Even with the current economic slowdown, the e-commerce share of retail is growing and predicted to account for 20.4% of global retail sales by the end of 2022, up from 10% five years ago. At the same time, buyer demands and expectations are rising and the shopping experience is becoming more immersive and instantaneous than ever. A zero-friction purchase flow of seeing a piece of desired clothing either on a screen or on the street, virtually trying it on, buying it, and receiving it at the doorstep within hours is not only desired by buyers, but in a few years, small business merchants, powered by e-commerce platforms, will actually be able to deliver on this expectation.
The main challenge for small business owners is that the e-commerce space is becoming more crowded, and business owners need to stay ahead of the competition. The below e-commerce trends are driving the retail industry forward into new unforeseen spaces and will continue to do so over the coming years.
- E-commerce is being democratized: Capabilities that were once limited to retail giants with access to advanced technologies and massive budgets, are now available to the masses, with e-commerce platforms democratizing e-commerce capabilities. Today, anyone who wants to create a retail brand can do so by leveraging these platforms to create an online store with advanced e-commerce capabilities, as well as, generate awareness by leveraging social media, and quickly begin selling their merchandise.
- Customer retention strategies are paramount due to sky-rocketing customer acquisition costs: With the ongoing domination of social networks and democratization of online shopping led by e-commerce platforms removing barriers for newcomers, online creators, and micro brands, the number of online merchants will continue to grow exponentially, and with it – competition and customer acquisition costs. With the increased competition, customer retention strategies have become more important than ever. It costs 6-7 times more to acquire a new customer than to retain an existing one. Furthermore, existing customers are 50% more likely to buy from a seller again spending an average of 31% more than new customers. This cost gap between acquiring new customers and retaining existing buyers will continue to grow as competition continues.
- Hyper-personalization is on the rise: The critical need to increase conversion and buyer repeat rate along with improvements in AI and data processing technologies is driving hyper-personalized shopping experiences. Online merchants are increasingly using datification and machine learning to adapt their products and services in real-time to generate personalized shopping experiences, catalogs, and promotions for each customer to increase the likelihood of a purchase.
- Omnichannel approach is essential to increase customer reach and boost sales: 73% of consumers use multiple channels for their purchases. In addition, consumers who use four or more channels spend 9% more compared to those who stick to one channel. While an omnichannel approach creates a consistent brand experience and a seamless shopping journey for consumers, it also multiplies the opportunities for merchants to acquire new customers. Today, e-commerce platforms allow small businesses to sell their products and sync their catalogs across their branded online store, physical stores, social media, and marketplaces, and this list will continue to grow as new channels emerge.
- Buyers have instantaneous shopping demands: Customer expectations are rising and they demand quick and seamless purchase flows. Small business owners need to focus on reducing friction by having a simple-to-use and reliable purchase flow and offering easy and fast shipping options. E-commerce platforms, third-party logistics, and shipping providers are joining forces to bring superb logistics capabilities to small businesses worldwide to shorten the time and reduce friction between customer intent and product delivery to a minimum.
- Immersive experiences increase buyer confidence: AI, AR, machine vision, and speech recognition will continue to evolve the shopping experience. Soon everything will be shoppable anytime and anywhere, whether it is on a screen or out there in the real world. Buyers will soon be able to see a character on TV or someone walking down the street, and in real-time, they will be able to purchase the entire outfit – clothes, shoes, accessories, and even the makeup – on any of their connected devices, after ensuring it looks perfect on them via a virtual fitting room. Shoppers are embracing new immersive technologies, including AR, VR, 3D content, and 360-degree videos, when they shop online, and 47% of consumers said these technologies make them feel more connected with the products they shop. Additionally, research reveals that immersive experiences boost consumer confidence in online purchases by 4% globally and by 9% in North America.
- Hybrid shopping is becoming the norm: While online shopping has continued to explode, in-store shopping is here to stay, and a new hybrid retail model has emerged. One in four consumers chooses hybrid shopping as their preferred method, and the current growing trend of shopping online and picking up in-store, or browsing in-store and completing the purchase online will continue. Combining both online and offline shopping possibilities and experiences is now essential. and resulting in something greater than what would be achieved through each as a solitary strategy.
These e-commerce trends will drive more change within the retail industry, and small business owners should not only be aware of these trends but lean into them and embrace them as the future of retail, to stay ahead of the competition. The retail industry is moving forward into new unforeseen spaces that bring shoppers new and seamless personalized online and in-store experiences. It’s safe to say that e-commerce has become, and will continue to be, a disruptive force in the retail industry.
Oren Inditzky, Vice President of Online Stores at Wix.