Forrester predicts online retail sales to hit USD $6.8 trillion

A new report from Forrester has forecasted that global online retail sales will experience substantial growth from USD $4.4 trillion in 2023 to USD $6.8 trillion by 2028, moving at an annual compound growth rate of 8.9%. The report, titled "Global Retail eCommerce Forecast, 2024-2028," provides a detailed five-year forecast of both online and offline retail sales across 40 countries worldwide.

Despite the surge in eCommerce, the report emphasises that physical stores will still command a significant share of the retail market. By 2028, 76% (USD $21.9 trillion) of the global retail sales, which are projected to total USD $28.7 trillion, will occur offline. This continued prominence of brick-and-mortar outlets indicates that retailers must maintain and enhance their omnichannel strategies to offer a seamless shopping experience regardless of the medium.

Examining various regions, the report indicates disparities in the maturity of retail eCommerce. Advanced economies such as the United States, the United Kingdom, and South Korea exhibit higher levels of eCommerce penetration, driven by greater internet access and digital literacy. Emerging markets, particularly in Asia Pacific, Eastern Europe, and Latin America, are rapidly catching up, spurred by increasing smartphone adoption and mobile commerce.

In Asia Pacific, a standout region, online retail sales from top markets, including China, South Korea, Japan, India, and Australia, are expected to rise from USD $2.2 trillion in 2023 to USD $3.2 trillion by 2028. China and South Korea lead globally in terms of online retail penetration, each expecting to see more than 40% penetration by 2028. In Southeast Asia, the top six countries — Indonesia, Thailand, Vietnam, Malaysia, the Philippines, and Singapore — are projected to grow their retail eCommerce sales from USD $93 billion in 2023 to USD $193 billion by 2028, representing 17.4% of total retail sales in the region. Notably, Indonesia spearheads this growth in penetration, followed by Malaysia and Singapore.

The Americas also show promising growth potential. In the US, online retail sales are forecasted to reach USD $1.6 trillion by 2028, accounting for 28% of total US retail sales. Conversely, Canada's online retail sales are anticipated to stand at USD $83 billion by 2028. Differences in market size, population density, and consumer adoption levels contribute to a slower penetration rate in Canada compared to the US. Latin America's top six countries — Brazil, Mexico, Argentina, Colombia, Peru, and Chile — are projected to witness an increase in online retail sales from USD $109 billion in 2023 to USD $192 billion by 2028.

Western Europe's key markets are poised for growth, with online retail sales expected to rise from USD $508 billion in 2023 to USD $773 billion by 2028. The UK leads this region, followed by Germany, France, Italy, and Spain. In contrast, Eastern Europe displays lower levels of online retail penetration. Nonetheless, Forrester forecasts that the top five countries in this region — Russia, Poland, the Czech Republic, Romania, and Hungary — will see online retail sales increase from USD $72 billion in 2023 to USD $126 billion by 2028.

Jitender Miglani, Principal Forecast Analyst at Forrester, remarked on the influential factors driving this growth: the proliferation of online marketplaces, social commerce, livestream selling, and direct-to-consumer commerce. "eCommerce maturity and growth opportunities vary vastly by region," he noted. Retailers and brands need a comprehensive understanding of these key drivers to tailor strategies for their specific markets effectively.