E-commerce is no longer a rising tide for all categories and brands. Online retail sales growth is coming down from pandemic-driven highs. Euromonitor International expects online product sales to record single-digit growth over each of the next five years. This rate is far lower than the more than 30% peak in 2020.
But e-commerce remains a dominant force, accounting for 47% of retail growth by 2027. Retailers and brands need to become savvier when searching for the next opportunity, though. The online channel is reaching a new level of maturity, especially in more developed e-commerce markets where penetration rates for specific categories may hit a ceiling. As such, retailers and brands are deploying new tactics to reach and engage consumers. And that gives way to three e-commerce trends.
Brands are putting the “custom” in “customer.” A greater desire for personalization means offering a broader range of tailored options across online purchases. In fact, 47% of digital consumers expected better personalization in exchange for their personal information, according to Euromonitor’s latest Voice of the Consumer: Digital Survey. Technologies like AI make it easier for brands to customize products on demand or enhance the level of individual shopping experiences.
Starbucks is one of the best examples of a company has has embraced the consumer desire for … [+]
Online companies are borrowing gaming tactics to drive growth. Low conversion rates plague e-commerce with shoppers abandoning purchases due to shipping, payment or tech hurdles. Three-quarters of digital consumers abandoned an online purchase last year, according to Euromonitor’s Voice of the Consumer: Digital Survey. The top reason? An unexpected shipping cost.
Gamifying commerce, or mimicking techniques from the gaming world to encourage a desired behavior, uses the power of rewards and competition to inspire app activity. Companies are also integrating these features to collect valuable first-party data, which has become more difficult off the back of tighter privacy restrictions.
Boston-based startup Jebbit offers brands the ability to add quizzes and other interactive elements to websites without engineering support. CEO Tom Coburn said Jebbit has seen interest in these features soar over the last 18 months due to shifts in regulation and the end of third-party cookies.
Another factor: the pandemic-driven e-commerce boom and realization that the online experience needed to adapt. “Now with platforms like TikTok capturing consumer attention, other platforms are now saying we also have to create a fun and engaging experience,” Coburn said in an interview at NRF 2023: Retail’s Big Show.
Brands leverage technology to create multisensory customer experiences online in order to better simulate in-person shopping. E-commerce stores are being transformed with more immersive visual and auditory content. Plus, brands are beginning to push Web 3.0 forward, using tech to evoke all senses like touch, smell and taste.
Recent advancements have been driven by either the largest, most well-resourced companies or innovative startups. For example, beauty and personal care giant L’Oréal is using novel auditory tech to help convey the impression of scent over the internet using sound. Meanwhile, South Korean beauty company Amorepacific created a skin measuring device in collaboration with MIT that allows users to monitor their skin’s response to external stimuli, bringing the sense of touch into the digital age.
2023 could mark an inflection point. Consumers are growing more comfortable with Web 3.0, and brands are better positioned to leverage it for immersive experiences. Beauty and fashion players, which tap into a consumer’s personal style, are likely to see the greatest upside.
Three Trends to Help You Secure Online Growth
Companies that want to thrive online have to proactively target, acquire and convert a new digital consumer. In a November 2022 industry survey from Euromonitor, 45% of professionals said delivering a positive digital consumer experience was critical to success. More than ever, it is important for companies to understand digital trends and shifts in order to gain a competitive advantage and better serve customers.