©Panuwat Dangsungnoen via Canva.com
February 26, 2025
Will US E-Commerce Growth Slow in the Years Ahead?
E-commerce sales in the U.S. grew by 8.1% in 2024, but predictions are mixed on whether faster or slower growth will arrive in the coming years.
According to estimates released last week from the U.S. Census Bureau, the 8.1% gain represented a slight pickup following gains of 7.6% in 2023 and 7.7% in 2022. E-commerce sales surged 14.2% in 2021 and 32.4% in 2020 as widespread store closures and social distancing during the pandemic turbocharged e-commerce growth but then slowed in recent years as consumers flocked back to physical stores.
The bureau estimated e-commerce sales accounted for 16.1% of total sales in 2024, up from 11% in 2019.
Among those delivering subdued e-commerce forecasts is McKinsey, which estimated in a recent report that while U.S. online sales accelerated to 18% annual growth between 2019 and 2023, such sales “could now normalize at a more modest but still healthy growth rate” of around 6% a year, close to pre-pandemic rates.
McKinsey stated, “Consumers still love to shop online, but growth in e-commerce is no longer likely to be as frenzied as it was in recent years.”
Last August, eMarketer predicted a more robust U.S. e-commerce growth rate, at around an 8.7% CAGR (compound annual growth rate) from 2024 to 2028.
“U.S. retail sales will grow at a modest and stable pace through 2028, with e-commerce progressing more than four times faster than in-store sales,” said eMarketer. “Major retailers are returning to online sales growth after a tumultuous period of post-pandemic adjustment. Gen Z consumers and product category trends present key opportunities for growth in digital commerce.”
Forrester also predicted last August that online U.S. retail sales would expand at an 8.4% five-year CAGR through 2029, reaching 29.3% penetration by 2029 from 23.4% estimated for 2024.
In a blog entry, Jitender Miglani, principal forecast analyst at Forrester, predicted online growth would “regain momentum” with a boost from advanced online payment solutions as well as both new and maturing channels. He said, “The rise of online marketplaces, social commerce, online grocery buying, click-and-collect services, quick commerce, livestream selling, and direct-to-consumer commerce will significantly boost online retail sales.”
Miglani told Retail TouchPoints that online grocery will see the fastest growth over the next five years, boosted by the appeal of same-day delivery and subscription services. He also said e-commerce upgrades will support growth in soft goods categories, particularly driving fast growth in beauty. He added, “Detailed product information, customer reviews and recommendations help drive online sales in personal care, nutraceuticals, medical supplies and OTC drugs. Ultra-low prices from Chinese retailers like SHEIN and Temu will help e-commerce sales in the apparel and footwear categories, despite longer delivery times”
A Boston Consulting Group study from 2023, based on a survey of retail and CPG executives, predicted that e-commerce sales would expand to 41% of global retail sales by 2027, over double from only 18% in 2017. The gains were expected to be driven by greater investments in digital technologies and e-commerce, the expansion of third-party e-commerce platforms, and advanced online assortment and pricing strategies.
Robert Derow, BCG’s leader for digital growth in North America, said in a press release at the time, “Many markets and categories are actually still years away from full e-commerce maturity, with tailwinds strong enough to justify investing greater capital and resources into winning capabilities and organizations.”
Discussion Questions
Do you see e-commerce growth in the U.S. slowing, accelerating, or continuing at the high-single-digit rate seen in recent years?
Are there more headwinds or tailwinds behind e-commerce growth?
Poll
Loading …BrainTrust
John Hennessy
Retail and Brand Technology Tailor
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Bob Amster
Principal, Retail Technology Group
Recent Discussions
More Discussions
How Can Retailers Crack the Gen Z ‘Riddle’?
Gen Z is becoming an increasingly important consumer demographic, but an elusive one to map. How…Does Bath & Body Works’ Scented Holiday Campaign Pass the Sniff Test?
Bath & Body Works is kicking off a new campaign with scent being at the fore…Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?
Yes, it will slow. But most of this is simply a case of basic mathematics. Online is getting bigger and more mature so the percentage growth it can drive will reduce. In actual dollar terns, the growth will still be good and online will continue to take modest share of overall retail. However, as we have discussed many times before, the consumer doesn’t really care about these analytical splits. They just want to shop across online and stores in a seamless way.
It’s usually difficult for a maturing industry – and no, I’m not claiming e-commerce is mature, only that it isn’t brand new – to sustain the early phase(s) of growth, for the simple reason that anything from zero will be huge; so my intuition is for a slight slowing in percentage terms. The arguments for drastic growth I don’t find particularly convincing (the arguments for Shein and TEMU being particularly notable, seemingly casting all our cares about de minimus repeals to the winds).
Growth like the numbers over the years in e-commerce can’t sustain. It’s a matter of adoption. The growth has come from adoption to buying online versus instore. Eventually, enough people will have adopted and balanced how they shop that the growth will slow to normal numbers based on increases in buying based on the economy and inflation.
The future growth of e-commerce in the United States may be influenced by a number of factors.
Consumer spending power is affected by the overall health of the economy.
Additionally, advancements in payment technology could encourage more consumers to shop online due to the increased security and efficiency of transactions.
E-commerce businesses are susceptible to fluctuations in shipping and logistics costs.
In addition to technological advancements, such as improved mobile shopping experiences and AI-driven personalization, further expansion of the business could be driven by these factors.
The pace of growth in coming years may also be affected by challenges such as increased competition, regulatory changes, and shifting consumer preferences.
AI plays a crucial role in enhancing customer experience by providing personalized recommendations and automating customer service through chatbots.
It helps e-commerce platforms optimize inventory management and pricing strategies, leading to increased efficiency and customer satisfaction.
The rate of growth (percentage) will slow. It is inevitable as the base continues to grow. In absolute terms, I suspect the growth, say, 7% next year will be larger than the 8% in 2024.
Wouldn’t any retailer salivate at to experience 8% growth vs total retail at 2.5%?
I am going to be a bit counter to the other comments I scanned. I see ecommerce growth expanding.
A lot has been learned about how to do ecommerce well. What’s important to shoppers. What makes the experience better for shoppers. But not all has been implemented.
Grocery specifically has been in the stone age in terms of efficient e-commerce fulfillment. They have been selling the store online versus running efficient e-commerce businesses. Removing grocery ecommerce fulfillment inefficiencies and delivering orders as ordered will unlock greater ecommerce growth by reducing order fulfillment costs while improving customer satisfaction with grocery ecommerce. See Walmart’s growth in grocery ecommerce and commitment to 400 automated fulfillment systems as an indicator that improving the shopper experience will unlock growth.
Ecommerce will continue to grow. All other factors being equal, Ecommerce and brick-and-mortar retail will find their equilibrium. The fact is that all other factors do not remain equal so, the growth of Ecommerce will continue until that equilibrium is reached but the rate is dependent on external factors.
Yeah, it will slow, but timing in the life cycle and basic math give us that answer. Isn’t the bigger question profitability? We’ll still be building ecommerce infrastructure, but isn’t profitability supposed to take a bigger role some day? Supply chain, inventory and delivery efficiencies…??? And, oh by the way, returns. Returns. The waste and inefficiency and costs of returns. Wouldn’t it be nice to read about progress in managing the inefficiencies and cost of returns. Ecommerce will grow, even if it will be a slower rates. Finally, thankfully. Now let’s solve some of the other attending problems.
Every datapoint, study and analyst assessment I have seen suggest continued steady growth. In addition to traditional eCommerce growth, online retail is the leader in point of shopping with omnichannel retail sectors…particularly in online grocery. Growth will continue to the foreseeable future…bigly.
I think eCommerce in the U.S. will keep growing at a steady pace, but the explosive gains from the pandemic are over.
Online shopping is more convenient than ever, and younger consumers are driving demand, but rising costs, tighter consumer budgets, and competition from physical stores are real challenges.
The biggest issue is profitability as many brands are chasing sales but struggling to make money. To sustain growth, retailers need smarter fulfillment, better inventory management, and stronger customer loyalty.
eCommerce isn’t slowing down, but success will depend on how well brands adapt to these new realities.