The global retail e-commerce market size was valued at USD 4.96 billion in 2021. It is expected to reach USD 11.60 billion by 2030, growing at a CAGR of 9.9% during the forecast period (2022–2030). The retail e-commerce market's value chain consists of producers/manufacturers, wholesalers, vendors, providers of retail e-commerce platforms, logistics & distribution (warehouse and delivery), and end-users. The market for retail e-commerce has undergone significant transformations because of the spread of technology.
Consumers can access the supply and delivery processes by creating individual accounts on the Internet. It has become an effective tool for facilitating more efficient connections between sellers and buyers. Because of rising customer expectations and product volumes, e-commerce has improved the supply chain process. They require efficient logistical growth in the supply chain process. The pandemic has compelled retailers to intensify their urgent efforts to modify their supply chains by reallocating all types of resources and revising their purchase orders and merchandising strategies.
Suppliers/Vendors: Authorized local producers/manufacturers/wholesalers engaged in providing retail products to customers make up the majority of vendors. Vendors form partnerships with e-commerce platform providers such as Amazon.com, Inc. to sell products online or integrate forward to create their websites and mobile applications.
Logistics and Distribution: Retail e-commerce businesses collaborate with multiple supply chain partners on the outbound and incoming logistics sides. Inbound logistics is concerned with the relationship between companies and their suppliers, whereas outbound logistics is concerned with how companies deliver their products to customers.
Customers/Users: The endpoint of the value chain is the end users/consumers who place orders online via company websites or mobile applications. During the COVID-19 pandemic, quarantine, self-isolation, and stay-at-home orders significantly increased online shopping and local deliveries for retail and nondiscretionary goods.
The rising demand for voice recognition to improve the customer experience is anticipated to drive market growth during the forecast period. Customers in the United States increasingly use smart speakers to place online orders, as voice-enabled orders improve search results. Artificial Reality has become a significant game-changer in online shopping, significantly narrowing the uncertainty gap. It helps online shoppers visualize the products they are interested in, whether a piece of furniture or an article of clothing. Customers can view how they would look after wearing a particular item or how their home would appear with a specific piece of furniture. Digital transformation enables businesses to build customer relationships, improve their brand presence, and reach their target audiences, thereby maximizing the use of emerging technologies.
Moreover, customer behavior and expectations shift has gradually materialized as technology advances, particularly in the retail e-commerce sector. Speech interface is the most recent market trend. It facilitates customer interaction with voice-enabled applications, including voice assistants. Natural Language Processing (NLP) and Machine Learning (ML) technologies power speech interfaces as they comprehend customer inquiries, analyze interactions to gather behavioral, demographic, and emotional data and mimic human speech.
In addition, when the information gathered through the interface is combined with other customer details, such as browsing details, call history, and the caller's location, retail organizations can target end-users with hyper-personalized and preference-based content more effectively. In addition, a speech interface can help contact centers authenticate callers based on their unique voice patterns and customize their IVR flow.
Mobile phones' evolution from simple communication devices to multipurpose devices has accelerated the growth of online retailing and Internet user penetration. The Internet has typically enabled many online services and a convenient communication and information exchange method. Concurrently, the increasing prevalence of smartphones and other mobile devices allows users to access the Internet while on the go. Over half of the world's population owns a smartphone and, depending on their age, gender, and other demographic characteristics, install various personal and professional applications. As smartphones and mobile devices become faster and smarter, and communication becomes more convenient and efficient, the demand for retail e-commerce will increase over the forecast period. The increasing shift from desktops to smartphones is anticipated to drive the retail e-commerce market. The rapid increase in smartphone users will expose more individuals to online advertisements and encourage them to consider online shopping. In developed economies, the number of individuals who own a smartphone or use the Internet remains high, whereas, in emerging economies, this number continues to rise.
It is expected that the growing prevalence of smartphone use in less commonly deployed towns will extend the reach of online retailers. The increasing concern over data breaches on online shopping websites is, on the other hand, restraining the market's growth during the predicted period. Concerns regarding the collection and use of customer's personal information by online retailers are hampering the expansion of the market. The consumer runs the risk of suffering a financial and personal loss if they misuse any technology, even though the application of technology is advantageous to the expansion of retail e-commerce. There is a possibility that market growth will be hampered over the period by an increase in the prevalence of cybercrime, digital fraud, and unclear return policies.
In recent years, retail e-commerce companies have aggressively adopted technologies such as Chatbot, Artificial Intelligence (AI), and Machine Learning (ML) to increase customer loyalty, customer retention, and revenue. ML and AI enable e-retailers to comprehend customer demand better, allowing them to capitalize on these technologies by receiving personalized guidelines and intelligent product suggestions.
Apps incorporate AI and chatbot voice assistants to facilitate shopping with real-time communication. AI technology has aided in enabling virtual trials of clothes, frames, and accessories to replicate the appearance of the online product, which has helped vendors increase customer conversion rates. To comprehend customers' attitudes, shopping experiences, and expectations, businesses invest more in cloud-based solutions, AI-powered solutions, and analytical instruments. In-store employees provide shoppers with product recommendations and guidance based on their requests or needs.
In contrast, AI and ML replace this aspect in retail e-commerce, enabling novel approaches to enhance personalization and customer service. Retailers are expected to make significant investments in this innovation to gain a competitive advantage in the market. Chatbots enable retailers to interact with customers while providing individualized care and helpful suggestions based on their responses. Numerous consumers prefer bots and other digital self-service tools. Currently, 80% of businesses use chatbots, which is projected to rise.
The global retail e-commerce market is segmented into Products.
Based on product, the global retail e-commerce market is divided into Groceries, Apparel and Accessories, Footwear, Personal and Beauty Care, Furniture and Home Décor, and Electronics Goods.
The apparel and accessories segment is dominating the market and is expected to grow at a CAGR of 9.3% during the forecast period. With such a diverse range of clothing brands available at factory prices, the apparel and accessories sector currently holds the most significant global market share. In addition, the flexible return policy and convenient payment methods will further propel the segment's growth. This effect is anticipated to have a long-lasting impact, resulting in a fundamental behavioral shift toward making digital purchases. In addition, the Electronic Goods segment is expected to experience significant growth. This is due to the rising demand for electronic goods and the availability of a wide range of products, making it easier to compare the relative merits of various options, with footwear dominating the market.
The global retail e-commerce market is segmented into five regions, namely North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa.
Asia Pacific is the most dominating global retail e-commerce market and is expected to grow at a CAGR of 10.8% during the forecast period. Rising mobile internet usage and changing lifestyles in the Asia Pacific region are expected to keep the region's leadership position in the global market throughout the forecast period. In today's work-oriented culture, personal time is in short supply, which is made even more difficult by the necessity to acquire essentials. A further factor driving industry expansion is a regional shift toward purchasing electronic goods through an online shopping platform. This growth is because of purchase pattern change, secured internet transactions, and increasing regional consumer awareness.
In addition, it is anticipated that the North American region will expand significantly throughout the projection period due to alterations in shopping patterns. The Development of secure online transactions and increased consumer knowledge followed by Europe will dominate the retail e-commerce market in upcoming years.
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