Digital Commerce Forecasts 2023

Insider Intelligence data and analyses of digital commerce across 8 markets: US, Canada, China, Latin America, India, Southeast Asia, Western Europe, and UK

Digital Sales Growth Will Accelerate Modestly as Stability and Predictability Finally Return

Credit to Ethan Cramer-Flood??|??Aug 11, 2023

Worldwide digital commerce sales growth will accelerate this year and next, after an all-time low of 6.5% growth in 2022. Next year, sales will cross the $6 trillion mark, half of which will come from China.

Overall, retail is in good shape for now, but a slowdown is inevitable. The outlook for retail sales worldwide (5.5% growth) is a little better than we anticipated it would be, but a steady deceleration is on the way

• The recovery in Western Europe will be essential for the global rebound. Western Europe is set for a 3.0% increase in digital commerce sales this year, which is low but represents a 7.5 percentage point improvement over last year—a more significant leap than any other region.After declining by 4.5% in 2022, digital commerce sales will grow by 3.0% to $604.33 billion across Western Europe in 2023. However, they will continue to lag overall retail sales.

Western Europe implications according to Insider Intelligence :

• Retailers should invest in digital technology to improve customer experience (CX) and boost retail media capabilities. But they can’t afford to take their eye off the ball on sustainability, which remains an important consideration across the region for both consumers and regulators.
• Low consumer confidence is hampering growth as sales growth is primarily coming from price increase vs. volume, also inflation is easing, however, food prices are still increasing at an alarming rate, and consumer confidence is well below the long-term average in the EU according to the EU Commission
• Discounters and private-label brands will gain more ground. In grocery, where discounting has been prevalent due to high food prices, 67% of CEOs in Europe expect further downtrading in 2023, and 60% expect an increased focus on private labels, per McKinsey & Company polling published in April 2023.
• Consumer loyalty will be tested. Over a third (38%) of consumers in Europe said last November that they had switched away from or become less loyal to a brand in the past year, per a survey by Marigold and Econsultancy.
• Sustainability still matters. Inflation is now the No. 1 social concern in Europe, per an April 2023 report by GfK Consult. However, climate remains one of the top three concerns, and 40% of consumers in Europe take environmental protection into account when purchasing a product.

Digital commerce sales will rebound in 2023—but remain constrained.

Digital commerce won’t regain the share of retail sales in Western Europe that it lost last year. Across Western Europe, 12.6% of retail sales will take place online in 2023, compared with 12.7% last year. Digital commerce will start regaining share next year as online sales bounce back in the UK. But digital commerce’s share will reach only 13.7% in the region by 2027, compared with its peak of 14.3% in 2021

Implications according to Insider Intelligence

• Retailers should invest in automation, advanced analytics, and AI. European wholesalers and retailers invest less than those in the US do, per an October 2022 report by McKinsey and trade body EuroCommerce. The report proposed that the sector invest between $163 billion and $242 billion in digital transformation over the next eight years.
• Cross-border commerce will offer opportunities. Cost-conscious European consumers are increasingly turning to cross-border digital commerce to hunt for the best deals. Nearly three-quarters (71%) of millennials and 60% of Gen Zers in Belgium, France, the Netherlands, Portugal, Spain, and the UK are shopping cross-border several times a year, per a June 2023 report by Worldline.
• Omnichannel retailers will outperform the market. digital commerce is growing again, but brick-and-mortar still accounts for the lion’s share of Western Europe retail sales. Retailers that have both physical and digital stores—and offer a seamless transition between the two—will have the edge.
• Mcommerce sales in Western Europe will grow by 4.4% to $280.98 billion in 2023. Sales growth will bounce back in France (7.3%) and Germany (4.8%) in 2023, after declines last year. The rest of Western Europe will see growth accelerate this year—except in the UK, where sales via smartphones and tablets will remain generally flat with 1.3% growth YoY.
• Mobile buyer penetration is still on the rise. Across the former EU-5, there will be 139.5 million mobile buyers in 2023. That means 69.1% of digital buyers will make a purchase on a smartphone or tablet in 2023—up from 68.4% in 2022 and 3.4 percentage points higher than pre-pandemic levels.
• Existing mobile buyers are also spending more. This year, mobile buyers in the former EU-5 will spend an average of $1,554 via mobile devices, per our forecast. That’s up 1.0% from 2022—and growth will accelerate to 5.3% next year.
• By 2027, mcommerce will account for 47.7% of total digital commerce sales in Western Europe. The UK leads the region, with mcommerce sales set to account for 57.6% of the country’s online sales by that time. But mcommerce is also gaining traction across the rest of the former EU-5 and other Western European countries.

More resources: Worldwide Ecommerce Forecast 2023 - Insider Intelligence Trends, Forecasts & Statistics (emarketer.com)