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[classic] Ecommerce 16% of total retail spending

By Priit Kallas

Q1 2025 E-Commerce 16% of total retail spending

U.S. e-commerce sales held steady in the first quarter of 2025 after the holiday season, while demonstrating strong year-over-year growth that continues to outpace the broader retail sector. Here are the key figures you need to know:

  • Adjusted E-Commerce Sales: Reached $300.2 billion, holding steady from the previous quarter.
  • E-Commerce Share of Retail: Accounted for 16.2% of all retail transactions.
  • Annual E-Commerce Growth: Sales jumped 6.1% compared to the first quarter of 2024.
  • Total Retail Sales: Reached $1,858.5 billion for the quarter.
  • Annual Total Retail Growth: Overall retail sales grew 4.5% from the prior year.
ecommerce of total retail spending

Ecommerce 16% of total retail spending in Q1 2025. The relentless surge of U.S. e-commerce retail sales took a breath in the first quarter of 2025, with sales volumes holding steady after a blockbuster holiday season. According to a new report from the U.S. Census Bureau, seasonally adjusted online retail sales reached an estimated $300.2 billion.

While this figure was “virtually unchanged” from the prior quarter, it underscores a significant 6.1% jump from the same period in 2024, signaling the sector’s robust underlying health and continued outperformance of the broader retail market. 6.1% e-commerce CAGR.

Ecommerce of total retail spending

How much of retail sales is e-commerce?

Total retail sales for the quarter grew a modest 0.4% from the fourth quarter of 2024 to $1,858.5 billion, but showed a solid 4.5% year-over-year increase. The data solidifies e-commerce’s indispensable role in the American economy, accounting for a substantial 16.2% of all retail transactions in the first three months of the year.

This stability in early 2025 comes amid a complex economic backdrop. Consumers are navigating persistent, though easing, inflation and are making more tactical spending decisions. Despite economic anxieties and a dip in consumer confidence, spending has remained surprisingly resilient, particularly among high-income households. However, many consumers are prioritizing essentials and experiences like travel over discretionary goods, a shift that influences both online and brick-and-mortar retail.

“Consumers are prioritizing their spending to a degree not seen since the pandemic,” noted Marshal Cohen, chief retail industry advisor for Circana. “This prioritization behavior is not consistent across all industries, or even consumer segments, and is likely to change in the weeks and months ahead.”

Quarter Retail Sales
(millions of dollars)		 E-commerce
as a Percent
of
Total		 Percent Change
From Prior Quarter		 Percent Change
From Same Quarter
A Year Ago
Total E-commerce Total E-commerce Total E-commerce
Adjusted2
1st quarter 2025(p) 1,858,471 300,226 16.2 0.4 0.0 4.5 6.1
4th quarter 2024 1,851,799 300,357 16.2 1.8 1.7 3.8 8.5
3rd quarter 2024 1,818,951 295,269 16.2 1.4 2.3 2.0 7.3
2nd quarter 2024 1,793,556 288,535 16.1 0.9 1.9 2.0 7.0
1st quarter 2024 1,778,119 283,038 15.9 -0.3 2.3 1.2 7.6
Not Adjusted
1st quarter 2025(p) 1,735,730 275,759 15.9 -10.7 -20.3 3.2 5.6
4th quarter 2024 1,944,449 345,872 17.8 6.8 21.4 4.5 8.8
3rd quarter 2024 1,819,936 284,795 15.6 0.1 2.4 2.0 7.6
2nd quarter 2024 1,818,605 278,255 15.3 8.1 6.6 1.7 6.7
1st quarter 2024 1,681,698 261,108 15.5 -9.6 -17.9 2.4 7.2
1 Estimates are based on data from the Monthly Retail Trade Survey and administrative records.
2 Adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

The Long-Term Digital Transformation

The unadjusted data from the Census Bureau, which doesn’t account for seasonal variations, tells the familiar story of a post-holiday sales dip. Unadjusted e-commerce sales fell 20.3% to $275.8 billion after the fourth-quarter rush. Yet, this still represents a 5.6% increase over the first quarter of 2024, demonstrating strong annual growth. The long-term view presented in the report’s historical data vividly illustrates e-commerce’s dramatic ascent since 2016, with a market share that has nearly doubled, supercharged by the pandemic’s catalytic effect on shopping habits.

Projections indicate this is a secular, not a temporary, trend. Global e-commerce sales are expected to surpass $6.86 trillion in 2025, making up over 21% of total retail sales worldwide, according to industry analysis.

The Technology Fueling the Future: AI, Omnichannel, and Personalization

Looking beyond the headline numbers, the future of e-commerce in 2025 is being forged by powerful technological and strategic shifts. The industry is rapidly moving beyond simple online transactions to create deeply integrated, personalized, and efficient shopping experiences.

Key trends shaping the e-commerce retail sales growth include

The Rise of Unified Commerce: The most forward-thinking retailers are breaking down the old silos between physical and online stores. This “omnichannel” approach allows for seamless customer journeys, such as buying online and picking up in-store (BOPIS) or returning online purchases at a physical location (BORIS). The goal is a consistent brand experience across all touchpoints, from a mobile app to a brick-and-mortar storefront. Research shows that physical stores significantly influence digital sales, with 21% of online purchases impacted by in-store interactions.

Hyper-Personalization at Scale: Artificial intelligence is the engine behind the next wave of e-commerce. Retailers are leveraging AI and machine learning to analyze customer data and predict consumer needs, offering tailored product recommendations, dynamic pricing, and personalized marketing. This move from generic promotions to genuinely individualized experiences is becoming the new standard for customer engagement and is expected to positively influence 80% of online shopping.

Social and Mobile Commerce Dominance: Social media platforms are morphing into major retail channels. In 2025, millions of Americans are expected to shop directly through platforms like Facebook and Instagram. This trend is coupled with the unstoppable growth of mobile commerce, which is set to become even more integrated into the sales process, from discovery to payment via mobile wallets.

Sustainability as a Core Value: Modern consumers, particularly younger generations like Gen Z and Millennials, are increasingly making purchasing decisions based on their values. Brands are responding by emphasizing responsible sourcing, eco-friendly packaging, and transparent supply chains. Sustainability is shifting from a “nice-to-have” feature to a core business expectation.

GenAI in E‑Commerce: Turbocharging Q1 2025 Growth

LLMs reshape online retail fast. Here’s one clear example:

Amazon’s Project Starfish & Rufus: AI That Sells

Project Starfish uses LLMs to auto‑generate product descriptions, images, and ads for millions of seller listings. Amazon expects this to add $7.5 billion to gross merchandise sales in 2025. Rufus, Amazon’s AI shopping assistant, guides customers through product discovery and purchases. It’s projected to boost operating profit by $700 million this year.

How this impacts Q1’s 16% e‑commerce share:

  • Automated listings appear online faster and look better. That drives more sales.
  • AI chat support helps customers, cutting friction and raising spending.
  • These tools help small sellers compete, feeding the steady 6% YoY growth in Q1 2025.

LLMs aren’t background tools. They move sales and support that helped e‑commerce reach 16.2% of retail in Q1 2025.

Navigating Economic Headwinds

The Census Bureau report also included important revisions, updating its data to align with the 2022 Annual Retail Trade Survey and the 2017 NAICS (North American Industry Classification System) standards. These adjustments, which now focus solely on employer firms, provide a more precise view of the retail landscape.

As the year progresses, the retail sector will be a crucial barometer of economic health. The interplay between consumer confidence, inflation, and the evolving strategies of retailers will determine the trajectory of growth. While consumers may be more cautious, their embrace of digital commerce is permanent. The businesses that thrive will be those that leverage technology to offer convenience, personalization, and value across every channel.

The next snapshot of the e-commerce sector will arrive on August 19, 2025, with the release of the second-quarter data.

Ecommerce share of retail 16% in Europe

At the same time e-commerce sales in Europe’s top five economies are predicted to grow 7.8% annually, reaching €565 billion by 2029 and reversing the post-pandemic trend of favoring in-store shopping. This will increase the online share of all retail sales from 16% in 2024 to nearly 21% in 2029, while offline retail growth is expected to slow to a 1.7% annual rate. A strengthening economy, increased adoption of omnichannel strategies, and the expansion of cross-border marketplaces are the primary factors driving this significant online growth.

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