E-commerce Surge: How Established Brands and Newcomers Must Adapt to Thrive

Over the past five years, the U.S. e-commerce sector has experienced a profound transformation, marking a sharp contrast with traditional brick-and-mortar retail. This shift has been driven by changing consumer behaviors, technological advancements, and external factors such as the economic disruptions and societal changes in recent years, which accelerated the adoption of online shopping.

Rapid Growth and Market Penetration
E-commerce in the U.S. has grown significantly, with total online sales reaching $1.119 trillion in 2023, representing 22% of all retail sales. This marks a notable increase from 21.2% in 2022 and illustrates the steady rise in e-commerce penetration over the years. Since 2018, the e-commerce growth rate has consistently outpaced that of traditional retail, with the most dramatic surge occurring in 2020, when online sales grew by 36.7% compared to the previous year.

According to the U.S. Census Bureau, e-commerce sales in the second quarter of 2024 alone reached $291.6 billion, a 6.7% increase from the same quarter in 2023. This steady growth has been a key factor in the overall retail sector, with e-commerce contributing to nearly half of the total retail growth in the country.

The Impact of Recent Economic and Societal Shifts

The recent economic and societal shifts were significant catalysts for this transition, as various factors led consumers to increasingly rely on online shopping. During the most challenging periods of these disruptions, e-commerce sales surged, growing by 42.8% in 2020 compared to 2019, while overall retail sales increased by only 7.8%. Although the explosive growth seen during that time has tapered off, e-commerce continues to grow at a robust pace.

Looking ahead, industry analysts project that U.S. e-commerce will maintain double-digit growth rates, with sales expected to reach $1.3 trillion by 2024, accounting for 16.6% of total retail sales. This ongoing expansion is expected to continue, driven by increased consumer comfort with online shopping, innovations in delivery logistics, and the broader integration of digital technologies in retail.

The Decline of Brick-and-Mortar Retail and the Need for Adaptation

As e-commerce has grown, traditional brick-and-mortar retail has faced significant challenges. The convenience and variety offered by online platforms, combined with the shift towards mobile shopping, have led to a steady decline in foot traffic and sales in physical stores. Because brick-and-mortar retail has traditionally been the closest to the customer, its decline presents a new challenge for brands. 

Now, brands must become adept at e-commerce merchandising and managing customer buying expectations across all online sales channels. This involves not only creating compelling online shopping experiences but also ensuring consistency in product availability, pricing, and customer service across multiple platforms. Retailers must leverage data analytics, digital marketing, and customer engagement strategies to maintain a competitive edge in this rapidly evolving landscape.

The Opportunity for Brands

The last five years have marked a period of unprecedented growth for e-commerce in the U.S., with the sector continuing to capture a larger share of the retail market. As technology advances and consumer preferences evolve, e-commerce is poised to play an even more significant role in shaping the future of retail, signaling a permanent shift in how people shop. 

This transformation, while challenging for traditional retailers, offers immense opportunities for those willing to innovate and adapt. Established and legacy brands, which have long relied on their physical presence and brand recognition, will need to adopt new direct-to-consumer (D2C) programs and business models. This shift will enable them to engage more directly with their customers, gather valuable insights, and build stronger relationships without relying solely on third-party retailers.

Meanwhile, newer brands, often more agile but with fewer resources, must double down on strategies such as maintaining strong marketplace account health metrics and enhancing product exposure. These brands need to leverage data-driven tactics, optimize their digital presence, and invest in customer experience management to compete effectively in the crowded e-commerce space. Focusing on these areas will be critical for maintaining visibility and achieving sustainable growth.

Brands that embrace e-commerce merchandising, develop strategies to manage customer expectations across all online channels, and adapt their business models to the evolving landscape will be well-positioned to thrive in the new retail environment.