Global web sales neared $3 trillion in 2018, increasing online's share of total retail sales to north of 15%.

Global e-commerce grew at a faster clip last year—18.0%—than online sales in the more saturated U.S. market, which Internet Retailer expects to increase 15.3% from 2017. Consumers worldwide purchased $2.86 trillion on the web in 2018, up from $2.43 trillion the previous year, according to our early projections.

This would be a slowdown from 2017, when global web sales grew 21.3% year over year from $2.00 trillion in 2016, according to Internet Retailer’s estimates.

Although global e-commerce growth decelerated a bit, online’s share of total retail sales has steadily been on the rise—with penetration increasing from 11.3% in 2016 to 13.3% in 2017, Internet Retailer estimates. Last year, Internet Retailer forecasts it hit 15.2%.

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According to estimates, there was a very small uptick in total retail sales across the world in 2018, which helped to give e-commerce penetration a boost. Overall retail sales climbed only 3.3% last year to $18.84 trillion from $18.25 trillion in 2017. Total retail sales growth registered 3.5% in 2017, up from $17.63 trillion the year prior.

Big markets’ e-commerce impact

The world’s two largest economies—the United States and China—dominate global online retailing. Together, these two powerhouses accounted for more than half of worldwide e-commerce sales of physical goods in 2017, which is the last full year for which data has been reported.

China, the world’s No. 1 e-commerce market, saw online sales soar 28.0% to $877.00 billion in 2017 from $685.16 billion the prior year, according to China’s Ministry of Commerce. Total retail sales reached $5.85 trillion, an increase of 4.6%, which was a modest uptick from nearly 4.5% growth in 2016, when purchases hit $5.44 trillion. Online’s share of total retail in the country reached 15.0% in 2017, up from 12.6% during the prior year.

A growing middle class and the huge demand for foreign goods is contributing to the health of China’s e-commerce performance. Additionally, according to Bain & Company’s annual luxury study, Asia is the “growth engine” for online luxury sales. The category jumped an impressive 23.3% in 2017 and was expected to grow 21.4% last year, and consumers in mainland China are leading the way. But overall online shopping in rural areas of the country also grew 39.0% in 2017, and cross-border commerce flourished, according to the Ministry of Commerce.

China far outpaced the United States, the second-largest global market in e-commerce, in terms of both sales and growth. In 2017, consumers spent $449.88 billion on U.S. retail sites, a 15.6% year-over-year increase from $389.11 billion in 2016, according to data released by the U.S. Department of Commerce. A blockbuster fourth quarter in 2017 contributed to the strongest year-over-year growth since 2011, when e-commerce grew by 17.4% over 2010. Even so, the market’s total is only a little more than half of what was spent online for physical goods in China.

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The Commerce Department’s total retail sales figures include the sale of items not normally bought online like fuel, automobiles, and food and beverages consumed at restaurants and bars. Internet Retailer excludes these categories in our analysis of retail data, and with those adjustments, total retail sales hit $3.45 trillion in 2017, up 3.9% year over year from $3.36 trillion.

While the United States hasn’t achieved the same level of e-commerce penetration as China, online took a 12.9% share of total retail sales in 2017, up from 11.6% the previous year, based on Internet Retailer’s analysis. This is the highest rate in all of the years that the Commerce Department has tabulated and released e-commerce sales. 2000 was the first full year for which data is available.

Retail giants take a big piece of the pie

In the United States—and increasingly around the world—Amazon.com Inc., No. 1 in the Internet Retailer 2018 Top 1000, has been the big story. The retailer sells its own inventory and operates a marketplace on which other retailers sell their products through the Amazon platform, with Amazon taking a commission of each order. Based on sales of retailers’ owned products alone, Amazon is the clear global winner in 2017 with $149.96 billion in sales, a 21.2% year-over-year growth. This means Amazon accounted for 43.1% of all e-commerce growth in the United States, Internet Retailer estimates.

But given that the mass merchant reported roughly a 50-50 split between sales of its own merchandise and that of third-party sellers last year, its total gross merchandise value would be about double that. So the company has touched a giant chunk of online retail sales.

Chinese rival mass merchant JD.com Inc., which also sells both its own merchandise and facilitates sales for outside merchants, came in at No. 2 with 42.0% growth last year on just first-party sales. Mass merchants take four of the top 10 spots for e-commerce leaders on the global stage. Large retailers like eBay Inc. and Alibaba Group Holding Ltd.’s Taobao and Tmall sites are excluded from these rankings since they operate as pure marketplaces in that they don’t own any inventory—rather just offer up their platform for third parties.

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With $1.55 trillion sold in 2017 on just the top 75 marketplaces, according to Internet Retailer estimates, companies operating with this business model are blowing away other retailers across the globe. China’s Alibaba Group reported that the value of goods sold on its big Chinese marketplaces, Taobao and Tmall, totaled $740.86 billion in 2017.

For its retail projections, Internet Retailer Research analyzed data from country-specific government agencies, regional and national retail trade associations, independent nonprofit organizations that track industry trends, public company filings and other sources. Our knowledge of other trends and indicators that speak to the retail climate—like the spread of cross-border commerce and surging demand for luxury goods—offered insight that helped us further refine our figures.