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US ecommerce sales will top $1 trillion in 2022, says FTI Consulting

The milestone is set to come three years earlier than projected.

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Unboxing (Photo by Daily Nouri on Unsplash)

US ecommerce sales are set to top $1 trillion in 2022.

That’s the consensus emerging over a series of forecasts from leading firms.

In March, Adobe said it was likely that ecommerce sales would vault over the 13-figure milestone for the first time this year. Edge by Ascential and Insider Intelligence chimed in with their own projections to that effect in June.

In between, the official numbers from the US Census Bureau indicated that actual first quarter ecommerce sales were $250 billion – exactly on pace to hit the trillion-dollar mark.

This week, FTI Consulting has further evidence. The firm’s retail and consumer products practice projects that online retail sales will reach $1.07 trillion in 2022. When compared to 2021, the year-over-year growth would be 11.7%.

FTI adds plenty of context that shows the milestone brings more significance than just adding zeroes.

For one, it is being reached faster than expected just a couple of years ago. Prior to the COVID-19 pandemic, the firm didn’t think the $1 trillion mark would be in view until 2025. The latest forecast means that incremental online retail sales would be 31% – or $256 billion – above its pre-COVID projections.

This reflects how the pandemic accelerated ecommerce growth. In particular, the period between the arrival of most restrictions in the second quarter of 2020 and widespread vaccination in the first quarter of 2021 brought significant gains. The year-over-year sales increases were in the range of 45% to 53%. Before the pandemic, those growth numbers were more in the low-to-mid-teens.

With a shift back to experiences over goods, a return to in-person shopping as restrictions lift and inflation layered on, the growth observed during that period isn’t sustaining now at the same breakneck pace.

Yet it’s important to remember that the massive ecommerce implementation that happened during the pandemic is still with us.

“There is persuasive evidence that COVID-19’s impact on ecommerce shopping will be enduring,” said J.D. Wichser, leader of the Retail & Consumer Products practice at FTI Consulting, in a statement. “However, the rocket-like growth of online retail during COVID-19 certainly will moderate.”

The infrastructure put in place by the large omnichannel retailers that benefitted the most from the ecommerce explosion still exists. But there has been a change in tone. Talk of ecommerce replacing in-person retail has been replaced by bids for a digitally-mediated co-existence. Ecommerce habits formed in the pandemic are remaining, even as shoppers mix visits to stores back in. There are signs that the lines between online and offline are becoming more fluid. Shoppers are just as likely to see an item browsing on Instagram as they are while out at a downtown shopping district. Journeys that start with a Google search end with in-store pickup, while browsing at the mall could lead to a purchase of the right color via mobile phone. DTC brands start online, and scale in stores like Target, or open their own shops.

As this happens, ecommerce will continue to gain. FTI projects that online’s share of overall retail is expected to reach 22.1% in 2022, compared to 20.8% in 2021. Back in 2019, the share was 15.2%.

“Online sales in the past two years were driven by necessity — shopping from home due to stay-at-home living and work conditions — as well as more discretionary income due to government stimulus, a speedy jobs recovery and increased savings,” Wichser said. “This will modulate over time, exacerbated by recent inflationary pressure, which is expected to slow total retail spending over the second half of 2022 and is quickly becoming the primary source of stress for consumers, who don’t know how long it will persist.”

The descent from the highs isn't smooth for many. That moderating growth and a downturn in the stock market are leading ecommerce-focused software companies to make layoffs and cut valuations. Talk of profitability and refining systems currently in place is taking center stage, displacing growth, at least for now. Amazon acknowledged in the first quarter that it overbuilt its logistics network in the growth of the pandemic, and is now looking to scale back. After a period of massive swings, supply and demand will have to normalize again. There’s a risk that the economy could fall into recession if policymakers can’t bring it in for a soft landing.

Yet while the short-term picture is cloudy, ecommerce will continue to trend up. The projected milestone coming this year is a sign of that. Looking to the future helps, too. It took more than 20 years for sales to reach $1 trillion. The next trillion is expected to come in less than a decade. FTI Consulting is projecting that ecommerce sales will reach $2 trillion by 2030. By the end of the decade, ecommerce's total retail share will be 31%, a 10-percentage-point gain over 2021.

For ecommerce, the trillion-dollar milestone will show how the future continues to point up. While a decade's worth of growth is longer being realized in a single quarter, the trajectory is still pushing ahead of the pre-pandemic picture. As ecommerce continues to gain more share, the time between trillions will continue to get shorter.

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