Key e-Commerce Industry Initiatives
Promotions Strategy
Boost e-commerce promotion plans to keep customers engaged
Assortment Strategy
Improve the launch plan and assortment of offerings
Pricing Strategy
Revamp pricing strategy and potentially differentiate it from offline
Dynamic Content
Create dynamic content using consumer data and anticipating trends
Disruptive Tech
Adopting generative AI, augmented services and Web3 to further enhance the customer experience
Source: BCG’s Worldwide E-Commerce Survey
e-Commerce Industry Overview
The e-commerce industry has been growing rapidly at a compound annual growth rate (CAGR) of 14% since 2018, with total sales reaching $948B in 2023. In 2024, e-commerce sales are expected to increase at a slower pace of 6% to approximately $1.0T. Future growth is expected to remain moderate with projected annual sales growth of 6.5% from 2024 to 2027.
As rate hikes appear to be behind us, credit conditions remain tighter and higher interest rates could hamstring broader economic growth and impact consumer spending. Inflationary pressures and supply chain bottlenecks are still being monitored closely, but are not as much of a concern as they were coming out of the pandemic. However, despite these macroeconomic headwinds, numerous trends will help drive further growth within the industry.
- Online shopping habits developed during COVID-19 persist to this day, as many consumers have become accustomed to a digital-first approach to consumption and researching products before a purchase.
- Younger digitally native consumer groups—including Gen Z, Millennials and Gen Alpha—will comprise 60% of the US population by 2027 and continue to drive e-commerce sales.
- Adoption of AI technology to streamline sales transactions, proactively manage inventory and leverage large amounts of data to anticipate customer trends in the e-commerce industry is expected.
U.S. Digitally Native Consumer Groups, 2026
The total number of digitally native consumers will grow substantially from 183M in 2022 to 207M in 2026, representing a 12% increase.
Gen Alpha » 20.2% of population » 69.3M people
Gen Z » 17.7% of population » 60.7M people
Millennials » 22.5% of population » 77.1M people
Source: Mintel
e-Commerce Industry Share of Total U.S. Retail Sales
The ongoing shift in consumer preference towards online shopping has been a driving force behind the steady growth in e-commerce sales. As a result, e-commerce is expected to make up 20.6% of all retail sales by 2027, up from 15.4% in 2023.
Source: FRED (Federal Reserve Economic Data), Statista
e-Commerce Public Valuations
— Public Valuations are based on an aggregate of companies including AMZN, EBAY, ETSY, CPNG, BABA, RVLV, JD, WMT, MELI
Select Private Equity Investments
Continued M&A Interest
The mergers and acquisitions (M&A) in the e-commerce industry market is well-positioned to see robust activity, although it may not reach the exceptionally high level of deals in 2021. Transaction volumes dipped in 2023 compared to prior years but are expected to rebound as buyers reprioritize inorganic growth after last year’s challenging deal-making environment.
Strategic buyers, who have recently emerged as the most active acquirers, and private equity firms continue to show interest in building e-commerce platforms. Strategic buyers are interested in acquisitions as a mechanism to expand their product offerings, increase market share and improve the customer experience. Private equity firms are attracted by the consolidation opportunity in a highly fragmented target-rich market of the e-commerce industry.
Attractive dynamics include:
- Need to enhance capabilities in areas such as logistics and technology infrastructure through targeted add-on acquisitions.
- Aggregators in strong financial positions refocusing on smaller brand acquisitions and expanding their reach into new products/geographies.
- Persistent need to continually improve the customer experience through each stage of the buying process to increase conversion rates and overall satisfaction scores.
- Inorganic growth serving as a tool to speed up the evolution and implementation of technologies that support the evolution how young consumers engage with brands and search for products, including the adoption of extended reality.
- The necessity of deploying an omni-channel distribution strategy and partnering with retailers while connecting directly with customers digitally.
Number of U.S. e-Commerce M&A Transactions
2018-2024 YTD
Sources: S&P Capital IQ, 2024 YTD reflects transactions through 5/23/24
Recent e-Commerce M&A Activity
| Date | Target | Buyer |
| May-24 | Lensabl, Inc. | Visibly, Inc. |
| May-24 | Butter Technologies, Inc. | GrubMarket, Inc. |
| May-24 | WILE, Inc. | NamelessCPG |
| Apri-24 | Mented Cosmetics, Inc. | West Lane Capital Partners LLC |
| Apr-24 | Commerce12, LLC | Investor Group |
| Mar-24 | Whele LLC | Razor Group GmbH |
| Feb-24 | Profound Commerce, Inc. | The Ambr Group, Inc. |
Select Cascade Partners Transactions
