Global e-commerce market may hit $8.5 trillion by 2026: Report
According to the Global Payments Report 2023 by fintech company FIS, the global e-commerce market is projected to experience a compound annual growth rate of 9% between 2022 and 2026. The report indicates that the value of e-commerce transactions is expected to increase from approximately $6 trillion in 2022 to over $8.5 trillion in 2026.
While the explosive growth of global e-commerce witnessed during the first two years of the pandemic has slightly decelerated in 2022, there was still a 10% year-on-year growth in the transaction value of global e-commerce from 2021 to 2022. The report acknowledges a reduction in growth rates compared to the initial pandemic period but maintains a positive outlook for the global e-commerce sector.
The forecast for global e-commerce indicates sustained growth and highlights the significance of e-commerce as a key driver of economic activity. As more businesses and consumers embrace online transactions, the e-commerce market presents substantial opportunities for businesses worldwide.
The report covers 40 markets across the globe, providing insights into the evolving landscape of e-commerce and its impact on various sectors. It highlights the resilience and potential of the e-commerce industry, even amidst the challenges posed by the pandemic, and underscores the importance of adapting to the digital economy.
The projected growth of the global e-commerce market presents opportunities for businesses, particularly small and medium-sized enterprises (SMEs), to expand their reach, tap into new markets, and leverage digital platforms for growth. As the e-commerce market continues to evolve, it is crucial for businesses to adapt and align their strategies to capitalize on the growing opportunities in this sector.
The Global Payments Report 2023 by FIS highlights the strong growth of the e-commerce market in various regions during the 2021-22 period. Except for Europe, all other regions experienced double-digit growth, with the Middle East and Africa leading with a growth rate of 21%. Among the 40 markets covered in the report, 37 witnessed double-digit year-on-year growth from 2021 to 2022.
The report identifies Latin America, the Middle East, Africa, and Southeast Asia (excluding Thailand) as high-growth markets. These regions have shown robust performance in terms of e-commerce growth. Notably, Thailand experienced a growth rate of 9%, which is still positive but relatively lower compared to other regions.
Looking ahead, the report predicts a mid-teens compound annual growth rate (CAGR) for these regions until 2026. This indicates a sustained growth trajectory for e-commerce in Latin America, the Middle East, Africa, and Southeast Asia, with the potential for further expansion and development in the coming years.
The findings underscore the increasing adoption of e-commerce in emerging markets and the growing significance of these regions in the global e-commerce landscape. As digital connectivity and internet penetration continue to improve, businesses in these markets have the opportunity to leverage e-commerce platforms to reach a larger customer base and drive economic growth.
The projected mid-teens CAGR in these regions reflects the positive outlook for e-commerce, indicating a continued rise in online transactions and the potential for businesses to tap into the growing consumer demand. It emphasizes the importance of businesses, particularly SMEs, adapting to the digital environment and capitalizing on the opportunities presented by these high-growth markets.The pandemic has indeed accelerated the growth of e-commerce, with consumers increasingly turning to online shopping and digital payments. This shift in consumer behaviour has profoundly impacted the e-commerce industry and continued to drive its growth beyond the pandemic.
As the report highlights, global e-commerce is expected to grow across all regions, with robust double-digit growth forecasts in emerging markets. This presents attractive opportunities for businesses to engage in cross-border e-commerce, expanding their reach and tapping into high-growth markets.
The report suggests that businesses should develop cross-border e-commerce capabilities to capitalise on these opportunities. This entails adapting their strategies and operations to facilitate international transactions, address logistical challenges, and navigate regulatory frameworks in different markets.
By building cross-border e-commerce capabilities, businesses can benefit from the increasing consumer demand in emerging markets and leverage the advantages of global connectivity and access to a broader customer base. It enables them to expand beyond their domestic market and establish a global presence.
Developing cross-border e-commerce capabilities involves localization, understanding cultural nuances, offering multiple payment options, optimizing logistics and delivery processes, and complying with international regulations. It requires a comprehensive understanding of the target markets and tailoring strategies accordingly.
By embracing cross-border e-commerce, businesses can tap into the growing trend of global online shopping and position themselves for long-term success in the evolving digital economy.
The report’s emphasis on this aspect highlights the potential benefits of expanding beyond domestic boundaries and engaging with high-growth markets, ultimately driving e-commerce growth and increasing business opportunities. While the growth potential of e-commerce in emerging markets is significant, some challenges need to be addressed to sustain this growth and maximize its benefits. The report rightly points out two key challenges: the lack of digital infrastructure and financial inclusion in some emerging markets and regulatory and cross-border trade barriers.
The digital infrastructure necessary to support robust e-commerce operations is still developing in many emerging markets. There needs to be more internet connectivity, adequate logistics networks, and more payment systems to ensure the seamless functioning of e-commerce platforms. Addressing these challenges requires investments in digital infrastructure, expanding internet access, and improving logistics and payment systems to create a conducive environment for e-commerce growth.
Financial inclusion is another crucial aspect that needs attention. In some emerging markets, a significant portion of the population still needs access to formal banking services and digital payment methods. Limited financial inclusion can pose a barrier to e-commerce adoption as consumers may face challenges in making online payments. Encouraging financial inclusion through digital payment solutions, mobile banking, and partnerships with local financial institutions can help overcome this hurdle.
Regulatory challenges and cross-border trade barriers also present obstacles for businesses looking to expand globally. Varying customs, taxation, data protection, and consumer rights regulations can create complexities for cross-border e-commerce operations. Harmonizing laws, establishing transparent frameworks, and promoting cross-border collaboration are essential to facilitate international trade and enable businesses to navigate regulatory challenges more effectively.
Moreover, reducing trade barriers and promoting favourable trade policies can encourage cross-border e-commerce and facilitate the flow of goods and services across markets. Governments and international organizations play a vital role in fostering an enabling environment through bilateral and multilateral agreements that promote trade facilitation, e-commerce standards, and consumer protection.
By addressing these challenges, emerging markets can unlock the full potential of e-commerce, fostering sustainable growth and reaping the benefits of digital commerce. Collaboration between governments, businesses, and other stakeholders is crucial in creating an ecosystem that supports the development of digital infrastructure, financial inclusion, and streamlined cross-border trade, thereby driving the growth of e-commerce in these markets.
