We just crossed over the quarter-century mark (2025). 30 years after Amazon and Alibaba launched, 25 years after the dotcom bubble, and 5 years after “the COVID boost.”

E-commerce as a % of total retail sales was 16% in 2024, up from 6.5% ten years earlier. E-commerce expansion is showing no signs of slowing down — with penetration projected to reach 20% by 2027. This has been largely due to i) more storefronts being created, ii) major innovation and advancement from incumbents like Amazon (who has 38% market share in the US!), and iii) struggling retail sales.

Some may call it bold, some may not. Nonetheless, one of our BIG predictions for this next quarter century is that we will see retail truly be reduced to ashes as we know it.

Here are 14 reasons why:

Personalization

• Continued advancements in AI will lead to an explosion of personalization — 79% of retail businesses are already investing in personalization tools — and when consumers experience truly personalized buying experiences, non-personalized buying experiences will simply not cut it, causing consumers to avoid generic experiences at all costs.
• TikTok, Instagram, Substack, LinkedIn, etc. all have algorithms (and dedicate up to 30% of R&D budgets for their development) to help influencers and brands reach the right audiences. Let’s think about that for a moment, with the vast majority of brands and consumers having an online presence, we are now able to play “matchmaker” with limitless scale (key words here being limitless scale). As a sector, we are just hitting our stride with this capability and I would argue, are still in the early innings. It won’t be long until we reach a tipping point.
• One day… you will find yourself staring at a feed on your phone, swiping to view one product after another, each a better fit for you than the last, and discovering products that you truly love, that you didn’t know you wanted, let alone, existed. Contrast this to physical retail where personalized shopping experience might only be made possible via 1v1 store associate conversations (remarkably un-scalable…)
• Personalized recommendations are here. They may already scare you (“I feel targeted!”), but just give it time because, even though Amazon already attributes 35% of its revenue to its personalized recommendations, this is just the beginning. The products you are most likely to buy and the products you need the most will algorithmically find their way to your email, your phone, and your feeds.
• Google, for example, just released their new “Shop” tab. Would you believe me if I told you they are leveraging all of your search history to serve up product recommendations? They are. Below is a screenshot of my Google Shop tab, just days after I was researching the best racing shoes.

• How is a physical retailer supposed to compete with that? You can’t possibly personalize a physical shopping experience. Every consumer who walks through the front door and down aisle #1 is getting the same experience, a far inferior set up to e-commerce where you could theoretically personalize the entire online storefront.
• Data companies like Google, Amazon, and Meta are going to run away with the show by harnessing the power of millions of datapoints per second across their user base to personalize offers to consumers.

SKU Proliferation

• Over the past decade, we have seen a shift from mass production to mass customization. When Air Jordans came out, there was only one model in various sizes. Now, we have several models, colors, designs, etc. Many shoe brands will even let you design the shoe yourself! Nike By You, Nike’s customizable shoe program, has increased the company’s average order value (AOV) by 15%, according to their 2024 earnings report. The retail side cannot compete with this immense and seemingly limitless optionality.
• The cost is too high for retailers to maintain inventory levels for the long tail of SKUs (the hot pink Disney princess running shoes are going to make someone very happy… but that is exactly the point: one person will be happy). As a retailer, which location will that customer arrive at and when? Is it sensible to stock all sizes of that sneaker in all stores? Of course not. Stocking less popular items can cost companies 23 times more inventory per dollar of sales compared to top sellers, placing a huge burden on smaller businesses that can’t afford to take the risk. This is yet another advantage e-commerce has over physical commerce, intelligent fulfillment, and inventory management.

Speed and Convenience

• Getting in the car and driving to one store (or multiple) takes time, energy, and resources. The options you are offered will be far fewer than the options you have when shopping online (which are fundamentally limitless). Both our plethora of options and the widespread ability to customize have really shone a light on how archaic the in-person shopping experience is. If you want something specific, you go online. Consumers are increasingly conditioned to order online, and technology companies are making it easier and easier to transact.
• But what if I don’t want something specific? More on that later… (see #8).

Research and Product Information

• Consumers want to shop informed. Nearly 90% of online shoppers read product reviews before making a purchase, with 77% stating that reviews strongly influence their buying decisions. A Nielsen Global Online Shopping Report found that 40% of online shoppers would not buy electronics without consulting online reviews first.
• Not only is it important to shop alongside peer reviews, but when you shop online, the level of product information is light years better than the product information found in the store, on the package, or with the store associate (will Eric, the college sophomore have more info to offer you on your TV selection compared to ChatGPT?)
• Searchable manuals, diagrams, dimensions, descriptions, reviews, warranty information, embedded financing detail, pictures, videos, reviews, “customers also bought this,” “bundle with…,” etc. — shopping with a wealth of data wrapped around the product is a far superior buying experience, in addition to being a significant revenue generator for merchants who attribute up to 30% of revenue to upselling and cross-selling based on customer and product data.

Logistics Infrastructure

• A KEY UNLOCK: As online retailers invest more and more in logistics infrastructure, it will bring down the cost of delivery and further, it will bring down the cost to deliver same day/next day. Currently, the cost of same-day delivery for retailers can be as high as $10 to $15 per order, depending on the location and logistics involved.
• Specifically, Amazon is going to lead this charge, followed by Target and Walmart. Once the logistics infrastructure has been put in place, these incumbents will start offering free shipping on every order.
• Amazon has already found a unit economic model capable of shipping your laundry detergent the same day for free. Now we need the rest of the market to follow suit.
• In summary: when there is no cost difference and when you can get the item the next day — the decision for a consumer is easy, skip the trip to the strip mall and order online.
• We will see fewer and fewer reasons to “pop over to the store.”

Generic Items and Cheap Items

• One could argue that e-commerce is great for very specific products, but when shopping for low prices or generic items, it’s more optimal to drive over to Target.
• We are not claiming Target and Walmart will go away, especially in rural America. However, we do generally think the logistics infrastructure will become so efficient that one day, you will be able to order a $5 pack of pencils at 6AM and have them in your mailbox by 10AM with no shipping cost.
• Update: we just tested this and…this is already possible…see below:

Autonomous delivery

• The next wave of logistics infrastructure advancements will come from self-driving cars, robots, and drones. In the next 25 years, we will see giants like Amazon leverage these delivery strategies (they already do so in their fulfillment centers) which will significantly drive down fulfillment costs. For example, Amazon’s pilot program for drone deliveries has already reduced last-mile delivery costs by 30% and delivery times by 50% compared to traditional delivery methods.
• In a world where products can be picked, packed, shipped, and placed on your doorstep without a human, there is a clear potential for “free shipping + get the product in 90 minutes.” This eats even further into the use case for retail (run out and get a quart of milk, need batteries, etc.) E-commerce will drive convenience through the roof.

Scale Factors

• This is a bit of a “big tech” prediction (extending to Amazon, Walmart, TikTok, Meta, Google, etc.) As these platforms get larger, they will get stronger from two main vantage points: logistics infrastructure and data. The more logistics infrastructure, the lower delivery costs are, which allows online retailers to offer you the product + more convenience with no additional cost. The more data, the more an online retailer is able to offer you a personalized shopping experience. In the next 25 years, big tech will get stronger.

Subscription Economy

• For your everyday household items, ordering through a subscription is a winning play for all. Recurring revenue for brands/retailers à easier for online brands retailers to manage inventory à no effort shopping/refills/delivery for the consumer. This space is just getting going but will look very different in 25 years when we will be able to accurately predict when items are running low and reorder them automatically. Or, separately, shop by voice commands asking Siri or your personal shopping assistant on your phone to order more laundry detergent. Shopping will be made as easy as breathing.

Returns Infrastructure

• It’s no secret. The returns space has been hot for years. The volume of returns is enormous. ~$250BN per year (or 18% of overall online sales) are returned each year. Dozens of supply chain and supply chain technology companies are working to both bring down the number or bring down the cost of processing a return. As returns become more ubiquitous, consumer behavior will fully adopt returns as a way of life and as a part of online shopping. It will eventually become so easy that it will deflate the argument of wanting to “try something on in the store” — currently cited as the primary reason for 61% of consumers preferring in-store shopping.

Social and Live Commerce

• What is e-commerce without the consumer? Since the beginning of retail, merchants have been obsessed with capturing the hearts and minds of consumers. The battle for consumer attention continues, but today, it is being fought and won online, primarily through social media platforms. For example, TikTok’s commerce revenue grew by 55% in 2024, generating $20 billion for the company. When it comes to selling products, we are seeing a sizable shift from traditional media to social media where hyper-personalization is driving up conversion rates and overall sales given these platforms were built to match brands with shoppers based on real data (very difficult to achieve via commercials on TV or physical billboards which cannot be personalized).
• Live Commerce is an emerging online shopping trend (estimated to generate $55B in sales by 2026) that combines video streaming with e-commerce. It’s a game changer because you get the best of both worlds 1) human-to-human, live interaction and 2) the ability to switch quickly between channels, do research on the side, and jump in and out of the experience. Yet another innovation that will capture the attention of consumers and take it away from physical retail.

Digital Payments and Checkout Experience

• Does anyone enjoy standing in a checkout line?
• Digital wallets continue to rise, accounting for 53% of global e-commercetransactions in 2024. ShopPay, PrimePay, GooglePay — each have your shipping and payment credentials saved for a rapid checkout experience.
• As A2A payments penetrate e-commerce, cost-conscious consumers will gain the ability to save 2–3% in payment fees through direct bank transfers — another advantage online shopping has over offline shopping.

Retail Unit Economics

• Making matters worse for retail, any declines in utilization/store visits are “felt” on the bottom line. By contrast, e-commerce is hyper-nimble and scalable relative to a retail outlet. It is free to stand up a storefront. And so not only will e-commerce continue to grow fast, but it will also be hard for retail to survive.
• We are already seeing a decline in store associates, leading directly to a weakened customer experience. Theft in retail does not help either, accounting for $122B in losses in 2023 alone.
• Lastly, supply chain issues are more easily seen in retail where out-of-stock items frustrate consumers. Inventory management is incredibly hard to predict, especially in this era of mass customization where consumers want choices and specific products. When shopping online, these are addressed via Dropshipping, communicating clearly what the delivery horizon looks like, or, if truly out of stock, at least there was no time wasted traveling to and from the store.

Food and Beverage

• In the US, retail spend is nearing $10 trillion per year, of which 10% comes from grocery stores. This is logically going to be a laggard segment to transition online.
• However, more brands are building direct connections with consumers, often capturing them on social, and selling to them directly. We would predict the D2C food and Bev space to see significant growth in the next 25 years (with 30% of all F&B sales expected to come from D2C channels this year) given advancements in cold chain, packaging/dry-ice, scheduled deliveries, quality assurance, and subscription commerce.

Bonus Chapter: and what about the environment?

In 2019, the e-commerce sector consumed approximately 2.1 billion pounds (about 950 million kilograms) of plastic packaging. This figure is projected to more than double, reaching an estimated 4.5 billion pounds (over 2 billion kilograms) by 2025. Studies indicate that 52% of people discard e-commerce packaging materials rather than reusing or recycling them, contributing to the growing waste problem

This by-product is scary to think about. If we are shipping all items (even small /generic ones) to a consumer’s front door in a cardboard box, packing materials will continue to balloon, leading to waste and environmental considerations. Not great…

That’s a wrap. Let us know which you agree with and which you disagree with. Certain shoppers like the in-person experience but we would argue that this cohort will continue to decline steeply for the reasons discussed above.

What will happen to retail? We suspect we will see a declining retail footprintand for the stores that remain, they remain on the basis of offering amazing experiences. For example, Barnes & Noble is opening 60 new stores in 2025. This is despite Amazon’s growing market share for books. Why? Because readers value the in-person experience. Similarly, many brands still do well with strategically placed stores where consumers can try on clothes, and touch and feel the brand. However, increasingly and over time, these stores may interact with you in person and then ship you your order.

In summary, in-person experiences will not die, but retail as we used to know it will.