The US e-commerce sector reached a significant milestone, achieving unprecedented sales penetration. With retail sales growing at a moderate pace, the surge in online shopping has highlighted e-commerce’s expanding role in the American economy.
The US department of commerce’s quarterly retail sales report for 2023 was released last week. Digital Commerce 360 analyzed the e-commerce sales penetration as a percentage of total retail sales, revealing a new high in 2023. This follows a similar pattern to the recent e-commerce growth in Europe.
According to research firm Forrester, online retail in Europe will continue to boom. Purchases made online “represent nearly 16% of total retail sales” in France, Germany, Italy, Spain, and the UK. The market will reach combined sales of €579 billion ($644 billion) by 2028.
E-commerce versus retail in the US
According to US data, the growth rate of e-commerce sales from 2022 to 2023 was 7.6%. This increased from approximately $1 trillion in 2022 to $1.12 trillion in 2023. These figures even eclipsed total retail sales growth’s 3.8% increase (from $4.9 trillion in 2022 to $5.1 trillion in 2023.)
It highlights an interesting dynamic: Retail sales continue to grow, but e-commerce sales are growing even faster as more and more consumers turn to online convenience.
Sales penetration in the US e-commerce sector reached a new high – from 21.2% in 2022 to 22% in 2023. However, the surge in the online sector also contributed to the continued growth of retail sales.
This means that while traditional retail isn’t necessarily slowing down, e-commerce is becoming a beast that cannot be ignored. Brick-and-mortar retail establishments need to understand that online sales are becoming an increasingly vital component.
ALSO READ: From Boomers to Gen Z: How social commerce is shaping retail
COVID-19 pandemic’s impact
The quarterly report shows that retail figures stabilized in 2023, with the sector returning to pre-pandemic estimations.
James Risley, research data manager and senior analyst at Digital Commerce 360, said e-commerce sales account for nearly half the total retail growth in the US despite “an overall slower economy.”
Risley explains: “That’s a return to pre-pandemic contribution levels compared to a much smaller contribution in 2021 and 2022. Overall, the e-commerce picture returns to our pre-COVID-19 understanding of retail.”
Meanwhile, Deloitte’s 2024 US retail industry outlook shows how “the last two years have been anything but ordinary” as consumers struggled through “a 40-year inflationary high.”
To weather the storm, Deloitte suggests the following the following for retailers:
- Lean into loyalty programs.
- Enhance omni-experience through in-store investments.
- Drive individual engagement at scale with trustworthy AI.
A word of caution when it comes to loyalty programs: These incentives are undergoing a makeover as retailers find new ways to boost customer engagement. But it’s a double-edged sword.
Businesses planning to invest in loyalty programs must be aware of the challenges Coles and Woolworths face.
READ: Rise of loyalty programs: Coles, Woolworths navigate challenges
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
