E-commerce spending is expected to grow by low-double-digit percentages through the next six years, according to a new forecast from media-buying giant GroupM.
Photo: Victor J. Blue/Bloomberg News
Online retail sales are expected to reach new heights in 2020, as the global coronavirus pandemic has forced many homebound consumers to shop online. That is not changing anytime soon.
E-commerce spending is expected to grow by low-double-digit percentages through the next six years even after the end of social distancing measures forced by the pandemic, according to a new forecast from media-buying giant GroupM, part of WPP PLC.
Global retail e-commerce will amount to $3.9 trillion in 2020, or 17% of global retail sales, according to GroupM’s report. The figures exclude food and delivery services to ensure consistency across markets, GroupM said.
GroupM anticipates that sum will rise to $7 trillion by 2024, or 25% of retail sales, and reach $10 trillion globally by 2027.
Brands selling more products online are spending a greater portion of their budgets on digital marketing and placing more emphasis on advertising that directly drives sales, said Christian Juhl, global chief executive of GroupM. The shift toward e-commerce will also change the way ad agencies operate, he said.
“It’s a continued migration of talent sets to people who understand data and performance,” Mr. Juhl said. “On the supply side, publishers have to quantify the value of their inventory. We’re not settling for broad reach and awareness.”
Online shopping habits are expected to stick.
“After a year of sitting at home, a lot of our behaviors are going to be permanently oriented toward these direct- and digital-commerce behaviors,” said Jay Pattisall, a principal analyst at research company Forrester Research Inc., referring to an uptick in traditional e-commerce and consumer offerings like curbside pickup.
In the future, as customers think less about safety than convenience, brands will need to better differentiate their online experiences from one another, he said.
“In the early stages we saw a lot of very transactional style messaging talking about contactless payments, order online, curbside pickup—a lot of very functional benefits,” Mr. Pattisall said. “Brands will need to switch strategies to be more about the brand experience and values rather than just the functional convenience of e-commerce.”
Ad agencies are likely to benefit from the uptick in online sales.
“Both North America and [Europe, the Middle East and Africa]-based brands and clients expect to find the e-commerce capabilities and services from their external agencies,” Mr. Pattisall said.
A handful of agencies are already rethinking and building out e-commerce capabilities.
WPP recently moved its commerce shop Geometry under creative agency group VMLY&R, creating a separate offering called VMLY&R Commerce.
Independent media agency Horizon Media earlier this year started a data and e-commerce consulting group called Night Market. And digital agency Dept recently acquired e-commerce shop Basic.
“Complexity is good for us,” said Mr. Juhl. “This is just a further deepening of the complexity, and questions and challenges existing business models.”
Write to Alexandra Bruell at [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
