Economy
29 March
Ecommerce expected to grow 10-12% in 2023: NRF
The National Retail Federation is expecting overall retail growth of 4-6%.

(Courtesy of National Retail Federation)
The National Retail Federation is expecting overall retail growth of 4-6%.
(Courtesy of National Retail Federation)
U.S. retail sales are expected to increase between 4 and 6% in 2023 over 2022, according to a new forecast from the National Retail Federation.
That would see retailers bring in revenue in the range of $5.13 trillion and $5.23 trillion for the year.
The estimate, which excludes restaurant, gas and motor vehicle sales, is above pre-pandemic average retail growth of 3.6%. However, it is below the pandemic years. In 2022, growth topped 7%.
Ecommerce and non-store sales are expected to outpace overall retail, with growth between 10 and 12% from 2022. That would range in revenue from $1.41 trillion to $1.43 trillion. While the inclusion of non-store sales from catalogs and vending machines mean this category isn't only ecommerce, the forecast would come well above the 7% growth of ecommerce in 2022, as observed by the federal government. Insider Intelligence released a separate projection on Wednesday that forecast 10% growth.
NRF said much of the ecommerce growth is now driven by multichannel sales that cross both digital and physical shopping. Physical stores continue to account for 70% of total retail, NRF notes.
The forecast arrives at a time of continued uncertainty surrounding the economy. While the supply chain issues and swings in demand of the pandemic have mostly moderated, high inflation and interest rates that are working to bring it down are combining to create headwinds on the consumer. Factor in the Silicon Valley Bank collapse’s ripple effects, and it remains a difficult job to predict results.
“While it is still too early to know the full effects of the banking industry turmoil, consumer spending is looking quite good for the first quarter of 2023,” said NRF Chief Economist Jack Kleinhenz, in a statement. “While we expect consumers to maintain spending, a softer and likely uneven pace is projected for the balance of the year.”
Here’s a look at key economic drivers of the forecast, as presented by Kleinhenz:
GDP: Overall U.S. economic activity is projected to rise between 0 and 1% in 2023. That’s below the 2.1% growth of 2022. Consumer spending makes up 70% of GDP, so this is a significant indicator for retailers.
Labor market: Jobs are a prime indicator of demand, and continued strength in new jobs created and wage growth to start the year is putting the year off to a fairly healthy start, despite inflation. But many economists believe the impact of interest rate hikes will eventually slow down job growth, and give way to a rise in unemployment above 4%, which would be up from its current historic lows later in the year.
Inflation: High prices have weighed on consumers over the last year. While it has come down to begin 2023, the pace of the decline is proving to make inflation stubborn. In the coming months, Kleinhenz said inflation is expected to cut in half to a range of 3-3.5%
Savings: Consumers continue to have access to healthy savings following the pandemic, but that could begin to wane more significantly as the year goes on, especially as continued high inflation leaves shoppers paying more for essentials like food, gas and rent.
Banking: One question mark is how the banking crisis that stemmed from the collapse of Silicon Valley Bank will filter out to consumers. Kleinhenz said it remained too early to determine the direct impact on consumption, but economists at the Federal Reserve have said it could lead to tighter credit conditions that will affect households.The figure underscores the importance of the marketplace to Amazon's business.
When it comes to selling physical goods through online channels, the Amazon model is dominant.
The company’s commerce business has four distinct components: A marketplace with a constantly expanding assortment of goods driven by third-party sellers, an advertising network that helps sellers stand out, a fulfillment network that delivers items quickly and conveniently, and a membership program that builds loyalty, while connecting shoppers to the other parts of Amazon’s consumer ecosystem.
Each of these elements are mutually-reinforcing. At this point, it would be difficult to grow one without another. A third-party seller on the marketplace likely buys advertising to stand out in a sea of brands, and uses Fulfillment by Amazon to store and ship inventory in part because it’s the most convenient way to access Prime customers.
Yet these parts also exist as their own lines of business that have helped Amazon unlock new avenues for growth beyond the rote sale of goods. Services provided to third-party sellers, Amazon Ads, FBA and Prime all generate their own revenue, and most of these are growing rapidly.
Just how important are they to Amazon?
The company offered some details on one of these areas in a new report this week: Third-party sellers. These independent sellers that list, manage and ship their own products are distinct from first-party sellers, which effectively sell items to Amazon and leave the ecommerce company responsible for the sale to the consumer. As Amazon points out, most third-party sellers are small and medium-sized businesses. First-party sellers tend to be the larger name brands.
As it turns out, third party sellers are very important to Amazon. Key stats from the report:
Independent sellers account for 60% of sales in Amazon’s store.
U.S. sellers sold more than 4.1 billion products—an average of 7,800 every minute. These sellers averaged more than $230,000 in sales in Amazon’s store.
Brand owners in the U.S. grew sales over 20% year over year in Amazon’s store.
Amazon sellers are based in all 50 states.
Over 260 million products were exported globally by U.S.-based sellers.
The results in part underscore how much energy Amazon has put toward growing the marketplace, and the uptake in sellers that has arrived as a result.
“Amazon invests billions of dollars annually to provide entrepreneurs with a constantly improving set of valuable tools and resources to help them gain access to capital, quickly launch in our store, build their brands, and rapidly scale and reach more customers,” said Dharmesh Mehta, vice president of Worldwide Selling Partner Services at Amazon, in a statement. “Amazon is committed to the success of small businesses, and we are excited to continue innovating on their behalf and help them grow into thriving success stories.”
Make no mistake: There is also a massive benefit to Amazon’s business. In the first quarter of 2023, third-party seller services generated $30 billion, and grew 20%. Compare that to AWS, which is typically seen as Amazon’s big profit driver, and you’ll find that the cloud division generated about $21 billion while realizing 16% growth.
While third-party seller services aren’t always running ahead of AWS, the fact that they are growing in areas close to each other is a sign of how much opportunity lies in the marketplace for Amazon. Factor in that Amazon’s $9.5 billion (Q1) advertising business is also tied in part to the marketplace, and it’s clear that the impact extends beyond a single budget line.
Amazon’s success with third-party sellers is a big part of the reason why the marketplace model is being widely applied across commerce. Walmart is doubling down on growing third-party sellers on its marketplace as it follows an ecommerce playbook that has similar components of Amazon, and Macy’s opened its ecommerce business to third-party sellers last year. Shein recently brought its own marketplace to the U.S., and the fast fashion platform is using it as a means to expand the number of categories.
While Amazon will likely to continue to couch its communications about third-party sellers in the language of support for small businesses, it is a major reason that the company has been able to grow to the giant it has become, and remain there. With the growth of ecommerce and the rise of retail media, plenty of others in commerce will continue to apply the model, as well.
For a bit more info on Amazon, the company also shared the below rankings in the report on third-party sellers:
The most-shopped categories from third-party sellers:
The five states with the most third-party sellers: