The global eCommerce industry has long been a beacon of rapid growth and innovation. However, according to new data by Stocklytics – a slowdown should be anticipated:
Between 2019 and 2024, global ecommerce revenues have spiked by almost 90%, rising from $2.18 trillion to $4.11 trillion. After COVID-19 triggered a boom in online shopping, the market revenue grew by an average of 25% per year before slumping in 2022 and 2023. Statista expects 2024 and 2025 to see high revenue growth rates again, rising by 14.6% and 16.4% year-over-year, respectively. However, after this recovery, the entire market will face a considerable slowdown, causing its revenue to grow much less than in previous years.
With revenue surpassing $4 trillion in 2023, driven by the convenience and technological advancements in online shopping, the sector has become a critical component of the modern retail landscape. However, recent research by Statista and Stocklytics indicates a paradigm shift is on the horizon. The annual growth rate of eCommerce is expected to contract significantly between 2025 and 2029, compelling businesses to reassess their operational efficiency strategies. This anticipated slowdown highlights the need for a more robust focus on omnichannel growth, operational efficiency, and physical retail partnerships.
From 2019 to 2024, global eCommerce revenues soared by almost 90%, catalyzed by the COVID-19 pandemic, which accelerated the adoption of online shopping. Innovations such as AI, voice search, and augmented reality blurred the lines between digital and physical shopping experiences, driving substantial user engagement and revenue growth. However, despite these advancements, the landscape is set to change drastically. According to that Stocklytics report, the annual growth rate will plummet to 4.6% by 2029, a third of the current rate. Several factors contribute to this projected decline that have been discussed here. Supply chain disruptions, inflation, rising digital advertising costs, and evolving consumer behavior are creating a more challenging environment for eCommerce profitability. The once double-digit growth rates will give way to a more tempered expansion, necessitating a strategic pivot towards integrating online and offline channels.
As eCommerce growth decelerates, the importance of an omnichannel approach becomes paramount. Omnichannel nirvana involves creating a seamless shopping experience across various channels, including online platforms, mobile apps, and physical stores.
On one end: profitable, enterprise traditional brands are in the news for moving away from wholesale and towards DTC. And on the other end: yet-to-be profitable digitally-native brands are in the news for moving towards department store wholesale in search of profits and scale.
They’re each trying to achieve a sort of omnichannel nirvana.
This strategy ensures that customers can engage with a brand consistently, regardless of the medium they choose. This approach to omnichannel balance allows retailers to offer a cohesive and personalized shopping experience. By leveraging data from both online and offline interactions, businesses can better understand customer preferences and tailor their offerings accordingly. This holistic view of the customer journey enhances satisfaction and loyalty.
Physical stores complement online channels by providing additional touchpoints for customer engagement. Showrooms, pop-up shops, and flagship stores offer tangible experiences that online platforms cannot replicate. These physical spaces also serve as venues for events, product demonstrations, and personalized consultations, enriching the customer experience. Integrating online and offline channels enables better inventory management.
Retailers can use physical stores as distribution centers for online orders, reducing shipping times and costs. This approach could enhance efficiency and meets the growing demand for efficient delivery times. Combining data from various channels provides valuable insights into customer behavior. Retailers can analyze this information to optimize their marketing strategies, improve product assortments, and enhance operational efficiencies. This data-driven approach helps businesses stay agile and responsive to market changes.
In addition to omnichannel strategies, forging partnerships with wholesalers can provide significant advantages. As eCommerce growth slows, collaborations with established brick-and-mortar stores can help eCommerce brands tap into new customer bases and leverage existing infrastructure. Partnering with physical retailers allows eCommerce brands to reach customers who prefer in-store shopping. This extended reach can drive sales and brand awareness, especially in regions where online penetration is lower. Collaborations enable resource sharing, from logistics and warehousing to marketing and customer service. This synergy can lead to cost savings and operational efficiencies, benefiting both eCommerce and physical retail partners.
Physical retail partnerships can enhance omnichannel fulfillment capabilities, as well. Retailers can offer services like “buy online, pick up in-store” (BOPIS) or “reserve online, try in-store” (ROTIS), providing customers with convenient options and driving foot traffic to physical locations. Physical retail spaces offer unique opportunities for brand building and storytelling. eCommerce brands can create immersive in-store experiences that reflect their identity and values, fostering deeper connections with customers. And several traditional brands have demonstrated the efficacy of omnichannel strategies by blending the physical and the digital in their own versions of omnichannel nirvana.
The first example is DSW (Designer Shoe Warehouse), which utilizes infinite aisle technology to offer customers a wide range of SKUs via mobile devices and digital displays. Their in-store mobile app enhances the shopping experience by allowing customers to browse rewards, wish lists, and personalized offers and checkout from anywhere in the store. DSW’s eCommerce platform improvements, such as more relevant search results and online-to-store purchase options, have significantly broadened their shopping ease and customer satisfaction.
Urban Outfitters created an intuitive mobile app that provides a seamless online shopping experience supported by their in-store services. The brand has also developed unique content strategies like the “UO Live” music series and music-focused Instagram pages, which engage customers through a multi-sensory experience that combines fashion and music. This strategy enhances the online and offline shopping experience and strengthens their community presence.
Abercrombie & Fitch has also embraced omnichannel retailing by integrating online and in-store experiences. Their system allows customers to search for in-store merchandise online, share shopping carts across devices, and return online purchases in-store. This cross-channel flexibility ensures a seamless shopping experience and increases customer convenience and loyalty.
Foot Locker has further blurred the lines between online and offline shopping through video walls in its physical stores by revamping its FLX loyalty program. This was recently published in Glossy:
Both the new FLX Rewards program and the new app are focused on two things, according to Foot Locker’s chief customer officer, Kim Waldmann: improving the connection between Foot Locker’s online and offline retail, and giving customers better access to limited products.
This strategy allows customers to research products, view them from multiple angles, and read user reviews while in-store. This integration of digital content into the physical shopping environment provides a comprehensive shopping experience and reinforces the consistency of its pricing and promotions across all channels.
IKEA has set a high standard for omnichannel retailing with its comprehensive strategy that combines digital tools and in-store experiences. Their augmented reality app, Click and Collect service, and online planning tools allow customers to engage deeply with the brand across multiple channels. Through programs like buy-back and recycling, IKEA’s commitment to sustainability and customer education further enhances its omnichannel approach and builds strong customer relationships.
These examples illustrate how effective omnichannel strategies and physical retail partnerships can drive growth and enhance customer experiences. By integrating digital and physical channels, these brands create cohesive, convenient, and engaging shopping journeys that meet the evolving expectations of modern consumers.
The anticipated slowdown in eCommerce growth between 2025 and 2029 presents both challenges and opportunities for retailers. By embracing omnichannel strategies and forging physical retail partnerships (both wholesale and owned store strategies), businesses will be more capable of navigating this evolving landscape and continue to thrive. The integration of online and offline channels, coupled with strategic collaborations, will be key to enhancing customer experiences, optimizing operations, and sustaining growth in the years to come.
Research, Data, and Writing by Web Smith