It wasn’t that long ago that finding a product online, buying it in a few clicks, and getting it delivered the next day or two, was a unique experience. Now consumers expect it. And not just from large retailers like Amazon or Walmart.
Ecommerce has evolved quickly, accelerated by–who would have thought?–a worldwide pandemic that led to an unprecedented boom in online shopping. It’s made possible by technology, including artificial intelligence and machine learning tools that make it easier than ever for online retailers to connect to shoppers.
So what’s next? Where is ecommerce heading in the future and what can marketers do to adapt?
Here, experts share the ecommerce trends to look out for:
“We are still in the very early days of mobile ecommerce,” says Filip Pejic, who has worked in ecommerce both on the corporate side, managing the ecommerce account for a major retailer, and as the founder of two online businesses. His most recent ecommerce company is Pearly, which sells bubble tea kits.
“We spend way more time than needed re-ordering products we like when in reality it could be a simple text message,” he explains.
The majority of Americans, 97%, own a cellphone of some type and smartphone ownership stands at over 85% according to Pew research. Worldwide, the number of mobile devices stood at almost 15 billion in 2021 according to Statista.
Pejic says that Asian countries are ahead of many others with WeChat as a prime example. WeChat reportedly has facilitated trillions of yuan (billions of dollars) in mini transactions.
Pejic notes that there are companies building text messaging marketing platforms that will make it much easier to shop via SMS, iMessage, or WhatsApp, but that may prove challenging for smaller brands. “The biggest risk here is to small and emerging brands,” he warns. “Standing out will be next to impossible as most customers will be locked into brands on SMS platforms, which give little to no room for other brands to promote themselves.”
There is an increasing level of consumer demand for more sustainable products. According to the 5WPR 2022 Consumer Culture Report, 71% of consumer respondents said they at least occasionally first research the ethical and sustainable nature of brands and their supply chains before purchasing.
According to the Shopify eCommerce Market Credibility Study, a commissioned survey conducted by Forrester Consulting on behalf of Shopify, September 2021, “A whopping 77% (of shoppers) are concerned about the environmental impact of the products they buy.”
Some companies are responding by adopting financial models, policies, processes, and technology to meet their own sustainability goals, balancing them against government policies and taxes to help fight climate change.
This is a multifaceted and complex challenge, but businesses that embrace it will have a unique opportunity to gain long-term market share with strong customer retention.
Privacy vs. Personalization
Consumers are demanding more personalization at the same time that privacy regulations and protections are making it more difficult for marketers to collect data and target ads. Ad blockers, government restrictions on data collection and/or use, as well as Apple’s decision to limit data sharing across iOS, are forcing ecommerce marketers to find new approaches to the way they find and interact with customers.
Marketers will have no choice but to find ways to adapt. “The clear solution for brands is to increase their repeat rates and increase customer lifetime value,” concludes Carl Rivera in Shopify’s report, The Future of Commerce in 2022.
Diversification will be mandatory. "Two or three years ago you could scale a 7 or 8 figure ecommerce business with a product and Facebook ads," says Zach Johnson, CEO and co-founder of dash.fi. "But now you'll need to diversify your traffic sources to include other platforms or influencer marketing."
Online Meets Bricks and Mortar
“I see a convergence of online and brick-and-mortar shopping unlike ever before,” predicts Dara Busch, CEO of 5WPR, a PR agency that identified cutting-edge trends in its 5WPR 2022 Consumer Culture Report. That research found that the relationship between consumers and where they want to shop is complicated, she points out.
According to their research, more than half of consumers surveyed prefer to find new products in-store, yet e-commerce continues to grow while physical stores continue to close.
“The question will be how brands can manage both and continue to find value in each,” she says, adding that “buy online and pick up in store (BOPIS) as a great example of a step in this direction, with this offering cutting down on shipping fees and delays in gratification.”
Forty-one percent of shoppers say they are more likely to use BOPIS than they were before the pandemic; 31% said they were more likely to use curbside pickup, according to Signifyd research shared in The State of Commerce 2022 report. There is both opportunity and demand to integrate ecommerce and bricks and mortar stores into an omnichannel experience.
Improved Capital Stack
Even smaller commerce advertisers may spend upwards of a million dollars a year on online advertising, and they need reliable access to capital to scale fast.
“Ten years ago, inventory financing was pretty much the only option (for ecommerce businesses),'' says Zach Johnson, founder and CEO of dash.fi. Lenders were rigidly tied into legacy underwriting methods, relying on FICO scores and business tax returns.
Today, though, ecommerce businesses have many more options from a variety of financing sources, including dash.fi which gives advertisers access to high, flexible credit lines tailored to the spending of the company.
Advertising is the largest cardable expense for most ecommerce businesses, Johnson points out, and 44% of ecommerce spending is on advertising. Yet traditional credit cards do a poor job of helping business owners scale advertising spend. Card failure has been a significant problem for ecommerce marketers. Johnson says the industry has a track record of declining 17% of transactions.
Dash.fi helps customers avoid card failure by using a rich set of data, including bank account, merchant processing, and payment history. It uses real-time business data through connected bank accounts to provide credit lines that meet the needs of the business and adapt to seasonal needs for higher spending.
Shopping in the Metaverse
Advertising in the metaverse is in the early stages and very few advertisers are there. “It is only a matter of time before it becomes a major digital marketing channel as more people become comfortable with interactive in the metaverse,” says Ryan Turner, founder of EcommerceIntelligence.com. “It's almost like the early days of the internet when there were hardly any ads.” Low competition and prices provide opportunities for early adopters, he observes.
Research firm Gartner predicts a quarter of people will spend at least an hour a day in the metaverse by 2026. Whether it’s advertising in VR games or offering a shopping experience enhanced by augmented reality, there will be opportunities for online businesses to develop effective strategies for reaching consumers through virtual reality platforms.
Why Is Ecommerce Changing?
The pandemic changed consumer behavior, accelerating the move to online purchases almost overnight. But it could not have happened as quickly as it did without technology to support multiple facets of the ecommerce experience.
Wider availability of digital commerce tools, along with more payment options including crypto and buy now pay later make it easier for online shoppers to complete purchases.
Advancements in AI and machine learning technology tools make it easier and less expensive for small businesses to reach consumers with personalized experiences.
Staffing challenges are accelerating the use of chatbots, voice search, and other technologies to make it easier to serve customers 24/7.
Continued improvement in m-commerce (mobile commerce) tools, including apps and one-click checkout, means consumers can shop from their smartphones whenever and wherever they are.
Selling on social media platforms has become easier and faster and is only expected to grow in coming years.
Will Ecommerce Keep Growing?
The U.S. Census Bureau’s Annual Retail Trade Survey (ARTS) tracks national estimates of retail sales of U.S. retail businesses. According to the 2020 ARTS release, ecommerce sales increased by $244.2 billion or 43% in 2020, the first year of the pandemic, rising from $571.2 billion in 2019 to $815.4 billion in 2020.
As just one example, the global ecommerce fashion accessories market size was valued at USD 182.0 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 14.7% from 2022 to 2028, according to Grand View Research.
While ecommerce has slowed from the pandemic high in many sectors, the overall trend is upward and will continue. The compound annual growth rate of ecommerce is estimated at 14.7% from 2020 to 2027.
Growth won’t just come from finding new customers, though. “As ecommerce gets more competitive in every market, brands who build true relationships with customers and inspire brand loyalty will have a huge advantage,” says Turner.
Is Ecommerce Still Profitable In 2022?
Yes, there is still plenty of opportunity for businesses in the ecommerce industry, but it’s not without challenges. Inflation, continued supply chain disruptions, and softening of sales in certain product segments in the past year are creating challenges for many of these businesses.
According to the International Trade Commission, food and personal care products show the most growth with a forecast increase of 26% of revenue as a result of consumer transition to online sales channels.
“We believe (the future of ecommerce) is optimistic,” says Hannah Nash, co-founder of Lucy Nash, which sells high-end jewelry at an affordable price. But she says that a lot of small businesses are struggling with debt that makes it difficult for them to take advantage of new opportunities.
“The biggest opportunity for the small e-commerce business is to focus on margins and survival. Anyone who can get through the economic downturn will be in a great position coming out of it.”