Profitability challenges continue to remain; new revenue streams needed to offset higher costs in online retail

• The online channel is forecasted to be the fastest-growing channel globally between 2024 and 2029, with a CAGR of 6.0%.
• This will result in an additional $164 billion worth of sales, ultimately generating a total of $646 billion in 2029.
• Asia will see the highest sales growth by 2029, where an additional $62.4 billion will be generated, while growth in Australasia is expected to be very strong, with a CAGR of 8.3%.

The online channel has experienced exceptional growth in recent years and is set to remain the fastest-growing retail channel globally through 2029. IGD’s latest Online Retail Trends Report reveals that this growth will add $164 billion in sales, bringing the channel’s total to $646 billion by 2029. It is also expected to gain the most market share of all modern grocery channels, increasing by 0.5 percent to reach 6.3 percent.

The report highlights that while Asia will lead in absolute sales growth, Australasia will see the fastest growth rate, and North America will remain a hub for innovation, with Walmart and Amazon continuing to dominate. However, this growth comes with profitability challenges. As online penetration deepens, grocery retailers are under pressure to manage rising operational costs and protect margins.

Michaela Jay, Insight Manager at IGD, commented: “The way people shop online is different to how they shop in-store, so this is a critical channel to get right. Speed, ease, and convenience are more important than ever to shoppers, which is why online continues to grow rapidly. But with disposable incomes under pressure and the perceived higher costs associated with online, retailers must continue to deliver great value and service to maintain momentum.”

To sustain growth and improve profitability, the report urges retailers and suppliers to focus on emerging revenue levers and offset operating costs through four key trends:

• Retail Media: Monetising digital advertising space and shopper data.
• Quick Commerce: Meeting demand for rapid delivery.
• Fulfilment: Reducing last-mile costs and improving efficiencies.
• Added Services: Providing deeper shopper engagement, loyalty, and differentiation.

There are varying levels of maturity in the online space. While some businesses have established strategies, others are still developing and evolving their online business plans. How retailers and suppliers should respond based on the four trends will differ depending on how advanced their ecommerce business is. This is brought to life through actionable implications in the report, which highlights the initial steps needed to define the online strategy and the next steps to take to evolve the online strategy in a profitable way, for both retailers and suppliers.

The report also explores the critical role of online in enabling unified commerce—the seamless integration of digital and physical retail. It identifies the core capabilities that underpin this future and benchmarks how leading global retailers are progressing. As the industry moves toward a more connected and shopper-centric model, businesses must begin laying the groundwork today—aligning internal operations with evolving customer expectations to stay competitive tomorrow.

Download the report

IGD’s Online Retail Trends Report 2025 is now available here. It provides a comprehensive global overview of the online channel, including forecasts, retailer strategies, and the trends shaping its evolution. Whether you’re a retailer or supplier, this report will help you make informed strategic decisions and stay competitive in a rapidly changing market

To download the Global Online Trends Report, visit IGD’s website.