Market research firm Forrester predicts that global online retail sales will experience significant growth, reaching USD6.8 trillion by 2028.
This forecast represents an 8.9 percent compound annual growth rate (CAGR) from the USD4.4 trillion recorded in 2023.
According to Forrester, the level of retail e-commerce maturity varies across different regions. Advanced economies such as the United States, the United Kingdom, and South Korea have achieved higher levels of maturity due to greater internet penetration and digital literacy.
But as mobile commerce becomes more widespread, emerging markets are catching up and reshaping the global e-commerce landscape.
Asia Pacific witnessing a surge in online retail
Online retail sales for the top five countries in Asia Pacific—China, South Korea, Japan, India, and Australia—are expected to increase from USD2.2 trillion in 2023 to USD3.2 trillion in 2028.
By 2028, both China and South Korea are projected to have online retail penetration rates exceeding 40 percent, making them the top two countries globally in terms of e-commerce penetration.
In Southeast Asia’s six prominent countries—Indonesia, Thailand, Vietnam, Malaysia, the Philippines, and Singapore—retail e-commerce sales are expected to rise from USD93 billion in 2023 to USD193 billion by 2028, capturing 17.4 percent of total retail sales.
Indonesia leads the region in online retail penetration, followed by Malaysia and Singapore. The Philippines and Vietnam are predicted to experience a compound annual growth rate (CAGR) exceeding 20 percent over the next five years, surpassing other countries in the region.
Leading in Southeast Asia are platforms like Shopee and Lazada, while the recent acquisition of Tokopedia by ByteDance’s TikTok is expected to fuel rapid growth in Indonesia. Shein too is entering the fast fashion scene while Temu focuses on group buying.
In other regions, the United Kingdom maintains its position as the largest e-commerce market in Western Europe, with Germany, France, Italy, and Spain following suit. Projections indicate that online retail sales in the UK will surge from EUR154 billion in 2023 to EUR219 billion in 2028. Meanwhile in the United States, online retail sales are expected to experience substantial growth, rising from USD1 trillion in 2023 to USD1.6 trillion by 2028.
Offline retail will continue to thrive
As the global retail landscape continues to undergo transformation, the balance between offline and online sales is shifting, with Asia-Pacific and Southeast Asia leading the charge in the realm of digital commerce.
But Forrester’s study finds that while e-commerce continues is still expanding, physical stores are set to maintain their significance worldwide, with a staggering USD21.9 trillion or 76 percent of total retail sales projected to be conducted offline out of the estimated USD28.7 trillion in global retail sales by 2028.
As a result, retailers must invest in omni-channel strategies to offer customers a seamless shopping experience both in physical stores and online.
“The growth of online marketplaces, social commerce, livestream selling, and direct-to-consumer commerce will accelerate global online retail sales growth over the next five years,” said Jitender Miglani, principal forecast analyst at Forrester.
SEE ALSO: APAC tourism is making a comeback, with travellers prioritising experiential retail
“However, e-commerce maturity and growth opportunities vary vastly by region. Retailers and brands must therefore have a thorough understanding of the key drivers of retail and e-commerce growth in their priority markets and tailor their strategies appropriately, to succeed.”