Move over millennials: The generational shift driving growth in eCommerce

There’s a changing of the guard happening in eCommerce. Quietly, but decisively, a new generation is beginning to dominate how and where value is created online. 

For years, brands have been building their digital playbooks around Millennials — the first generation to grow up with the internet. But the reality is Millennials aren’t the only generation powering eCommerce sales growth.  Gen Z is already reshaping what digital commerce looks and feels like and levels of adoption. And right behind them, Gen Alpha is poised to accelerate eCommerce and digital commerce adoption and shape the future of online shopping as we know it.   

The trouble is that most businesses are still optimising for yesterday’s performance and habits. But tomorrow’s growth is a blind spot for many.

The generational handover has begun

Gen Z may still be early on in their careers (and some yet to join the workforce), but their impact is outsized. In Australia alone, they already account for an estimated 15% of discretionary spending and are on track to outspend Millennials within the next decade. According the BBC, Gen Z’s global annual spending power exceeds $450 billion - and it’s growing fast.

When it comes to eCommerce specifically, the numbers also don’t lie. Gen Zs in Australia now account for nearly $12bn in annual online spend, according to the 2024 Australia Post eCommerce report, which is nearly half of total Millennial spend. And this is from a generation currently aged 13 – 28.

Gen Z vs Millenial online spend, Australia Post 2024 eCommerce report

Gen Alpha of course on the other hand, are still preschool, primary and early high school aged kids, but they are on the cusp of part time employment, and many are already making cold hard cash through pocket money.

From wishlist functions on eCommerce sites to co-shopping with parents and “kidfluencer” content on YouTube, gen Alpha’s digital fingerprints are everywhere, and this cohort is already heavily influencing household spend and shopping behaviours. Brands like LEGO, Nike, and Mecca are already experimenting with formats, content and experiences tailored to this generation — not just to drive sales today, but to build cultural relevance early.

Digital-native by default: What sets Gen Z and Alpha apart

Gen Z search behaviour, eMarketer

There’s a temptation to think of Gen Z and Gen Alpha as just younger Millennials. But that’s missing a huge point.

These generations didn’t grow up with the internet - they grew up inside it. They’re not “digital-first”, they’re digital by default. And that changes everything.

While Millennials turned to Google, Gen Zs turn to TikTok, YouTube and Reddit. In fact, over 40% of Gen Zs use TikTok as a search engine, according to Google’s own internal data, and over 50% are turning to social media over search engines to research brands. If you’re not present in those discovery channels, you’re invisible.

Experience expectations are higher

Gen Zs won’t tolerate clunky UX, slow delivery, or generic messaging. They expect speed, personalisation, and seamless handoffs between platforms. If your checkout page hasn’t been optimised since 2016, they’ve already moved on. They also value their time and are more willing to pay for convenience than other generations before them. According to a recent PYMNTS report out of the US, 85.2% of Gen Zs used “convenience services” over the past 12 months e.g. rapid delivery, which is higher than any other generation.

Values drive loyalty

For Gen Z and Alpha, identity, ethics and inclusion are non-negotiable. They seek out brands that align with their beliefs — whether it’s sustainability, social justice, or mental health advocacy. A flashy product isn’t enough. They want brands that mean something, and trust and authenticity is key to buying decisions. In fact, according to a 2024 report from PYMNTS, four in 10 Gen Z consumers prefer to buy directly from brands rather than retailer sites, with trust being a pivotal factor.

Shift in behaviours are reshaping the commerce journey: From funnel to fluid 

Forget linear funnels. Discovery and decision-making now happen in loops — often led by peers, creators, or algorithms.

Consider how a typical Gen Z shopper might interact with a brand:

1. Discovery via TikTok creator

2. Validation on Reddit or reviews or chatGPT

3. Checkout on mobile, with Buy Now Pay Later

4. Post-purchase unboxing shared on Instagram

At no point did Google or traditional brand channels enter the mix.

This fluid commerce model demands a rethink of digital marketing and sales strategies. If you're still optimising for search and display, you’re potentially missing the moments that matter. A lack of discoverability in the places and spaces where active demand is occurring will erode market share and relevance over time.

Fast forward to early 2030s and it's a whole different eCommerce ball game

Whilst the influence and spend behaviours of Gen Z and Alpha are already having a sizeable impact on many brands and retailer performance, the next five to six years will completely change the game as eCommerce sales move into overdrive.

By 2030, Gen Z and Gen Alpha will collectively represent more than a third of global consumers. Gen Z’s earning capacity will have grown substantially as many move to mid career and older parts of the generation move to starting a family, whilst younger parts of the generation enter the workforce. Whilst gen Alpha entering full time employment will lead to growth in disposable income.

It is these shifts, combined with continued growth in online spend from millennials that will see eCommerce make up a much bigger share of total retail spend, with Arktic Fox forecasting we are likely to see eCommerce represent 25 – 30% of spend in Australia by 2030 and the problem is many brands are simply not equipped to operate in a world where eCommerce represents a much bigger portion of sales.  

Brands that are evolving in the face of change 

Some brands are already adapting to meet the moment: 

• e.l.f. Cosmetics grew its market share by embracing TikTok-native content, remix culture, and creator partnerships, becoming a top brand for Gen Z without traditional media spend. 

• Nike launched kid-designed shoes through its .SWOOSH Web3 platform, engaging Gen Alpha in digital ownership and co-creation. 

• ASOS has restructured its site navigation and product pages to align with Gen Z expectations — short videos, reviews, fit predictors, and social integration. 

These aren’t just marketing stunts. They’re structural shifts in how brands show up for a new generation of buyers.

How brands can prepare now

This generational shift isn’t a distant horizon — it’s already underway. To stay competitive, brands and retailers need to act with urgency and invest in building capability now to not only support return today but to future proof their organisation for tomorrow.

Here’s where to focus:

1. Re-think eCommerce Channel Strategy

eCommerce channel proliferation has occurred which means consumers are buying in more places and spaces than ever before from social media to conversational commerce channels, marketplaces via quick commerce platforms and more. Investment and focus on emerging channels are as important as maintaining and managing core channels to build capability and learnings to shape current and future strategy. Today too many brands, pay too little attention to emerging channels in pursuit of delivery of today’s sales outcomes.

2. Learn from your younger consumers

Step inside the world of gen Alpha’s and gen Z and you will soon grasp the very different ways they engage with digital. From VR and AR gaming experiences and short form content consumption through to voice- and chat-based experiences and interaction, understanding how audiences research, become informed, buy and interact are key to understanding how best to drive discoverability, preference and conversion for your brand and products. Testing and learning across TikTok, ChatGPT, YouTube Shorts, Discord, niche communities and more is becoming hygiene to deliver relevance – and just being there through advertising doesn't cut the mustard. Understanding what drives organic engagement, beyond paid reach is critical to success.

3. Measure lead indicators

Whilst understanding macro performance is important, it is vital to be able to measure growth in audience and share from younger consumers to understand if your strategy and investment approach is moving the needle with this core cohort.

4. Connect Authentically

Gen Z sees through inauthenticity fast. Your social impact claims need to be backed by real action, and your brand values should be visible across all touchpoints — from product sourcing to customer service. Brands who want to win on the digital shelf and within eCommerce need to;

1. Ensure digital experiences enable consumers quick and easy access to information to help them make more sustainable choices

2. Create greater ability for consumers to understand the supply chain – where products | ingredients are sourced etc to be able to buy within confidence through effective tracking and product content management and make this information available how and when consumers want to engage.

3. Consider the carbon footprint around delivery and fulfilment options and providers consumers with options to reduce their footprint and more

The future is younger, faster and more values-driven

The generational turnover in eCommerce isn’t coming - it’s already started. What worked for Millennials won’t cut it for Gen Z and Alpha. Their expectations are redefining the rules of engagement across discovery, delivery, and brand experience.

Brands that listen, learn, and lead will earn more than just conversions — they’ll earn cultural relevance, loyalty and long-term growth.

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Arktic Fox partners with leading brands to reimagine digital strategy, experience and channel design for the next generation of shoppers. Find out how we can help you future-proof your brand for Gen Z and Gen Alpha.