In our 2024 Online Retail Report, FTI Consulting’s Retail & Consumer Products industry experts highlight the ongoing evolution of the e-commerce sector in the U.S. and in Europe, providing forecasts and critical insights into competitive dynamics and strategic imperatives.
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Blending digital and in-store journeys: Retailers are looking at how the consumer navigates either online or in-store experiences at various points in their shopping journey.
Managing fixed costs of store fleets: As e-commerce cannibalizes store sales, retailers are reducing labor, closing unprofitable stores or shifting stores to smaller format versions.
Trend Watch: How U.S. Retailers Are Adapting to the Changing Landscape
2024 Online Retail Report
U.S. E-Commerce Trending Higher Again: Sales to Hit $1.2 Trillion
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AN FTI CONSULTING REPORT
E-Commerce Resumes a Pre-COVID Trajectory While Retaining COVID Gains
Our projected sales growth rate for e-commerce in 2024 is more than twice the expected growth rate of total retail sales (excluding auto & gas) and more than three times estimated store-based total sales growth.”
– Kurt Staelens, Senior Managing Director
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E-commerce sales growth represented 46% of total retail sales growth in 2023, consistent with pre-COVID capture rates.
46%
E-commerce sales growth accounted for 57% of total U.S. retail sales growth in 1Q24.
57%
U.S. E-Commerce Sales Change as a % of Total U.S. Retail Sales Change
Source: U.S. Census Bureau and FTI Consulting
56.6%
New E-Kids on the Block: Do They Have the Right Stuff?
Several new players have entered the U.S. market relatively recently and are determined to disrupt the status quo of online retail selling. Temu, Shein and TikTok Shop, all online-only retailers, have achieved considerable sales scale and prominence globally and now have their sights set on grabbing a chunk of the U.S. retail market.
High efficiency and a huge audience reach are the common denominators behind all three newcomers.
The biggest threat of these three online platforms is to store-based sellers of deep value-priced apparel and home-related merchandise.
It is unclear whether customer retention rates and profitability metrics will be sufficient to ensure their staying power.
Trend Watch: How U.S. Retailers Are Adapting to the Changing Landscape
Leveraging stores as fulfillment hubs: Retailers have shifted to using their stores as fulfillment centers, managing returns, leveraging labor, improving inventory utilization and optimizing markdown/clearance processes.
Using AI to engage more closely with consumers: More retailers are creating personalized shopping experiences and promotions, including Generative AI content descriptions that customize the experience for each guest based on their underlying consumer persona.
Subprime Backdrop for U.S. Retail as Prime Day Approaches
In recent years, Amazon has emphasized 3P product sales (third-party seller) over 1P (company-owned) sales, and the results are evident. Last year’s Prime Day event generated nearly $13 billion of worldwide sales for Amazon over its two days, a healthy 7.5% year-over-year increase despite little change in average order value. A similar increase will be more challenging this year, as discretionary retail spending continues to decelerate monthly compared to a year earlier.
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Estimated Breakout of Amazon’s Online Retail Sales
Source: SEC Filings and FTI Consulting
3P/Total GMV
1P/Total GMV
46.2%
53.8%
50.9%
49.1%
55.7%
44.3%
59.9%
40.1%
61.3%
38.7%
62.2%
37.8%
62.4%
37.6%
62.5%
37.5%
66.8%
33.2%
29.2%
70.8%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
U.S. Online Retail Forecast: Back on Track After the COVID Rollercoaster
E-commerce sales are settling down to more predictable growth and market share gains now that the post-pandemic transition is behind us.
We project U.S. online retail sales will hit $1.2 trillion in 2024.
$1.2 Trillion
Estimated increase in U.S. online retail sales of $108 billion, or 9.8% over 2023.
9.8%
Expected U.S. e-commerce market share of 22.7% by year-end, compared to 21.6% at the end of 2023.
22.7%
A recent UBS report estimated that 45,000 net retail store closures will occur in the U.S. by 2028—nearly 5% of the total retail store base.
45,000
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Accelerated e-commerce growth during the pandemic has resulted in sustained market impacts. Comparing against FTI’s ‘Pre-COVID Forecast Model,’ we anticipate that the COVID-driven acceleration will account for $200 billion of incremental e-commerce sales in 2024.”
– Matt Garfield, Managing Director
Source: FTI Consulting
(in billions)
Pre-COVID Forecast Model
2019
2020
2021
2022
2023
2024
Actual or Current Forecast
Online Market Share COVID Model
22.7%
U.S. E-Commerce Retail Sales
$571
$571
$811
$648
$951
$730
$1,013
$817
$1,104
$908
$1,212
$1,002
Global Spotlight: Online Continues Growth Trajectory in Europe
E-commerce in Europe is maturing. This is reflected in the ongoing pursuit of a greater balance between responding to systemic demand (e.g., increasing e-commerce adoption by a broadly stable internet user base) and improving the supply-side service offering and profitability.
While Western Europe holds the highest share of total online sales (67%) and Eastern Europe the lowest (2%), it is the latter that has the highest growth potential given its low market share of online sales and greater opportunity to increase users of online shopping.
The European online retail market grew by 8% in 2023, to reach an estimated €975 billion.
€975 billion
Key Trends Observed in the European Online Retail Market
Shorter delivery windows
More widespread provision of next-day delivery
Increased minimum order values required to qualify for free delivery
Retailers increasingly charging for returns
Read Now: The Full List of European Trends
The French online retail market continues to boom, achieving €160 billion turnover in 2023, a 10.5% increase over the previous year.
€160 billion
Italy’s online retail market grew to €33 billion in 2023, a growth rate of 3% over the previous year.
€33 billion
Read Now: Select Perspectives | France
Read Now: Select Perspectives | Italy
Kurt StaelensSenior Managing Director
Across both the U.S. and Europe, the online retail sector is navigating a landscape shaped by resilience, innovation and evolving consumer behaviors. Our analysis underscores the importance of agility and innovation in adapting to shifting consumer preferences and market conditions. Understanding these trends is crucial for leaders to formulate effective growth strategies, optimize operational efficiencies, and capitalize on opportunities for market expansion and technological innovation in the evolving e-commerce landscape.
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CONTACT US
Our Experts
kurt.staelens@fticonsulting.com
Matt GarfieldManaging Director
matt.garfield@fticonsulting.com
John YozzoManaging Director
john.yozzo@fticonsulting.com
EMEA
Ralph FernandoSenior Managing Director, EMEA
ralph.fernando@fticonsulting.com
Francesco LeoneSenior Managing Director, Italy
francesco.leone@fticonsulting.com
Raphael MiolaneSenior Managing Director, France
raphael.miolane@fticonsulting.com
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Select Country Perspectives
The total amount of online purchases made in Canada in 2023 was around $52 billion. With 29 million shoppers, e-commerce now represents 11.5% of Canada's total retail sales.
$52 billion
Read Now: Select Perspectives | Canada
The total amount of online purchases made in Canada in 2023 was around $52 billion. With 29 million shoppers, e-commerce now represents 11.5% of Canada's total retail sales.
$52 billion
Read Now: Select Perspectives | Italy
The report’s Select Perspectives series spotlights e-commerce trends in individual countries: Italy, France, Canada – and more to come.