E-Commerce in "Slow Growth" Mode Through 2030

With a big boost from inflation, e-commerce sales revenue in the US exceeded $1 trillion for the first time in 2022. But a far more reliable metric of its growth rate—the e-commerce share of overall retail sales—appears to be stalled between 14% and 15%.

Direct-to-consumer sales exploded during the lockdowns of the pandemic. At one point in 2020, US consumers were buying an estimated 70% of their groceries online. E-commerce sales as a percentage of total retail sales surged to a peak of 16.4% in Q2 2020, up from pre-pandemic levels that hovered around 14%.

“The e-commerce share of retail was growing at about 1% per year prior to the pandemic, but the surge in 2020 pulled forward growth by about three years. What we have seen since that initial surge is a leveling off in terms of the penetration rate,” James Bohnaker, Senior Economist, Cushman & Wakefield, told GlobeSt.com.

By the end of 2020, the e-commerce share of retail was 15.1%; at the end of 2021, it was 14.6%; at the end of 2022 it was 14.7%.

“Now that the normalization to pre-pandemic trends has mostly played out, e-commerce will begin to gradually re-accelerate, but at slower growth rates than seen prior to the pandemic,” Bohnaker told us.

Bohnaker thinks the “saturation point” for direct-to-consumer is a 20% share of retail—and he believes it will take several years to get there. “The share should approach 20% by the end of this decade,” he said.

JLL’s expert also is expecting a slow slog for e-commerce growth. “There’s certainly more room for e-commerce to grow, however it’s unlikely to happen in such a dramatic fashion as we saw in 2020,” James Cook, JLL’s Head of Retail Research, told GlobeSt.com.

“The percent of e-commerce as a share of retail sales has returned to a slow growth mode. I would expect it to inch up to 15% over the next year and a half,” he said.

Brandon Isner, CBRE’s Head of Retail Research for the Americas, is much more bullish on the potential growth curve for the e-commerce share of retail.

“Our latest data suggests that, overall, the e-commerce share of total retail will grow to 29.3% by 2030,” Isner said. “Consumer preference is the primary factor, as we have more agility and choice than ever before.”

Mark Masinter, Newmark’s Chairman of Global Retail, doesn’t think e-commerce will get anywhere near 30%. “I don’t see direct-to-consumer ever getting to 30% [share of retail],” Masinter told GlobeSt.com. “From everything I’m observing with the brands that we’re involved with, direct-to-consumer sales will peak in the high teens to 20%.”

“E-commerce is just too expensive,” Masinter explained. “The cost of customer acquisition and last-mile delivery are far more expensive than opening a store. Bricks and mortar is still the best play to acquire a customer.”

Cook agrees that the cost of shipping is the primary hurdle to rapid expansion of e-commerce. “In order for ecommerce to make long-term dramatic leaps, there would have to also be dramatic drops in the cost of last-mile delivery,” he said.

“For retail categories like grocery, it’s quite expensive to make delivery cost effective and profitable. Over time, advances in technology could create new efficiencies. But for the near-term, daily needs categories will be areas where e-commerce has the lowest penetration,” Cook said.