Reach $8.5 trillion by 2026, a growth of 56 per cent from 2018
Of the several transformations, Covid-19 pandemic has stirred across the globe, taking shopping out of malls and cushy outlets into living rooms and bedrooms of homes could arguably be its biggest – businesswise. As we nagivate another year free from Covid-19, the evidence is clear: global e-commerce is set to explode further.
Despite reduced growth rates compared to the initial pandemic period, the forecast for global e-commerce remains bullish. According to the FIS Global Payments Report 2023, the explosive growth in global e-commerce in the first two years of the pandemic has slightly slowed in 2022, with a 10 per cent YoY growth in global e-commerce transaction value from 2021-2022. However, the report predicts a 9 per cent CAGR from 2022-2026, projecting that global e-commerce transaction value will rise from approximately $6 trillion in 2022 to over $8.5 trillion in 2026.
The report highlights that all regions except Europe saw double-digit growth from 2021-2022, with the highest growth of 21 per cent in the Middle East and Africa. Of the 40 markets covered in the report, 37 saw double-digit YoY growth from 2021 to 22. Markets in Latin America, the Middle East, Africa, and Southeast Asia, except for Thailand at nine per cent, continue to be high-growth markets. The report predicts a mid-teens CAGR in these regions through 2026.
The COVID-19 pandemic significantly impacted e-commerce as people began to rely more on online shopping. The report indicates that the pandemic has solidified the shift in consumer behaviour towards digital payments, which has continued to drive e-commerce growth. In addition, technological advancements and improvements in digital infrastructure have made online shopping more accessible and convenient for consumers, contributing to the development of e-commerce.
Global e-commerce is projected to grow in all regions, with a robust double-digit growth forecast in emerging markets. This trend presents attractive opportunities for cross-border e-commerce. Therefore, the report suggests that businesses should develop cross-border e-commerce capabilities to benefit from the high-growth markets.
Common Services Centers under the Ministry of Electronics & IT (MeitY) said it has invested in the Open Network for Digital Commerce (ONDC) to promote e-commerce and logistics in rural areas. “It is for the first time that CSC has invested in an initiative like this. ONDC will democratise digital commerce by moving to an open network. The partnership will also generate employment opportunities for rural youth by enabling a last mile logistics network,” said Dinesh Tyagi, MD, CSC SPV, in a release.
“It is for the first time that CSC has invested in an initiative like this. ONDC will democratise digital commerce by moving to an open network. The partnership will also generate employment opportunities for rural youth by enabling a last mile logistics network,”
Dinesh Tyagi, MD, CSC SPV
However, some challenges still need to be addressed to sustain this growth. For example, the report indicates that the lack of digital infrastructure and financial inclusion in some emerging markets can hinder e-commerce growth. Additionally, regulatory challenges and cross-border trade barriers can create obstacles for businesses looking to expand globally.
Overall, the FIS Global Payments Report 2023 indicates that global e-commerce is poised for significant growth over the next few years, presenting business opportunities and challenges. Companies that can successfully navigate the challenges and leverage the opportunities presented by e-commerce will likely benefit from this growth trend.