US e-commerce market share on the verge of reaching $1 trillion
Marketplace Pulse released news that U.S. consumers spend close to $1 trillion annually through e-commerce. Market share increased slightly, nearly doubling in three years.
According to the U.S. Department of Commerce, e-commerce sales in the past twelve months reached $975 billion. Three years ago, the annualized run rate was $518 billion; at that time, it took seven years for the market to double in size. At this time a decade ago, it was only $208 billion.
Had the pandemic hadn’t happened and e-commerce had continued to grow 14-15%, the annualized run rate would have been $780 billion today. That’s 200 billion less than the current run rate of $975 billion. As a result, e-commerce is 25% larger than it would have been, but total retail spending also grew more than expected.
E-commerce grew just 6.7% in the first quarter. This was the slowest growth since 2009, in the months following the 2008 financial crisis. Even inflation leading to higher prices contributed to the increase. However, it was compared to the first quarter of 2021, the last quarter of historical growth in e-commerce. E-commerce growth will slow.
In the most recent quarter, 14% of consumer spending occurred on e-commerce. Excluding retail categories that don’t typically compete with e-commerce — restaurants, car dealerships and gas stations — e-commerce accounts for 21% of retail. For every $5 spent, more than $1 flows through e-commerce.
A year ago, however, e-commerce penetration was almost the same, or even slightly higher. It lost market share in 2021 as offline retail grew faster than e-commerce for the first time ever and the Covid-19 pandemic’s boost to online shopping cooled.