Is Your Business Ready for eCommerce’s $1 Trillion Year?
eCommerce is at an all-time high, with global eCommerce sales reaching nearly $3.5 trillion worldwide in 2019.
However, as fast as eCommerce is growing, it is also constantly changing to meet the demands of consumers around the world. Businesses that are able to evolve and rise to the challenge have an opportunity to grab hold of a piece of the $1 trillion pie expected to form in the U.S. this year.
Read Also: How to start a business
In the following article, we go into further detail of the trends emerging in 2022 that will shape the future of eCommerce (see our guide on what is eCommerce). And how your eCommerce business can position itself to capture a portion of the trillions of dollars flooding the industry.
The trends shaping the future of eCommerce—and how to prepare for them
The eCommerce industry is increasingly expected to change in the next few years driven by three main objectives:
Increasing convenience for both sellers and buyers
Creating rich brand and shopping experiences
Selling anywhere and everywhere
These objectives can be seen in many of the trends that emerged in the last several years. Those trends include:
Record online competition and global expansion
New consumer behaviors to change retail
Fulfillment as a competitive advantage
Customer experience to challenge marketplace dominance
To help you navigate the torrent waters, we’ve laid out how merchants can respond to these encroaching trends.
Trend 1. eCommerce boom fuels record online competition
Growth in eCommerce will continue, but with that comes increased competition.
As legacy wholesalers go online and global retail giants expand their eCommerce initiatives, digital competition is heating up. Additionally, competitors in product categories not traditionally in demand online are also competing for eCommerce shoppers, including household essentials, health, and personal care. Competition is also coming from abroad. As COVID-19 spread, consumers began shopping outside their home countries. Cross-border eCommerce spiked 21 percent year over year from January to June 2020, with online sales of luxury goods increasing by 39 percent.
The eCommerce share of retail sales globally has been on the rise for at least the past five years and is expected to continue, especially in countries in which the growth rate for ecommerce penetration previously lagged.
Emerging markets such as India, China, Brazil, Russia, and South Africa are predicted to play a large role in the future of eCommerce. It’s estimated that a potential 3 billion buyers from emerging markets will have access to the internet by 2022. The same report found that 20 percent of all retail sales in 2022 will come from buyers residing in emerging markets.
These relatively untapped markets offer an immense opportunity for eCommerce brands to branch out and reach new audiences. Despite eCommerce growth skyrocketing over the past year, the U.S. has still only reached an eCommerce penetration rate of around 17 percent. This means we are likely to see many new eCommerce brands pop up in these emerging markets that are able to tailor their services toward the local market.
How to prepare for tightening eCommerce competition
With the international eCommerce market estimated to reach a whopping $5.9 trillion by 2022, competition will continue to be fierce. Brands must stay at the top of their game and in tune with consumer demands to capitalize on the eCommerce boom and overcome the competition. What that looks like will differ for every type of business, but those at the top currently are optimizing commerce across channels like online marketplaces (think Amazon and eBay), social media platforms (like Facebook and Pinterest), retail, and wholesale. That means creating a technological foundation that frees your team to create immersive, unified experiences wherever your customers are. Merchants will need a fully-integrated eCommerce platform that will allow you to sell across the marketplaces en vogue while also allowing you to display prices in local currencies and leverage sales tax automation tools.
Trend 2. New consumer behaviors reshape future of retail
There are several shifts in behavior that are expected to drive the future of eCommerce over the next few years.
For one, today’s consumer increasingly expects easy-to-use, intuitive digital experiences across channels and devices. Brands that can deliver on those expectations are seeing the greatest returns.
A desire for convenience, immediacy, and simplicity is maybe the biggest trend shaping the future of retail.
Another shift in consumer behavior born as a result of the pandemic is a change in lifestyle and consumer spending habits. Our homes have become our offices and entertainment spaces, and human interaction and touch are diminishing.
Additionally, with consumers still wary of buying in-store, online demand in new product categories has surged worldwide. Health, hygiene, home essentials, and food and beverage are now the new top online product categories.
And while the growth of online shopping is undeniably outpacing traditional brick-and-mortar retail, that does not mean physical stores are invaluable.
How to prepare for changing retail dynamics
Brick-and-mortar stores will remain valuable assets for eCommerce brands who can create unique shopping experiences rather than simply duplicating their online stores. Exclusive experiences are thought to be the future of physical retail locations. A POS system outfitted with a customer relationship management tool (like Wix CRM) can allow you to mirror online experiences happening across your website or social channels within your store. Wix POS can offer loyalty points for in-store purchases (as well as online ones) with the right Wix App Market integration, ensuring your customers feel valued across every one of your brand touchpoints.
Trend 3. Fulfillment emerges as competitive differentiator
Increasing online sales has created a need for fulfillment centers that can ship and deliver items in the shortest amount of time possible. As a result, brands are investing in smarter and more automated full-service fulfillment centers.
The ultimate shipping experience for today’s consumer includes four pillars: fast, free, sustainable, and branded shipping. Globally, 64 percent of consumers want their orders shipped for free. Meanwhile, 67 percent of U.S. consumers expect either same-, next-, or two-day delivery, while 72 percent of global consumers want brands to use sustainable packaging.
To meet these demands and the soaring fulfillment costs that accompany them, brands are looking at fulfillment as a strategic asset. This is where investments in technology can make the process smarter and more automated.
Some of the most popular fulfillment innovations are robotics and machine learning. Robotic devices, drones, and other autonomous vehicles are already being used to augment the supply chain to find, identify, and transport items in warehouses. Plus, the U.S. is closer than ever to seeing fully autonomous freight vehicles on the road.
How to make fulfillment a strategic asset for your eCommerce business
eCommerce automation will be a key in growing your online business, including but not limited to marketing automation and warehousing. Automation has the potential to free up employee time and resources for more important work, as well as improve supply chain management. For example, automation software can schedule inventory alerts for reordering when stock gets low.
Additionally, the combination of machine learning and big data is doing more than simply automated and optimizing processes. It is also predicted to drive increased eCommerce personalization, giving customers a better store experience. For example, websites that recommend items you might like based on previous purchases are using machine learning to analyze your buying history.
eCommerce success doesn’t stop in the warehouse, however, and will be greatly impacted by the last mile. Today’s consumer has little patience for shipping inconvenience, with only one in five (21 percent) U.S. consumers saying they are forgiving retailers and brands for service disruptions due to COVID-19. Even the most advanced eCommerce capabilities can’t make up for the importance of fulfillment, as delivery becomes a cornerstone of the overall customer experience.
Another fulfillment strategy many brands have found success with is blending in-store and online experiences such as buy-online, pick-up-in-store (BOPIS) and buy-online, return-in-store (BORIS). Salesforce found that retailers offering BOPIS at their brick-and-mortar stores grew digital revenue by 27 percent in Q1 2020, as opposed to only 13 percent growth in those businesses that did not.
Retailers must be consistent in their fulfillment approach, however, to capitalize on its potential as competitive differentiator. Wix eCommerce allows you to set up store pickup as your only fulfillment option to help cater to customer expectations (and stand out in a crowded market as well).
Trend 4. Customer experience will challenge marketplace dominance
As large marketplaces such as Amazon, Etsy, and eBay continue to dominate eCommerce sales, brands will have to work harder to provide a rich and compelling shopping experiences that can hold their customers’ attention in the crowded market.
The technology to create these experiences is increasingly becoming more accessible, and more brands are looking to innovate beyond. To stand apart, the brand experience must go beyond the digital storefront and tell a consistent narrative across channels, devices, and contexts.
Today, many brand are using algorithms to collect data about consumer behaviors that enable them to optimize marketing campaigns and personalize the shopping experience. However, consumers are increasingly becoming fatigued by these impersonalized experiences, craving a more personal touch. Shoppers want to feel like there is somebody behind the computer screen who cares about them.
Research shows that 41 percent of buyers claim to have already switched from companies that they like due to poor personalization. And another 48 percent say they spend more money with a company when they’re provided with a personalized shopping experience.
How to provide compelling shopping experiences
eCommerce websites must find a way to understand their customers behaviors while also offering the desired customer service feel. Many brands considering improvements to their customer experience are beginning to investigate how headless commerce can help. Headless commerce separates the front and back end of an eCommerce application, allowing increased agility and adaptability.
Headless commerce is essential in creating a true omnichannel commerce experience. For example, the front end, whether taking place on a web browser, mobile device, or in-store, provides someone with a personalized experience by automatically connecting their secure personal data in the back end to deliver product and service offerings, pricing, and other content that’s tailored to their interests and needs. Customers feel as though the brand is personalized to them, generating a wealth of brand loyalty. While in the meantime, companies eliminate technical headaches at the back end.
Brands can also set themselves apart by opening up their payment options to reach new markets, offer more choices and create the more desired personalized experience.
To open up more of their available market, particularly the under-40 demographic, brands will also need to accept as many online payment solutions as possible, including buy-now, pay-later (BNPL) options such as Klarna, Afterpay, and Affirm (payment gateways that are available to Wix eCommerce merchants).
Wix stores connected to BNPL providers have seen a 25 percent increase in high-ticket transactions.
How to get your business ready for the future of eCommerce
The eCommerce industry is in a perpetual state of change, and as the above trends illustrate, it is crucial you stay up to date to maintain a competitive advantage.
While not every brand needs to capitalize on every trend, it’s important to know what the competition is doing and to consider if a similar strategy will work for you.
The pandemic has forced many businesses to re-evaluate their top priorities, shifting eCommerce strategies to the top. The Harvard Business Review found that retailers made approximately $10 billion in eCommerce investments, acquisitions and partnerships from May to July 2020. These investments spanned logistics capabilities to enable last-mile, asset-light approaches like dark stores (retail distribution centers that cater exclusively to online shopping), as well as product portfolio investments geared toward digital capabilities in AI and blockchain.
For some brands, investing in and accelerating previously existing efforts to innovate makes the most sense. While for others, right now is the time to reset the way they think about consumers needs and the future of eCommerce.
Today, the core question merchants must ask themselves is not, “What e-commerce investments do I need to make?” but rather, “What consumer experience do I need to offer?”
The future of eCommerce ultimately will come down to creating a customer experience that’s relevant to your target consumer while also building the structure that provides the most value along that journey.
Head of Outbound Marketing, Wix eCommerce
Bogar leads thought leadership and outbound marketing for Wix eCommerce. He has an extremely soft spot for all things eCommerce, retail, tech, content, and marketing.