As we get closer to our inaugural eCommerce conference, we want to reflect on Accel’s history of investing in eCommerce globally. For as long as we can remember, we have believed in the inevitability of eCommerce becoming the primary method of buying goods and services. As we sought out entrepreneurs who were seeking to make this inevitability a reality, it is interesting to see how our family of eCommerce companies reflects the arc of the category’s evolution over time. 

In the early days, we invested in marketplaces such as Flipkart and that pioneered and built out the infrastructure for eCommerce in their respective markets. As enthusiastic communities formed around specific categories online, we backed vertical marketplaces such as Etsy, GOAT, Lyst, Vinted, and others that enabled trusted transactions within these communities. We recognized early the rising trend of digitally native brands, such as Away, Bonobos, and others that were direct-to-consumer (D2C) from day one. Believing that last-mile delivery would change the way we would purchase our daily essentials, we partnered with Cornershop, GoPuff, Misfits, Swiggy, and others. Last but not least, believing that eCommerce merchants would desire the best picks-and-shovels to sell their products and services online, we invested in companies such as Algolia, Braintree, Klaviyo, Nuvemshop, Shogun, Taxdoo, and others, that enable merchants to gain independence and own their customers and their destinies.

Five Predictions for the Future of eCommerce

First published in TechCrunch

In 2016, more than 20 years after Amazon’s founding and 10 years since Shopify was started, it would have been easy to assume eCommerce penetration (the percentage of total retail spend where the goods were bought and sold online) would be over 50%. What we found was shocking: the U.S. was only approximately 8% penetrated - only 8% for arguably the most advanced economy in the world!

We’ve had a close eye on the rate of eCommerce penetration globally ever since. Despite eCommerce growth skyrocketing over the past year, the reality is the U.S. has  still only reached an eCommerce penetration rate of around 17%. During the last 18 months, we’ve closed the gap to South Korea and China’s 25%+ eCommerce penetration, but there is still much progress to be made. 

It’s clear that we are still in the early days of this megatrend and it is our strong conviction that it is inevitable that we will get to a point where at least half of every retail dollar is spent online over the next decade.

Below are five key predictions for what this road to further penetration will hold:

1. Marketplaces forged the path, but direct-to-consumer (D2C) retail will accelerate as merchants seek independence

Marketplaces have forged the path for eCommerce adoption among merchants of all sizes. They have raised significant capital and made the necessary investments in payments and logistics infrastructure, often subsidizing the consumer experience with free shipping or discounts to get them comfortable buying online. In recent years, merchants have pursued options aside from these marketplace aggregators. They have sought independence, opting to pay 5-10% of their GMV on their own technology infrastructure vs. paying the 6 to 45% (average of ~15%) in marketplace fees. Most importantly, they have prioritized owning the relationship with their end customers, given customer loyalty and life-time value is becoming only more important in a hyper competitive online market.

To understand these changes, look at the battle between Amazon and Shopify. Their market caps are awe-inspiring, with both almost quadrupling their valuations during the pandemic year.  However, Amazon has other business lines like AWS, so you have to look at Amazon and Shopify GMV figures to see that, for the first time ever in its history, Amazon lost market share of U.S. eCommerce, while Shopify more than doubled in its share in 2020. 

After more than 20 years of Amazon’s dominance in the U.S., Shopify democratized the once expensive, extremely difficult to build and implement eCommerce infrastructure. To be clear, we believe Amazon will continue to be a dominant player in U.S. eCommerce, but they’ve clearly recognized that the demand for D2C could have a massive impact on their business. The balance of power has shifted towards merchants, who previously didn’t have the picks and shovels to build their own eCommerce capabilities.

As a result, we’re entering what we at Accel believe is “the golden age of D2C eCommerce.”

2. The SMB and mid-market will continue to be the fastest-growing segments and D2C eCommerce platforms will play key roles in continued growth

The surge in eCommerce growth today is driven by the SMB and mid-market, not the enterprise, and platforms like Shopify, BigCommerce, and Nuvemshop have changed the game for merchants by democratizing eCommerce infrastructure and empowering merchants everywhere to go D2C and own their own destinies. 

eCommerce infrastructure was historically focused on enterprises that could afford expensive and complicated software. Products such as IBM Websphere, Oracle ATG, SAP Hybris, Salesforce Demandware, and Adobe Magento were simply out of reach for most merchants. They took many months and in some cases, years to implement, and required a lot of configuration and customization. 

SMB and mid-market platforms are much simpler to use, are relatively cost-effective, and enable merchants to get up and running in hours. They’ve also taken a “it takes a village” ecosystem approach, with app partners such as Alloy, Algolia, Klaviyo, Malomo,, ReCharge, Shogun and others catering to more sophisticated needs. We should see many merchants on custom tech stacks moving towards these platforms, and we fully expect Shopify’s to grow its merchant count to 5 million in the next few years. 

3. Non-eCommerce players will increasingly look to acquire D2C eCommerce capabilities to compete with the eCommerce Platforms

Over the past decade, we saw large enterprise software companies acquire eCommerce capabilities: SAP acquired Hybris, Salesforce acquired Demandware and Cloudcraze, Adobe acquired Magento. We’re now seeing SMB and mid-market players like Intuit and PayPal similarly acquire e-commerce capabilities, as they seek to give their own customers an eCommerce back-end. There will be much more of this M&A activity and it will increase D2C options for merchants. 

4. Data privacy changes will create even stronger D2C tailwinds

This point deserves its own op-ed but, in short, Google Chrome 3rd party cookie changes and Apple’s app tracking changes will drive even stronger tailwinds for D2C. As brands and advertisers no longer have 3rd party cookies to track user behavior across websites and apps, their ability to target and retarget users across websites will increasingly be limited. Brands and merchants will be forced to move towards and establish 1st-party, direct relationships with their customers by gathering email addresses and phone numbers so they can communicate and market directly to them. 

5. Social media platforms and publishers will increasingly move towards commerce-driven revenue models

As another by-product of the cookie and app-tracking changes, social media platforms and publishers will move towards in-content commerce-driven revenue models, as affiliate and 3rd party advertising becomes more challenging. China’s highly integrated social media and eCommerce experience is a model for the future of what shopping looks like on Facebook / Instagram, TikTok, Snapchat, Pinterest and other platforms. We expect product discovery AND checkout to happen increasingly inside of these platforms, with some analysts predicting, for example, that Facebook will generate $200-$300M in eCommerce revenue from their Shops product in Q3 this year. 

Publishers like Buzzfeed have already started selling products within their articles, realizing that selling direct to consumer yields more revenue, as brands are willing to share a cut of sales vs. trying to prove attribution for lower CPC or CPM affiliate-based advertising revenue. 

The Path to 50% Penetration

The U.S. increased eCommerce penetration by 12% in the last decade from 5% to almost 17%. Almost half of that 12% increase happened in just the last year. While we don’t expect the same level of annual increase going forward, shopping behavior has fundamentally changed and, just as importantly, the way merchants want to sell their products has shifted from marketplaces to D2C. This D2C wave is a critical enabler for the progress we expect to see over the next decade as we strive towards this inevitable 50% penetration. We are excited to witness this progress and the accompanying rise of incredible companies built to empower merchants all over the globe.