Nearly three of every 10 purchases by American consumers will be made online by the end of this decade, according to projections from Forrester in its U.S. Online Retail Forecast, 2024 to 2029. The research and technology firm projects that online U.S. retail sales will increase from $1.2 trillion in 2024 to $1.8 trillion in 2029, a five-year compound annual growth rate (CAGR) of 8.4% that will increase ecommerce’s share of total retail sales from 23.4% this year to 29.3% in 2029.
Additionally, the growth rate for total (online and physical retail) sales has returned to pre-COVID levels, climbing 4.1% in 2023 and projected to increase by 4% in 2024. Forrester predicts that total retail sales (excluding automotive and gas) will increase from $5 trillion this year to $6 trillion in 2029, based on a CAGR of 3.7%. (The CAGR for total retail sales was 3.6% for the five-year period from 2014 to 2019.)
Nondurable Goods Have Plenty of Ecommerce Runway
The report predicts that online grocery will see the fastest growth during the coming five years, and that online penetration for clothing, flowers, footwear, pets and toys will exceed 50% by 2029.
“Online retail of nondurable product categories (like grocery and beauty) is poised for significant expansion in the coming years,” said Jitender Miglani, Principal Analyst at Forrester and lead author of the report in an interview with Retail TouchPoints. “Their aggregate online retail penetration is only half that of durable product categories, leaving significant room for ecommerce growth. Most nondurable categories have online retail penetration less than 40% and are likely to see double-digit or high-single-digit ecommerce growth over the next five years.”
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Miglani noted that many relatively recent online commerce developments will support the sales increases of nondurable goods, sometimes referred to as soft goods. “The appeal of same-day delivery and subscription services helps boost online grocery growth by offering convenience and consistency for customers,” he said. “Detailed product information, customer reviews and recommendations help drive online sales in personal care, nutraceuticals, medical supplies and OTC drugs. Ultra-low prices from Chinese retailers like Shein and Temu will help ecommerce sales in the apparel and footwear categories, despite longer delivery times.”
In fact, click-and-collect sales (sometimes referred to as buy online, pick up in-store or BOPIS), which are considered part of total ecommerce sales, will reach $196 billion by 2029, capturing 29% of U.S. omnichannel retailers’ online sales. BOPIS sales got a huge boost from the COVID era and have remained popular for many consumers even as the pandemic has faded.
Durable goods (sometimes referred to as hard goods and including categories such as consumer electronics, tools and home improvement, furniture, small appliances, office products and car parts) already have a high ecommerce penetration overall, with half of the categories above 40%. Miglani sees the potential for double-digit growth in the tools, home improvement and furniture categories due to their current low online penetration rates.
Amazon and Walmart: The Big Will Get Bigger
The Forrester forecast paints a picture of an ecommerce market, and indeed a total retail market, dominated by Amazon and Walmart. Both are starting from a position of strength, particularly Amazon, which in 2023 accounted for 43% of all U.S. online retail sales — and 10% of all retail sales, both digital and physical. Amazon’s closest competitor, Walmart, claimed 11% of online sales last year and a 12% share of all retail sales, understandable given its enormous physical footprint.
If current trends continue through 2029, the two companies alone will generate $1.5 trillion in total (physical and online) sales, which would be one-fourth of the projected U.S. total of $6 trillion. For online sales only, Amazon and Walmart will generate $1.1 trillion by 2029, which would represent two-thirds of all U.S. ecommerce sales for that year.
Both companies’ growth could expose them to antitrust scrutiny, according to Miglani, and in fact the Federal Trade Commission’s (FTC) case against Amazon will arrive in court in late 2026. Amazon and Walmart also have made technology investments that feed their growth but also could attract the interest of legislators or regulators in addition to the more active FTC operating today.
“The vast amounts of consumer data collected by Amazon and Walmart allow them to refine recommendations, marketing and logistics, creating a feedback loop that reinforces their market dominance,” said Miglani. “Their adoption of advanced technologies like AI, data analytics and supply chain optimization enhances customer experiences, but smaller businesses may struggle to keep pace with these innovations.”
Both Amazon and Walmart have built “high-margin alternative revenue streams, such as retail media, which smaller retailers have limited access to,” Miglani added.
