In June 2019, eMarketer forecasted the global ecommerce market would reach $3.535 trillion in total sales in 2019. This was an increase of 20.7% from the previous year. That’s a high growth rate compared to most other industries, but it’s slower than the 22.9% ecommerce market growth rate of 2018 and the 28.0% growth of 2017. This slowdown isn’t too surprising, though, considering the growth rate of the global economy as a whole fell from 3.81% in 2017 to 3.61% in 2018 to 3.01% in 2019.
There are a number of factors that have contributed to this cooling-off period. Trade disputes between the U.S. and China, the looming fallout of Brexit and aging demographics in advanced economies have led to less investment and hiring, which leaves less money to trickle down to ecommerce shoppers.
Five of the top 10 countries by retail ecommerce sales are also among the top 10 countries by retail ecommerce sales growth — this shows there’s still a lot of room for this industry to expand.
China and India have particularly high potential for growth. They have the two biggest populations in the world (about 1.4 billion people each), and the GDP of both countries grew by 5.8% and 7%, respectively, in 2019 (for comparison, the U.S. economy grew by 2.1% in 2019). Scores of people are entering the middle class every year in these countries, which generates a lot of new money to spend on ecommerce.
Canada is a somewhat surprising entry on this list, considering its GDP grew by 1.8% in 2019. Unlike developing countries, this is an advanced, stable economy — and yet, the ecommerce industry is growing rapidly.
Canada’s population is thinly dispersed across a wide area, making it difficult for ecommerce companies to establish cost-effective distribution networks. Recently, Canada’s ecommerce infrastructure has begun to catch up with demand. This helps explain the high growth rate.
Finally, Mexico’s geographic location provides consumers with affordable access to the many popular stores that are based in the U.S. Sixty-seven percent of Mexican online shoppers purchased goods from international retailers in 2019, and 75% of those purchases were made from U.S.-based stores.
Growth by Platform
Just as the ecommerce market growth in 2019 wasn’t evenly distributed by country, it wasn’t evenly distributed by platform, either.
When it comes to marketing in 2019, content is king. Outright advertisements are often blocked or ignored, so you need genuinely entertaining or informative content to grab people’s attention and communicate your message. Shopify started the year with a splash by launching Shopify Studios, its own video content production house.
The company also rolled out a new integration with Snapchat that allows users to purchase and manage Snapchat Story ads from within the Shopify interface. A new native chat feature, Shopify Chat, was released as well.
In October 2019, Shopify announced that it would be making improvements to the Shopify Experts Marketplace, which is a platform that store owners can use to find developers, marketers and other ecommerce specialists. Shopify implemented new pairing algorithms that make it easier for merchants to find the expert help they need.
Another feature released in 2019 was Shopify Email. This app allows you to create and manage email marketing campaigns from within the Shopify interface. You can send emails using your Shopify store’s domain name, and the app collects analytics such as email open rates, email click-through rates, the number of products added to carts and the number of products purchased.
Shopify Plus, the version of Shopify built for enterprise-level, high-volume merchants, was overhauled in 2019. It’s now easier to manage multiple stores on the platform — users have more control over permissions, store additions and cross-shop navigation.
These features are especially helpful for international retailers that maintain separate sites for each region and language that they serve. You can also use a multi-store approach to present different designs and language to different segments of your audience in order to implement a more targeted marketing strategy.
Also in Shopify Plus news, Shogun was selected to join the Shopify Plus Technology Partner Program. Only apps that meet the highest level of quality, service, performance, privacy and support are accepted into this program. Shogun has become the app-of-choice for enterprise merchants who want to create their own custom product pages, landing pages and blog posts.
But the biggest news for Shopify came in June, when it announced the launch of its own Fulfillment Network. This would allow small businesses to take advantage of enterprise-level logistics infrastructure that they wouldn’t be able to afford on their own. It also sets Shopify up for direct competition with Amazon, whose Fulfillment by Amazon (FBA) service has been extremely popular with small to medium-sized businesses since it launched in 2006.
This drop can be explained by the fact that the end of support for Magento 1 is almost here. After June 1, 2020, there will no longer be any updates or security patches. That means businesses will need to migrate to Magento 2 or another ecommerce solution to keep their sites secure and comply with PCI DSS.
Another new feature makes it easier to create and schedule email summaries for visualizations, tables and standalone KPIs.
In October 2019, it was announced that Magento would now be bundled with Yotpo Focus and Visual UGC. This integration makes it easy to add social proof to Magento pages in the form of customer-produced reviews, photos and videos. That’s a powerful tool for increasing sales, as organic praise of your products is always more persuasive to potential customers than standard brand copy.
Back in January 2019, BigCommerce migrated its hosting infrastructure to the Google Cloud Platform. This resulted in an 81% improvement in connection times for BigCommerce stores.
Also in January, BigCommerce released BigCommerce Shipping, a free feature that provides all users with accurate, discounted shipping rates and a streamlined system for managing shipments and printing labels.
Finally, BigCommerce received ISO/IEC 27001:2013 certification in April 2019. This is the gold standard for cybersecurity. It allows online stores (as well as their customers) to be confident that their sensitive financial information will be kept secure.
Perhaps the best example of the ecommerce industry’s strength is the fact that each Cyber Monday breaks the record set by the last Cyber Monday.
Just take a look at the CNBC headlines for each Cyber Monday of the past three years:
2019: “Cyber Monday online sales hit record $9.4 billion”
2018: “Cyber Monday sales break a record, with $7.9 billion spent online”
2017: “A record $6.59 billion spent online on Cyber Monday”
You get the picture. Another year, another broken record.
While it’s important to note that the growth of the industry has been slowing for a couple years, it’s just as important to keep in mind that the industry is indeedstill growing.
With advancing logistics technology and much more room for consumer spending in developing countries, the overall outlook is quite good.
What to Expect for 2020
As stated above, the ecommerce industry is tied to the global economy. The good news for this year is that the growth of the global economy is projected to increase from 3.0% in 2019 to 3.4% in 2020, so you can expect the growth rate of the ecommerce industry to increase as well.
The projected employment numbers for ecommerce are also encouraging. According to data from the Bureau of Labor Statistics, the “electronic shopping and mail-order houses” industry is expected to grow from 398,600 workers in 2018 to 571,600 workers in 2028 — a 43% increase. That makes “electronic shopping and mail-order houses,” out of the 163 industries measured in this report, the third-fastest growing industry in the country.
Whichever way you look at it, there’s no reason not to be optimistic about the future of the ecommerce industry.
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