increase from $2.27 billion in 2021 to $4.92 billion in 2023. It’s emerging as a marketing channel in other markets also, such as the US, where 20 percent of online shoppers said they’d participated in live commerce.
According to McKinsey, live commerce sales could account for as much as 20 percent of all e-commerce by 2026.
According to projections, retail e-commerce sales in Asia-Pacific will be greater than the rest of the world combined by 2023.
In 2022, for example, China’s e-commerce sales totalled approximately $2.8 trillion. That’s more than double the US market. And this disparity is even more pronounced in B2B, as APAC and China continue to improve their industrial structures.
It must be remembered that with around 632 million internet users, China is the fastest-growing and largest e-commerce market in the world.
All the data, market research and trends speak of an e-commerce market that has become and will continue to be a significant part of the global economy. Despite facing some headwinds, the market will continue to grow, providing e-commerce fulfilment facilities plenty of opportunities for increased growth. In servicing this market, however, it will be important that fulfilment centres work to optimise their operations to reduce costs and resources through increased use of automation and digital technologies.
