The Future of eCommerce: What's on The Horizon for Brands and Retailers?
CX Circle

The Future of eCommerce: What’s on The Horizon for Brands and Retailers?

Wendy Carré
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November 4, 2020
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Read Time: 9min

2020 has been a year for the history books. On January 1, we thought we were simply entering a new decade and getting a new start. That is until, only a few weeks into the year, the Covid-19 health crisis struck worldwide and the year took a turn for the worse. As the virus continued to spread globally, non-essential businesses all over the globe were forced to shut down, rewriting the rules for online and offline business. Digital became fundamental overnight and the future of eCommerce websites have never looked so bright. 

“People have never been so connected. Whether they were talking to their loved ones, finding information, buying essential items, working from home, or having fun, digital became vital as soon as lockdown started,” says Pierre Casanova, Chief Revenue Officer at Contentsquare.

Online became a refuge the only point of contact with the outside world and with our loved ones. Then, it became every consumer’s friend as changes in behavior gradually became routine.

The figures speak for themselves. Between March 22 and May 10, 2020, global online traffic increased by nearly 37% across all sectors. Transactions also soared, increasing by 43% over the same period! These trends have continued, even with the reopening of physical shops and relaxed health measures.

This crisis has greatly accelerated the rate of digital transformation that was already unfolding across the globe. New consumer profiles have emerged and there is now an essential and obvious need to offer a seamless eCommerce user experience.

Of course, thankfully, the future of eCommerce doesn’t depend exclusively on an external crisis that’s impossible to predict. Other factors also play a part that may become increasingly important. 

They include the worldwide roll-out of 5G, which is already in use in South Korea, China, and the United States, and other technological innovations like drone delivery, virtual and augmented reality, and artificial intelligence. Plus, our consumers’ expectations are growing and they’re becoming more and more demanding, especially from an ethical point of view. 

One thing is certain: eCommerce is constantly changing.

 

Knowledge Through Data: Eliminating Guesswork

In 2017, The Economist concluded that “The world’s most valuable resource is no longer oil, but data.” Looking at the challenges businesses have had with data over the last few years, that’s really saying something.

 

Using first-party data to better understand customers

With the introduction of GDPR (General Data Protection Regulation) in Europe in 2018 and the release of the ePrivacy Directive in 2002 spelling an end to third-party cookies, regulations concerning data collection have tightened. And yet, data remains essential for knowing and understanding your customers. The challenge now lies in how to retrieve data at its source, directly from the public, on a first-party basis. This gives you more precise qualitative data while respecting your customers’ privacy.

Whether it’s declarative or behavioral, this data remains crucial, and not just for marketing teams.

“Harnessing data will be a means of developing the predictive supply chain,” explained Alexandre Eruimy, CEO of Prestashop, an eCommerce website building software. “Data is not just for marketing, it’s also for improving procurement planning all the way through to product delivery and routing.

 

Building brand independence with the Direct to Consumer approach

Moving to a direct-to-consumer (D2C) digital approach means freeing your company from depending on traditional distributors. The advantages are tempting: reduced costs, maximized ROI, complete control of your brand image, and, most notably, control of the data you collect. By cutting out the middleman, brands can secure direct access to data and retain ownership of it. 

One of the biggest pioneers of D2C is Apple. Rather than solely offering products for purchase in its stores, customers get much more: an experience and the feeling of belonging to a community. Other brands have followed suit, for example, Dyson, M&M’s, and Sézane. By having direct access to customer data, brands have been able make informed decisions and build the best possible experience for their customers, both in-store and online with eCommerce. 

 

The Evolution of Customer Experience

Traditionally, when talking about business, people mainly discuss sales figures. Today, commerce is no longer simply about shopping. Above all else, it’s about experience.

 

Social commerce 

“eCommerce has become a completely distinct social network in Asia,” noted Christophe Lejeune, General Manager EMEA at payroll, recruitment, and HR software company BRIOHR and former CEO at Lazada, Southeast Asia’s leading eCommerce platform. “In China, eCommerce represents 19% of total retail sales, due in part to the fact that eCommerce apps have become social networks.” 

Taobao, an Alibaba Group-owned online shopping app, for example, offers users a chat feature, so merchants and customers can talk to each other. Users can also follow their favorite brands, which means that these brands can build their own communities independent of traditional social networks. Influencers can use the app to live stream and share product promotions on their own channels, rather than on the brand’s digital space.

“In Malaysia, a country with 30 million inhabitants, some promotions have been shared by users over 3-million times, representing 10% of the total population,” stated Lejeune. “This shows the sheer power of social networking.” 

We’ve come a long way from eCommerce’s traditional transaction value. Now, experience and engagement take precedence over the act of buying. This is the ascendance of “social commerce.”

Social commerce is the use of channels and networks that promote social interaction between users and promote the buying and selling of products and services. While it often takes place on traditional digital channels like Instagram, Twitter, TikTok, and Facebook, new contenders continue to appear, like Taobao. Rather than depending on traditional social networks and in the process losing part of the ownership of their own products, Taobao is positioning itself as a “commercial” network. Its purpose is to help brands build relationships and connections with prospective clients, long before a customer makes a purchase.

The Lazada website hosts live shopping events, like online fashion shows, that allow consumers to purchase products in real-time. Consumers can click directly on models’ clothes to buy them during the show. 

These strategies are working. In 2020, 80% of Instagram users say the app influences their purchasing decisions. Now, other social networks are following suit. Both TikTok and YouTube are introducing eCommerce features and becoming marketplaces in the process.

 

Retailtainment

This experience-transforming trend is not unique to Asia, even if it’s being pioneered there, and it doesn’t solely depend on social networks. Microsoft’s recent decision to close most of its physical stores seems to echo this trend. You might think that the health crisis was what sealed the fate of the technology company’s stores, but in reality, Microsoft was in trouble even before COVID-19 hit. The brand now plans to convert its remaining flagship stores into “Industry Experience Centers,” or places for product discussions, training sessions and workshops, and other unique ways to interact with the brand. 

The evolution of shopping malls in recent years also illustrates this change. There’s been a growing trend in malls to include fewer shops and more space for restaurants, play areas, and experiential spaces. Because products can be purchased online, the in-store experience has become less focused on selling products and more focused on entertaining and connecting with potential and current customers. Brands are bridging the continuity and interaction between their physical and online digital experiences by introducing tablets and touch screens in-store. On the more extreme side, we’re also seeing areas set aside purely for leisure activities, which can be as extreme as freefall simulators!

 

Phygital, the human touch

Not long ago, eCommerce was seen as a threat to physical sales. People believed the two channels were incompatible and risked cannibalizing one another. Nowadays, uniting your brand’s online and offline presence no longer seems crazy — it’s essential to your brand’s survival! 

Introducing the concept of “phygital,” or the combination of physical and digital channels to bring customers the best experience possible. Brands need to bring the best elements of in-person retail and eCommerce together to build a truly seamless and highly personable shopping experience for their customers. 

The goal of both channels is the same: create a seamless customer experience that wows customers and keeps them coming back again and again. Over the last few years, companies have learned how to optimize their digital presence with that in mind, removing friction and prioritizing human connection at every step of the customer journey. But, why not apply these best practices to physical stores? 

Opening and maintaining a physical store is a way of getting closer to your community and building a connection with customers. This is exactly the goal US mattress brand Casper had in mind when it opened its “nap bar” in New York City. The experience lets users book a nap pod for 45-minutes to give them a respite from the hustle and bustle of the city, while also allowing them to try out a Casper mattress for themselves. The aim of the experience was not to sell mattresses, but to create a more human connection with customers and provide a unique, memorable experience.

Ecommerce best online practices can easily be implemented within physical stores. Beyond immersive experiences, brands could introduce automatic checkout, store analytics, or inventory automation.

 

Customer confidence

When we think about building customer confidence, concepts like secure payment, returns, and refund policies are usually what come to mind. However, confidence goes much further than that.

Nowadays, consumers want to know what brands stand for, their sustainability practices, how a product is produced, and so much more. Consumers want to shop with brands whose missions, visions, practices, and values reflect their own interests and beliefs. A great deal of focus is being placed on all these factors and on corporate social responsibility as a whole. 

These heightened expectations have given rise to a new way of selling things online, or “recommerce.” Recommerce is the practice of reselling pre-used products. This could be books, clothes, technology – you name it. Back Market, an online marketplace selling refurbished electronics, probably being the best-known example of this. 

“Digitally native brands have integrated this idea of responsibility, integrated commerce, added value, and quality into their DNA and their fundamental principles,” said Eruimy of Prestashop.

 

Technology and Commerce: The Winning Team

Logistics: the vital link in the chain 

This year’s health crisis made logistics a competitive advantage for offline and online commerce. The acceleration of digital transformation and the digitization of consumer practices are putting the spotlight on transport, routing, delivery, and supply chain issues. As we have seen in recent months, being able to sell online is one thing. Now, being able to deliver goods in a timely manner at a reasonable cost, while actually making a profit, is another. The challenge now is how to implement effective logistics.

Until now, many businesses have leaned on just one distribution model through one marketplace, creating a heavy dependency. During the lockdown, the government and businesses chose to prioritize the shipment of essential items over non-essential items on certain marketplaces, thus blocking the sales of other products.

At a time when everything was happening online, brands selling “non-essential” products took a huge hit to their potential revenue. Diversifying your company’s sales model will therefore become crucial in order to maintain control over your sales.

This is when the recent innovations come into play. Delivery by drone or robot, the development of pick-up and drop-off points such as the well-known Amazon Lockers, and dark stores all drastically reduce delivery costs and help maintain a high level of customer satisfaction. Missed deliveries and trucks delivering parcels one-by-one will be a thing of the past. Technological innovations of the future will help us respond to the 3As rule: anything, anytime, anywhere.

 

The power of marketplaces: a winning model

Over the last few years, eCommerce has witnessed a boom in marketplaces. In 2019, over 50% of eCommerce sales take place through a marketplace. Marketplaces are flexible and cheap, offering considerable advantages for brands looking to quickly launch their products and boost brand visibility. Brands can easily piggyback on the marketplace’s reputation and built-in audience to promote their products in front of customers. 

And while many marketplaces were only launched in the last decade, many have gained a notable reputation and strong presence in the eCommerce market. And with their undisputed strength and expertise, they are gaining ground, explains Dickel Sooriah, VP of Marketing at Mirakl. “54% of the top 100 marketplaces worldwide were launched less than 10 years ago. Yet, marketplaces’ market share is increasing twice as fast as eCommerce,” said Sooriah. “For example, the online luxury fashion market is growing by 21%, but luxury fashion marketplaces, such as Farfetch, have increased by 48%.” 

It’s all down to their immediate impact and their economic model.

 

5G, a technological Big Bang and eCommerce revolution 

5G technology comes with several advantages: an end to latency, namely page load times, internet speeds 20 times faster than 4G, and ubiquitous connectivity. With time, it will allow connected devices in any sector to be controlled remotely. Its arrival also marks an acceleration of automation.

More than anything, 5G will empower brands to deliver the best customer experiences possible. It will pave the way for augmented reality and VR to be used more regularly to showcase products, for example, through virtual dressing rooms and virtual try-ons. Customers can spin 360-degree product images on their screens to learn everything there is to know about a specific product, helping customers make more informed buying decisions and giving them the confidence to purchase online. 5G will also allow brands to fine-tune data collection, making it easier to provide a frictionless, personalized customer journey for each and every user. Making a true connection with your consumer will no longer be a distant dream.

Of course, these are just some of the trends emerging in this new decade, but in our opinion, these are the ones that will change eCommerce in the long term. Or, more importantly, these are the ones that will empower brands to make a difference.

 

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The Future of eCommerce

Author

Wendy Carré

Wendy is passionate about creating content and all things marketing. She is a Content Marketing Manager working in Contentsquare’s Paris office.