E-commerce has long been an integral part of our lives. After the global lockdown in 2020 caused by the spread of COVID-19, this industry has received such a strong impetus for development that it cannot be stopped.
In this article, we propose to examine the main indicators of the e-commerce industry and analyze its growth prospects in the future.
Electronic commerce (e-commerce) – the activity of electronic purchase or sale of goods and services on online services or through the Internet.
According to the analyst publication Insider Intelligence, by 2025 the volume of retail e-commerce around the world could grow by 50%, to 7.3 trillion dollars, and account for 24.5% of total retail sales. By comparison, the 2021 total: $4.9 trillion and 19.6%.
World leaders in e-commerce market volume
The top ten countries with the largest e-commerce sdasrinagar markets account for 88.6% of the total global volume of this industry. At the same time, the top three (China, the United States and the United Kingdom) account for about 75.9%.
Marketplaces play an important role in the development of e-commerce, both in individual countries and around the world.
Marketplace is an online trading platform that acts as an intermediary between the seller and the buyer. The advantages of such platforms are a wide choice of products, fast logistics, easy selection and return, the presence of loyalty programs.
According to statistics from the analytical agency Digital Commerce 360, in 2021 the volume of purchases on the world’s 100 largest online venues (49 of them located in the U.S.) amounted to about $ 3.23 trillion, equivalent to 65% of the world market for e-commerce. At the same time for 2021 gross sales of goods through marketplaces grew by 18%.
Two Russian marketplaces are also included in this rating. Wildberries is in 17th place worldwide with 154.5 million visits per month, and Ozon (OZON) is in 26th place with 88.9 million monthly visits.
World leaders in online commerce
The largest e-commerce market by volume, estimated at $2.56 trillion, is located in the Middle Kingdom.
In 2021, about 24.5% of total retail sales in China were in the online sector. Although this figure is down slightly from 2020 (24.9%), China’s e-commerce market remains one of the fastest-growing markets in the world. The online retail segment has more than doubled since 2014.
The Chinese authorities pay great attention to this sector. Chinese economists estimate that the country’s e-commerce market could grow to $4 trillion by 2025. These figures were included in China’s five-year development plan.
This growth is supported by the enormous potential of online users within the country (more than 600 million people) and the active development of international online commerce through online marketplaces such as Alibaba Group, JD.com and smaller platforms.
From 2017 to 2021, the weighted average growth rate of the e-commerce market in China was about 17.5%. This growth is expected to slow to 12-13% in the near future.
The most popular Chinese e-commerce companies (marketplaces) among Russian market participants are:
- Alibaba Group (BABA) – one of the most famous and largest Chinese technology companies that owns and operates online marketplaces (e-commerce).
- JD com (JD) is the main competitor of Alibaba Group. The company also specializes in online trading and e-commerce.
- Vipshop (VIPS) is a company that specializes in online trading of discounted branded goods. It is inferior to the first two companies on the list in terms of business scale, but Russian market participants actively traded its shares in 2020-2021.
Despite good operating and financial indicators of the industry as a whole and positive forecasts for its development in the future, public participants of the Chinese market failed to please their investors in 2021. The shares of most Chinese IT companies fell by dozens of percent amid tightening government regulation of the technology sector.
Read a more detailed analysis of the Chinese stock market here.
According to estimates of various experts, the volume of the e-commerce market in the U.S. last year amounted to $ 870 billion to $ 930 billion, an increase of 14.2% compared to 2020.
According to analysts, the growth of e-commerce in the U.S. market after the removal of covid restrictions may slow down. In 2021, for example, it has already fallen by half, to 14.2%, down from 31.8% in 2020.
The weighted average growth of online sales in the U.S. from 2014 to 2019 was 14.2%.
The most popular US e-commerce companies (marketplaces) among Russian market participants are:
- Amazon (AMZN), the technology giant and the world’s largest marketplace, accounting for about 43% of all e-commerce in the United States.
- eBay (EBAY) – an international trading company that provides services in the field of online auctions and online shopping. It is the second most popular online sales platform in the world.
- Walmart (WMT) – Since 2016, the company has been actively developing e-commerce platforms walmart.com. and mwalmart.com. Beginning as a small discount store in the middle of the last century, today Walmart is strengthening its presence in e-commerce. According to analysts, in the near future the company will be able to seriously compete with Amazon.
What could affect the development of the e-commerce market?
In the second half of 2021 and the first quarter of 2022, the U.S. market saw multidirectional dynamics. Against the background of historically high inflation in the U.S. at 7.5%, the market expects the Fed’s balance sheet to shrink, its monetary policy to tighten more actively and its key rate to increase. It should lead to active sales in shares of the technological sector which during 2020 and the first half of 2021 showed the growth rates outstripping the market.