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Fastest growing e-commerce sectors for 2025

By Dom DiFurio on Jun 28, 2022 2:25:48 PM

Fastest growing e-commerce sectors for 2025

The COVID-19 pandemic supercharged Americans’ appetite for 24-hour seamless online shopping experiences. But will the trend change our shopping habits for good?

Wicked Reports analyzed Statista’s 2021 e-commerce report to curate a list of the five projected fastest-growing e-commerce sectors for 2025. Rankings are based on each industry’s projected global revenue growth between 2020 and 2025.

More consumers than ever before are connected to the internet, and their purchasing power has only increased. In fact, nearly a third of American consumers surveyed in 2021 said they’re online almost constantly. Helping drive the growth is the fact that Americans hunkered down at home in 2020 and got into the habit of shopping online for everything from grocery and meal delivery to furniture and even vehicles.

E-commerce as a whole earned nearly $2.9 trillion in global revenue in 2020 and is expected to grow to about $4.2 trillion by 2025, according to Statista. That global revenue is expected to grow at an average of 8% per year through 2025. The report also found that China is dominating the global e-commerce market, accounting for $1.3 trillion in value mostly driven by its fashion industry.

But which industries, specifically, will see the most gains over the next half-decade?

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#5. Electronics and media

- Projected sector revenue growth, 2020 to 2025: 28.9%
- Global revenue forecast 2025: $773.9 billion

Online retailers worldwide, including Amazon, Best Buy, and Europe’s Media-Saturn Holding, are some of the biggest players propelling consumer electronics and media sales today. Their sales are expected to accelerate in growth due in part to the introduction of virtual and augmented reality products in the coming years.

Meta, formerly known as Facebook, pivoted to focus on virtual reality, signaling where the big player in the tech industry sees the future heading. The so-called “metaverse” is where virtual experiences such as meeting friends, attending concerts, and shopping could become commonplace in internet-connected countries. Some industry insiders have optimistically dubbed virtual reality tech the future of the internet.

Another factor driving electronics and media growth is the evolution of online reviews. More robust online product reviews like those offered by Amazon and other retailers are influencing a shift in buying habits. Consumers are gaining more confidence in purchasing products online without ever having seen them in person.

Despite China’s massive population and history of producing electronics for the world, Europe leads the rest of the world in the rate e-commerce sales are forecast to grow over the next half-decade, according to Statista.

A laptop is open to a page of furniture on Overstock.

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#4. Furniture and appliances

- Projected sector revenue growth, 2020 to 2025: 36.2%
- Global revenue forecast 2025: $521.9 billion

Furniture and appliances accounted for $383.2 billion in global revenue in 2020, according to Statista data. The segment includes home goods from retailers like Wayfair, The Home Depot, and IKEA—companies that have seen skyrocketing profits since the pandemic began. It does not include electronic household appliances.

These items are typically large goods that can be difficult to deliver to customers logistically. One reason the market is projected to grow so rapidly is the fact that shopping for large items online is far more convenient and efficient than driving around to different stores. The marketing for these products has also become more appealing, according to the Statista report.

The Home Depot warned back in February 2022 its sales growth could slow throughout the remainder of the year, pointing to the slowdown in the housing market. The company and others in the segment have benefitted since 2020 from historically high real estate activity.

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#3. Toys, hobby, and DIY

- Projected sector revenue growth, 2020 to 2025: 48.7%
- Global revenue forecast 2025: $946.4 billion

The U.S. and China accounted for most online sales of toys and hobby products sold online in 2020. However, sales are expected to grow fastest in China and slowest in the U.S. in the coming years.

The growth in this segment may ride on whether brands embrace direct-to-consumer sales. Wholesalers and manufacturers typically sell goods to retailers in the past, but e-commerce allows them to sell directly to consumers, cutting out the middleman and earning them healthier profit margins. The evolution of 3D printing is also expected to play a role.

The segment, which includes products like sporting goods and Lego building blocks, is essentially dominated by Amazon, according to Statista. There are smaller players, however, that focus on one or a portion of the segment including Office Depot.

Growth of sales in this market could be somewhat hampered in the near term by increasing costs of production and fears of a looming recession, according to a recent report from the NPD group.

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#2. Fashion

- Projected sector revenue growth, 2020 to 2025: 54.8%
- Global revenue forecast 2025: $1.2 trillion

Fashion was the largest e-commerce segment in 2020—a segment where China accounts for more than 40% of global revenue. Of the three major regions with hefty e-commerce revenues, China is expected to grow the fastest by the middle of this decade, according to Statista.

The online fashion industry took a momentary hit when the pandemic began but bounced back to above-average sales volumes in later 2020. Growth in online clothing and accessory sales is expected to be driven by the success of rewards programs and easy reordering processes.

Retail giant Amazon allows customers to have products delivered on a regular basis. The retail giant’s monthly membership program, Amazon Prime, crossed 200 million members in 2021.

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Parking spots for curbside pick-up are pictured at Target.

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#1. Food and personal care

- Projected sector revenue growth, 2020 to 2025: 64.2%
- Global revenue forecast 2025: $791.6 billion

Sales of grocery and personal care products experienced the most growth in 2020, and that trend is forecast to be fairly sticky.

In 2020, Walmart, Kroger, Tom Thumb, and other grocers doubled down on online ordering, delivery, and curbside pickup offerings. The rapid shift was mostly driven by health concerns amid the pandemic, but the move to e-commerce had begun prior to COVID-19’s arrival in the U.S.

Snack food giant Frito-Lay launched a direct-to-consumer site in mid-2020. Hygiene products like toilet paper and tampons were also in high demand in 2020 and ordered online.

Startups in the personal care space have already seen tremendous growth since 2020 as they ride the direct-to-consumer wave. Thinx, which makes underwear for menstruation, caught the attention of Kimberly-Clark, which acquired the company in February 2022. In the beauty space, Sephora has also leaned into online sales and is adding one-day shipping in 2022.

Statista data forecasts these goods will see the fastest growth over the next five years compared with any other segment, thanks in part to the running start they received during pandemic lockdowns.

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Dom DiFurio

Written by Dom DiFurio