The World Trade Organisation (WTO) defines e-commerce “as a commercial process that includes productions, distribution, sales or delivery of goods and services through the electronic means.”
The scope of e-commerce includes a range of online businesses enabling individuals to purchase, sell, market, ship, or pay for an item or a product over the internet. It differs from conventional commerce in the way that it allows for the electronic transfer or trading of commodities/goods, money, and information from one computer to another. There is no longer a need for physical currency or items to carry out business because e-commerce is about doing everything online. Before carrying out any business, e-commerce requires an individual to set up and register an online store first. Take the example of Shopify, which helps individuals in this regard. Shopify is a subscription-based software that allows individuals to create or launch an online store and start selling their products.
With access to nearly every product and service conceivable, the popularity of online shopping has seen a surging trend in recent years. Owing to the mayhem wreaked on brick-and-mortar businesses by the pandemic, online shopping on platforms like Amazon quadrupled over the past three years.
The e-commerce industry is on a bonanza presently, and its scope will continue to broaden in 2022 and in the years to come. How? Take the following factors into consideration:
Online shopping has proven to be pandemic-friendly: No matter how much havoc any pandemic may wreak on physical stores, the e-commerce industry will remain “untouchable” from the reach of any calamity, natural or viral. It will spur more individuals to develop their businesses online.
E-commerce has freed the world from all the geographical restraints and physical confinements. All you need to do is to have a stable internet connection and a computer or a smart gadget to conduct it.
Availability and convenience are other noteworthy factors that extend the scope of e-commerce. E-commerce websites can run round the clock. As a result, the number of orders received by the merchant increases, rewarding them monetarily. It will flourish more businesses online.
To substantiate that the scope of e-commerce is flourishing in 2020, we must cast a cursory glance at the e-commerce trends in the previous years to predict and project its range in the ongoing year. No market other than the US could offer us better anticipation of e-commerce scope in 2022, for it is the largest economy in the world, with its GDP standing at over USD 22 trillion.
According to a Digital Commerce 360 analysis of U.S. Department of Commerce data, “Consumers spent $870.78 billion online with U.S. merchants in 2021, up 14.2% from $762.68 billion in 2020.” (Young, 2022)
In 2020, the coronavirus pandemic contributed to the spike in e-commerce sales in the US, which kept people out of physical stores due to statewide lockdowns and fears of contracting the virus. But, following the massive e-commerce surge triggered by the pandemic’s onset, online sales growth slowed dramatically in 2021 as many vaccinated and weary consumers returned to stores. Following an upsurge in online spending in 2020 because of the pandemic, digital growth was expected to decelerate in 2021. While the 14.2 percent increase in e-commerce in 2021 is less than half of the record-breaking 31.8 percent increase in 2020, it is comparable to pre-pandemic growth levels.
Now bringing into discussion the e-commerce trend in 2022, we see various sources claiming that online sales to reach up to $1trillion in the US. According to a forecast by eMarketer’s Insider Intelligence, “E-commerce sales will exceed $1 trillion for the first time in 2022, totaling $1.065 trillion and accounting for 15.9% of total retail sales in the US” (Wilson, 2022)
Let us now talk about the e-commerce sales the world over in the years 2020 and 2021 to give us a better prognosis of e-commerce sales by the end of 2022. According to Statista, “In 2020, over two billion people purchased goods or services online, with e-retail sales surpassing 4.2 trillion U.S. dollars worldwide” (Coppola, 2022). “Retail e-commerce sales amounted to approximately 4.9 trillion U.S. dollars worldwide in 2021. This figure is forecast to grow by 50 percent over the next four years, reaching about 7.4 trillion dollars by 2025.” (Chevalier, 2022)
Take the example of the online retail giant Amazon, whose annual revenue reached 45.4 billion US dollars in 2020. In 2021, Amazon reported a net income of 33.36 billion US dollars, up from a 21.3 billion US dollar net income in the previous year. With $263.5 billion in net sales, the United States was Amazon’s biggest market in 2020. Germany was ranked second with 29.6 billion US dollars, ahead of the UK with $26.5 billion.
The net sales of the top ten retail platforms in the US bagging the highest profit in 2021 are as follows:
Summarizing the argument, having seen the soaring trend of e-commerce sales in the previous two years and the estimated trend of 2022 with the help of the credible and authentic business sources, we can conclude that the scope of e-commerce will expand with online purchasing exceeding the expected $5.5 trillion in 2022. That figure is estimated to grow over the next few years, indicating that borderless e-commerce has emerged as a profitable option for online retailers.
Writer: Hira Ejaz