Retail Insights: Global eCommerce growth and the marketplaces to prioritize

Third-party (3P) eCommerce continues to outpace first-party (1P) eCommerce globally, with a forecasted 11.7% CAGR from 2023-28 for 3P, versus 6.6%  for 1P. This will be supported by international marketplace expansion, particularly by Chinese players such as Pinduoduo’s Temu and Alibaba’s Miravia.

Omnichannel retailers, such as Walmart, will also rapidly build out their 3P businesses and assortments, while category-specific platforms continue to be launched. Retailers are developing marketplace propositions to drive growth and, more importantly, to support the economic model—with marketplaces benefiting from 3P seller income, whilst supporting valuable retail media revenue streams.

Where brands should prioritize as Pinduoduo overtakes Amazon as leading global retailer

Looking at the key retailers by eCommerce sales, the top players from 2023 will continue to be important through to 2028, with Amazon, Alibaba, Pinduoduo, JD.com and Walmart still making up the top five, albeit in a different order. Pinduoduo, in particular, is a platform set to gain in significance, growing at a CAGR of 17.0% between 2023 and 2028, making it the largest eCommerce player globally by 2028, just ahead of Amazon and Alibaba. Considering Pinduoduo’s increasing focus on grocery categories, this is a platform brands will need to prioritize.  

Elsewhere in the top ten, we see Coupang, based in South Korea, and Shein, headquartered in Singapore, both set to move up the global rankings to position eight and seven respectively. Shein is currently planning an IPO in the UK, which is expected to raise over GBP 1 billion (USD 1.3 billion) from the sale of new shares to investors, funds that could be used to accelerate its growth.

MercadoLibre, the largest eCommerce retailer in Latin America, is also a key platform for brands to target over the next five years, as it grows strongly at a 14.1% eCommerce sales CAGR from 2023-28. At its recent Q1 2024 results MercadoLibre’s GMV rose 71%, supported by strong GMV growth in its two key markets, Brazil (+30% YoY) and Mexico (+30% YoY), where it saw a rise in both active buyers and the number of items sold.

MercadoLibre is also rapidly developing its advertising business, growing 64% year-on-year in Q1 2024—with developments here providing additional opportunities for brands to drive visibility and sales on the platform.

3P business models to grow in importance across key platforms

3P share of eCommerce sales will rise across most of the largest eCommerce retailers, demonstrating the growing importance of this business model to brands. Amazon will see its 3P share of eCommerce sales rise from 66.7% in 2023 to 75.0%  by 2028.

Walmart is also one to watch here. Although a marketplace much more focused on 1P sales than Amazon, Walmart’s share of 3P eCommerce sales is forecast to rise by over a third—from 26.0% to 35.8%—between 2023 and 2028. Walmart’s increasing focus on its marketplace platform is part of its strategy to grow the bottom line faster than the topline, with the marketplace generating income from 3P seller fees, whilst supporting valuable new revenue streams such as retail media. Though smaller, Shein and Coupang are also of note here, with their 3P share rising.

Pinduoduo’s Temu to scale rapidly across US and European markets

One platform, which is smaller but worth calling out for the speed of its acceleration, is Pinduoduo-owned Temu. Globally, Temu is expected to grow at a CAGR of 58.6% from 2023 to 2028, which underlines how rapidly it is scaling its operations in key Western markets, notably the US, UK, France, Spain and Germany. Although still largely limited to non-food product categories, brands should keep a close eye on Temu’s development and look out for its potential to disrupt key markets such as the US and UK.

You can find all the latest eCommerce data and forecasts for Temu across more than 60 markets in our Retail Insights platform.

Key takeaways and recommendations for brands

We’ve compiled four key areas for brands to focus on to ensure they adapt their strategies to stay relevant given the current global eCommerce developments:

• Organization: Brands with international operations should consider building global marketplace toolkits, recognizing the various nuances and capabilities needed for different marketplace models and retailers. Ensure teams are working towards common marketplace goals and KPIs across markets.
• Customer development: As the death of the third-party cookie looms and marketplaces master the personalization battle through their own data, brands should leverage data-sharing partnerships and collaboration with marketplaces to power more targeted shopper engagement. Brands must also ensure customer strategies are tailored to the different models and requirements (e.g. search algorithms) of their marketplace customers.
• Brand offering: Brands must optimize assortments to minimize risk of price matching, such as using exclusive assortments or experimenting with pack sizes and bundles. Additionally, brands should look to exceed the competition on digital shelf execution, through primary and secondary images, enhanced content, ratings and reviews.
• Supplier economics: To optimize top-line growth while maintaining a positive margin, brands should test and learn with different marketplace models (e.g. 1P vs 3P strategies). Also, consider reducing supply chain complexity through strategies such as selling in full-case packs or increasing pack size counts.

This analyst update was originally published in our Flywheel Retail Insights platform. Subscribers get exclusive access to resources like our eCommerce Retailer Ranking & Growth Forecasts dashboard, as well as market intelligence data, retailer reports, and best practice case studies.

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