- Online retail sales will hit $1.2 trillion in 2024, an increase of $108 billion or about 9.8% over 2023, according to FTI Consulting. In addition, the ecommerce market share will hit 22.7% by the end of the year, up from 21.6% at the end of 2023.
- Ecommerce sales growth represented 46% of all retail sales growth in 2023, consistent with pre-COVID capture rates, and ecommerce sales growth represented 57% of all sales retail sales growth in the first quarter of 2024.
- The growth projections come as a host of new players, many of them Chinese-owned like Temu, Shein, and TikTok Shop, enter the market, look to disrupt the landscape and grab a share of the U.S. market.
Without question, the Covid-19 pandemic accelerated the already fast-moving trend toward ecommerce’s dominance. While the pandemic has ended, many of those shopping habits remained, leaving brick-and-mortar retailers struggling and ecommerce becoming the preferred shopping channel for consumers. FTI’s “2024 Online Retail Report” bears that trend out, noting that ecommerce has resumed its pre-pandemic trajectory while maintaining the post-pandemic gains.
“Our projected sales growth rate for ecommerce in 2024 is more than twice the expected growth rate of total retail sales (excluding auto & gas) and more than three times estimated store-based total sales growth,” said Kurt Staelens, FTI Consulting’s senior managing director, in the report.
This growth comes despite the market’s general overall maturity, as well as with the introduction of new competitors such as Temu, Shein and TikTok Shop, which are all looking to gain a foothold in the U.S. market. The biggest threat these newcomers pose will be to brick-and-mortar stores that sell low-cost apparel and home goods, according to the report.
As a result, retailers are experimenting with altering their models to prioritize the ecommerce channel while maintaining some relevance in the brick-and-mortar channels. They are examining the consumer journey to blend in-store and online experiences, reducing fixed costs by closing unprofitable stores and trying smaller-scale options of brick-and-mortar retail venues, leveraging physical stores as fulfillment hubs and using AI to improve consumer engagement.
