The Future of Ecommerce – Trends to Watch
Ecommerce has revolutionized retail. In the last year, the ecommerce industry exploded and at the height of the pandemic, we saw 10 years’ of ecommerce growth in just 90 days.1 Global ecommerce reached $4 trillion2 in 2020, growing nearly 30% from the year prior and this number is expected to continue growing over the next few years. By 2024, it’s estimated that world retail ecommerce sales will reach $6 trillion3 and the overall ecommerce share of retail sales will hit 22%, compared to 18% in 2020. This unprecedented growth of the ecommerce industry isn’t a trend. It’s here to stay. Just as the pandemic transformed the world of ecommerce, emerging trends will continue to shape the industry. The pandemic induced a wave of digital transformation and completely changed consumer behavior, creating new challenges for businesses everywhere. Now, ecommerce businesses must learn how to sustain the high levels of growth and keep up with emerging trends over the coming years. We’ve outlined everything you need to know to prepare for the future of ecommerce.
The Changing Market
1995 marked the first time anyone had ordered a product online, a book from Amazon.com. Since then, the ecommerce market has come a very long way and has shown no sign of slowing down. The market is constantly evolving, and is expected to continue to transform after the pandemic. Here’s what you need to know about the changing market:
Record Breaking Year With Worldwide Expansion: Amid slowing economic activity, COVID-19 has led to a surge in ecommerce and accelerated digital transformation. As lockdowns became the new normal, businesses and consumers increasingly went digital, providing and purchasing more goods and services online, raising ecommerce’s share of global retail trade from 14% in 2019 to about 18% in 2020 4 . Worldwide, ecommerce penetration is expected to increase from 15% today to 25% in 2025. The US saw 10 years’ growth in 3 months and ecommerce penetration went up from 13% in 2019 to 30+% in Q1 20215 . Stimulus checks and vaccinations in the US have further pushed the rapid growth of the ecommerce market, with sales in March of this year hitting record levels.6
Be Prepared for Mobile Users: In light of the pandemic, consumers were spending more time on their phones than ever before and as a result, mobile ecommerce sales grew 31.5%7 in the US in 2020 and are expected to surge another 28.8% this year. By 2022, mobile retail revenue in the US will pass $432 billion and account for 54%8 of total ecommerce sales. Mobile shopping trends are pointing to m-commerce as the wave of the future for shoppers, so it is essential for all ecommerce businesses to be mobile friendly and invest in their mobile UX and mobile payment options.
Invest in Virtual Tech for B2B Growth: The pandemic positively impacted B2B ecommerce growth too and global retail ecommerce sales for B2B are expected to reach $1.1 trillion9 in 2021. A large portion of B2B growth was driven by the increase in demand for digital commerce sales channels. With the pandemic shutting down traditional sales channels like distribution branches, 75% of B2B buyers10actually prefer online purchasing and remote sales interactions over in-person connections. This provides insight to ecommerce industries in the B2B space, it will continue to thrive in the coming years. As this trend continues, companies should increase investments in technology that allows easy remote sales interactions including CRMs or technology which uses AI to identify key sales behavior, like Gong.
The Changing Consumers
COVID-19 has reshaped the habits of even the most resolute shoppers as social distancing became a key line of defense against illness. As a result, ecommerce is seeing new customer segments, behaviors, and expectations across all industries.
Different Customer Segments– Older Generations Online: One of the most significant and unexpected shifts brought on by the pandemic was the almost immediate embrace of online shopping by people in their 60s, 70s and 80s. Consumers 65 and older, on average, spent a total of $1,61511 online from January through October, a 49% increase from a year earlier, making them the fastest-growing cohort of online shoppers. Frequency of purchases, meanwhile, climbed more than 40%. And though the trend is born primarily from necessity — older adults are at higher risk for complications if they contract COVID-19 — analysts say they expect the behavior to stick even after the pandemic is over. With new customer segments entering the market and being expected to say, ecommerce companies will need to adapt too. Brands should adjust their marketing strategies to reach these new demographics of customers that were previously a small segment of the market. In addition, personalizing messages and online experiences for these demographics will also ensure their long-term loyalty.
Changing Customer Behaviors– New Product Purchases: Consumers worldwide are buying items rarely purchased online before the pandemic, like groceries, health and hygiene, and home essentials. Ecommerce was previously dominated by items like gadgets or fashion retail, but suddenly people were purchasing groceries, furniture and even vehicle parts. Interestingly, COVID seems to have heightened consumer needs—to be entertained, for essential household goods, food, and beverages and their desire to discover new products. COVID-19 accelerated free trials and new subscription growth in digital media and entertainment, education, software, food, and consumer goods. Growth in new subscriptions immediately increased during the first few weeks of the COVID period, ranging from 20%-40%12 higher than the pre-COVID timeframe. This shift to subscriptions is expected to carry into the coming years and could provide opportunities for brands in this space, or looking to enter it. A subscription sale creates revenue that recurs again and again, and turning customers into subscribers provides a reoccurring sale and fosters a deeper relationship. If a business was considering adapting towards a subscription model, now is the time.
New Customer Expectations– Personalization and Convenience are key: Consumers have flocked to online shopping more than they have since the dawn of digital, and they haven’t let go of their increasingly high expectations for digital experiences. A recent Forrester Report found that 79% expect brands to make shopping experiences simpler and faster, and 64% expect brands to invest in technology for more frictionless experiences for them. A separate report shows more than 50%13 of consumers are willing to share information on products they like in order to get personalized discounts. 78% of consumers14 value convenience more now than they did before the pandemic, with nearly 90% saying that they spend more when brands offer seamless and flexible payment options that speed up their decision-making. The pandemic has amplified the consumer’s desire for convenience, personalization, and immediacy, and companies should invest accordingly.
The Changing Technology
The birth and growth of ecommerce is due to technology, which remains the fuel behind the ecommerce industry. As technology advances, so do the offerings to both consumers and online businesses. There are several emerging technologies that will change the way people and businesses utilize ecommerce in the future. These technologies expand the traditional checkout experience to include pre-purchase, during purchase, and post-purchase.
Pre-Purchase Technology: One of the fastest growing trends in pre-purchase ecommerce technology is the use of chatbots, programs that help simulate interactions with customers automatically based on a set of predefined conditions, triggers, and/or events. With a projected worldwide market size of more than $1.3 billion by 2024,15 chatbots will be a driving force for business communications, and 80%16 of businesses are projected to integrate some form of chatbot system by 2021.
Another pandemic-driven trend, live streaming ecommerce grew exponentially, during lockdowns and enabled brands to engage with viewers virtually while showcasing products and services. This technology allowed customers to instantly click and purchase via platforms like PopShop and ShopShops. In China, livestream ecommerce was already a huge phenomenon that pulled in over $100B17 in estimated sales last year.
At-Purchase Technology: Arguably the most important part of ecommerce is the purchase, but 70% of shoppers18 drop at checkout, and cart abandonment represents a $4 trillion19 problem globally. Speed, convenience, and personalization are essential components for the purchase experience. Technology solutions that enable 1-click secure checkout experiences are rapidly growing in popularity.
Additionally, eWallet functionality, commonly known as mobile wallet, is no longer optional. While digital payments accounted for $3.04 trillion USD in payments in 2017, they’re projected to reach a whopping 6.6 trillion USD in 202120, more than doubling in only four years.
Technology that powers distributed commerce is also expected to continue to rise in the coming years. This is technology that enables consumers to make purchases directly from the content they are experiencing without having to go to another page, window, or tab. Ecommerce companies can partner with strategic partners that both enhance the customer experience while also creating additional revenue streams. A key function of this technology, though, is that it must be personalized to the individual purchasing user, to enhance their experience. 80%21 of consumers self-reported that they are more likely to make a purchase when brands offer personalized experiences. Advancements in technology, especially the increasing accessibility of artificial intelligence and machine learning, has been a major enabler of this desired personalization. AI can crunch user data quickly, and intelligently manage tradeoffs, to allow for real time optimizations and scalability which have become essential for ecommerce brands.
Post-Purchase Technology: After a purchase is completed, there are still essential opportunities to engage with the customer and build brand loyalty. Communication with consumers post-purchase is crucial, and 84% of consumers say that more post-purchase communication is critical if a purchase is expensive. While email is still the dominant channel for post-transaction messages, 43%22 of consumers ages 21-29 prefer to receive messages from retailers via text, and 33% want them via push notifications. As consumers begin to frequent more communication channels like messenger apps, they’ll expect helpful, relevant information to reach them through those channels as well.
Furthermore, the post-purchase confirmation screen offers an often untapped opportunity for ecommerce brands to improve customer experience while generating additional revenue streams. After the customer makes a purchase, presenting them with a relevant third party offer (or an internal offer) creates a deeper relationship with the customer while also generating additional revenue for the ecommerce company.
Looking Ahead
Since the birth of ecommerce, it has been a changing landscape. In 1995 Amazon sold a book and eBay debuted as the world’s first global marketplace, and this unleashed a flood of online shopping where businesses and consumers never looked back. Advances over time, for both tech hardware and the Internet, have had a direct correlation with the intense rise of ecommerce, and so has the pandemic.
COVID-19 disrupted the ecommerce landscape and the pandemic fueled unprecedented and unforeseen growth in the digital and ecommerce sectors. It is now projected that online retail sales will reach $1 trillion by 2023, a year earlier than projected in 2019. Total online market share is projected to reach 27% by 2025 and 33% by 2030, compared to 18% in 202023.
As ecommerce continues to grow and change, two of the most crucial trends for online retailers are mobile commerce and personalization. The customer needs to be at the heart of every solution, and that means being where customers are (their mobile devices) and providing them an experience that is tailored to them individually, building convenience, trust, and efficiency. These are key to ecommerce prosperity, both now and in the future.
The industry has come a long way, and it is evident that investments in consumer-facing and back-end technologies, and the ability to adapt to continued advancements, will be the main factors to ensure ecommerce success.
3https://www.emarketer.com/content/worldwide-ecommerce-will-approach-5-trillion-this-year
4https://unctad.org/news/how-covid-19-triggered-digital-and-e-commerce-turning-point
6https://www.digitalcommerce360.com/article/quarterly-online-sales/
7https://www.statista.com/topics/1185/mobile-commerce/
9https://www.bigcommerce.com/articles/ecommerce/ecommerce-trends/#14-ecommerce-trends-leading-the-way
11https://www.washingtonpost.com/road-to-recovery/2021/01/21/baby-boombers-online-shopping-pandemic/
12https://recurly.com/research/pandemic-impact-subscription-growth-rates/
14https://www.linnworks.com/whitepaper-access/the-effortless-economy-a-new-age-of-retail
15 Intellectyx chatbot statistics
18https://baymard.com/lists/cart-abandonment-rate
19https://phys.org/news/2019-10-abandoned-carts-trillion-dollar.html
20https://www.finaria.it/pr/digital-payments-to-hit-6-6t-value-in-2021-a-40-jump-in-two-years/
22https://see.narvar.com/consumer-report-bots-texts-voice.html
23https://www.fticonsulting.com/insights/reports/covid-19-2020-online-retail-forecast-report
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