In business, you always have to think ahead.
Sounds like a trite observation, huh? Maybe it is one. It doesn’t make it wrong, though.
And for eCommerce store, it’s especially true. According to eMarketer’s forecast, this year it will grow by 20.7% and reach $3.5 trillion in revenue.
So buckle up, because, in this article, I will tell you about the biggest future eCommerce trends and what your e-business should do about them.
1. Smart home devices will be used for shopping more
Smart homes are getting more popular: in 2018, around 60% owned at least one such device.
The convenience of smart homes is undeniable. Despite the fact that a lot of smart devices that collect information about their users often lack vital protection (which can be mitigated by customers installing third-party software to hide their IP-addresses), the number of smart home users is expected to grow even further.
For example, whereas there were 114 million smart speaker units worldwide last year, by the end of 2019, this number is predicted to reach 208 million by Canalys. That’s an 82% growth in just one year’s time.
In fact, Canalys expects the number of smart speakers in use to reach 500 million units by 2023, thus significantly outnumbering tablets.
Voice shopping is a pretty obvious trend. With more and more people relying on their virtual assistants, it’s natural that the numbers grow. According to OC&C, voice commerce will account for $40 billion being spent in the USA in 2022.
While that figure will only cover 6% of all online retail that year, it is still a considerable one.
What can eCommerce companies do to benefit from it? There are a few ways:
· Work in close collaboration with the manufacturers of smart devices. This will allow e-tailers to promote their goods and services from the ground up.
· Take SEO even more seriously than ever. However, eCommerce businesses need to optimize their sites with smart devices in mind, first and foremost. It’s because machines are now going to surf the Web on behalf of their owners and sometimes, even make decisions.
· Of course, buying ads to boost your website’s standing among the search results is always viable. However, it’s best to use it just as a complementary means and not to rely on it exclusively.
2. Influencer marketing is going to get even bigger
The reality of influencer marketing is simple: influencers hold a lot of power.
Out of the companies that had employed influencers in 2017, 92% were satisfied with the results, a Linqia report found out. Another figure speaks for the level of their satisfaction: 39% were planning to increase the respective budget.
When it comes to influencer marketing, you have to know your target audience. Millennials and the following generations are more susceptible to it but that’s not to say it doesn’t work with older people. However, you’d have a harder time finding influencers who are popular enough with them.
According to Forbes, one of the most important things about an influencer is believability. First, they must be directly related to the product or service they are promoting. Nobody is going to believe, say, Gabe Newell’s endorsement of a fitness nutrition company, but if you were a hardware manufacturer and got him (sorry, can’t give you the precise amount of money he is going to demand it) to promote your goods, it would be extremely credible.
Second, even if an influencer’s field of expertise relates to what you produce, there are still ways it can all go wrong. It can happen if they look disinterested in the product and what they say about it reads like a paid promotion. Which, of course, it is, and your customers likely know it, but certain sincerity will help a lot.
To that end, it’s best to give your influencers a bit of creative freedom. This way, they will appear to be more natural to potential customers.
3. Subscription-based eCommerce
What’s so good about custom eCommerce design is that it allows buyers to access stores and acquire goods from within the comfort of their homes. However, there still remain some inconvenient moments to this, like the need to actively order the product.
While it’s far from a huge drawback if someone needs to buy a product on a one-time basis, it becomes tiresome for everyday commodities.
This is exactly the reason why subscription-based eCommerce is on the rise right now and is expected to keep growing. All that a customer has to do is subscribe to the service, pay the fee, and the product will be regularly delivered to their house.
The growth in this sector of the eCommerce market is huge. As McKinsey’s research found out, the revenue for the 500 largest subscription eCommerce companies has increased from $57 million to $2.6 billion, and all that just in a span of 5 years.
According to the research mentioned above, 15% of all surveyed online shoppers are subscribed to at least one eCommerce service. This fact alone means that it’s a good idea (and the right time) to get into the subscription business.
It is true that this model might not be viable for all e-businesses. If you sell luxury goods exclusively, few people might be interested enough to pay for regular shipments of those. However, for an online store trading in food or other commodities (according to McKinsey, Dollar Shave Club is second only to Amazon Subscribe and Save in popularity), subscription boxes are a gold mine.
Per McKinsey’s report, consumers subscribe for three main reasons:
· Replenishment of everyday items – accounts for 32% of subscriptions;
· Curation that allows customers to try out new goods – accounts for 55%;
· Access to exclusive items – accounts for 13%.
As you can see, most consumers actually want to “be surprised” with products they have never tried before. If your business can provide such a service, you’d better not miss this opportunity.
However, as McKinsey warns us, not everything is so nice about the subscription model. The cancellation rate is around 40%, which is a ton. On the other hand, those subscribers who stay tend to stay for a long time: 45% were found to stick for a year and more.
4. Draconian measures against “serial returners”
Sometimes, you just have to return something you bought. Reasons can vary: maybe that pair of sneakers don’t fit you well, or maybe you got several pairs in different colors, to begin with, planning to keep the one you like best and return the rest.
While it is a necessary trade practice, returns can harm the company’s profits if the customers are not reasonable about them. To an outside viewer, it may seem that if a product is returned, there’s no loss for the company. However, it’s not the case.
As business owners know all too well, managing returns doesn’t simply amount to doing the usual operations but in reverse. It actually requires additional manpower and additional accounting as well as additional costs of transportation and storage.
But what makes it specifically an eCommerce issue?
The thing is, eCommerce suffers the most from returners. According to Shopify, eCommerce return rate generally is twice as high as that of traditional retail and can reach as much as 30% during holiday seasons.
Despite the fact that free returns hurt the profitability of a company, they also are a huge incentive for customers to choose the said company. The same report suggests that the correlation between free returns and the willingness of the clients to shop online is high.
More than half of consumers can be swayed to use an online store if it provides free returns or exchanges. At the same time, almost 70% have second thoughts about online shopping if there are fees for returning the product.
What can we make of it? With the costs of product returns predicted to reach $550 billion in the US by 2020 (almost $200 billion on top of the 2017 figures), eCommerce businesses will have to seriously revise their return policies.
Industry leaders are already taking measures to stop their customers from abusing the system of returns. As of now, though, such measures are not transparent enough.
Take Amazon, for example. Despite there being no clear information on what exactly qualifies as the abuse of their return policy, some accounts have been banned for abusing it.
For an eCommerce business, it would be a smart move to undertake the following steps:
· Design a strategy that allows it to provide free returns. Their availability plays a huge part in customers’ decision making, as we’ve seen in the Shopify report.
· At the same time, it needs to impose some limitations on how many items and/or how often a client may return for free. Otherwise, losses may turn the advantage of having more customers due to free returns into a drawback.
· This strategy must be supplied with infrastructure and logistics to keep it going. How exactly are goods going to be returned? Where will you keep them? These questions must be answered in advance.
· Perhaps the most important of all: your return policy must be very clear to your customers. And to achieve that, it must be very clear to you. It’s better to spend time thinking about your policy through than to waste it (and damage your brand’s image) dealing with angry customers you’ve failed to inform.
5. Reality is about to get augmented
Initially, augmented reality (AR) was planned to be used in traditional retail. However, its performance in good old brick-and-mortars was found lackluster. And no wonder – it had little to offer to the customers who could see and interact with actual products.
Where AR really has a chance to shine is eCommerce. As predicted by ABI Report, by 2022, 120,000 stores will be using smart glasses to enhance the customer experience. Besides, it will also help the employees to provide better service.
In 2020, according to the same report, sales made with the aid of augmented reality will amount to 3% of global eCommerce sales, or $122 billion.
What’s more, by using AR for virtual try-on, e-businesses will be able to (partially) deal with those pesky serial returners. If they can see what an item of clothing or jewelry looks like on them real-time, they’re going to lose one of their excuses for returning things they didn’t like.
If you produce a highly technical product, AR might also be your friend. An augmented reality manual is going to be both impressive and useful to your customers as it makes understanding what is what in your device so much easier. If you’re quick enough, it might even become your USP!
6. Environment and ethics-minded commerce
For some business owners, taking part in ethical consumerism may sound like a pipe dream, like something that is undeniably commendable but hardly doable if you want to make a profit.
Such a worldview is dying out by now, though. We all know how important the company’s brand reputation is. And in today’s world, ethics play a huge part in building one’s brand reputation.
A 2017 Unilever survey shows that one-third of consumers care about the sustainability of a brand. We can safely expect this percentage to grow as climate change and other environment-related topics are among the hottest ones today.
As consumers’ ecological and ethical awareness rises, eCommerce companies must think beyond profits (especially considering that it will help with the profits too).
Besides, customers are also likely to take other aspects of your business ethics into consideration. Among those aspects are how well-paid workers are, whether or not the product is made with responsibility in mind, how much waste its packaging is going to produce, etc.
Naturally, an e-company can play off of it.
One example is making the package smaller because, as we all have noticed time and again, it is often just too damn large for the product it contains! While keeping the waste down, it also improves logistics quite a bit, as a single item of the product would require less space both during the delivery and in the warehouse.
Companies have to adopt a transparent modus operandi to let consumers know how conscious they are.
Industry giants know the importance of letting their customers know about their eco-friendliness. For example, Walmart’s Sustainable Packaging Playbook is designed to provide customers with the best service possible while reducing the costs that service has on the environment.
What I’m about to say now is an obvious piece of advice, but it’s worth reiterating: what a business states about ecology and ethics must always be 100% true. If some company deviates from it proclaimed policies or, worse, lies about them, the backlash will be horrendous.
7. Learning from China
All e-business companies in the West have something to learn from the Chinese market. After all, eCommerce is huge in China: around 722 million people are reported to use it this year, while by 2023, their number will reach more than a billion.
Even now, there are more than twice as many online shoppers in China as there are people in the US. That includes toddlers, prisoners, and other individuals who can’t do much shopping online.
According to Statista, the total eCommerce revenue in China will amount to $918 billion by 2022.
There are a few things that Chinese e-tailers do differently than their foreign counterparts. Western companies that would take a lesson from them can really become stars of their respective markets.
The first trend that is already observed in China and can soon become a reality for the rest of the world as well is the merging of eCommerce with the entertainment industry. As per the PwC’s report, Alibaba now uses its services to complement buying with rich user experience.
This includes videos, events, virtual reality headsets, games, etc. Basically, what we see is eCommerce powered by the integration of social media.
Related to it, live streaming is becoming more and more vital for companies in China to connect to their customers. YY Inc., for example, is crazily successful in part thanks to how engaging it is for the users, allowing them to perform tasks for virtual currency that can then be exchanged for a real one.
No wonder that companies try to tap into this potential. Oreo had two popular musicians host a humorous live stream promoting their product and interacting with viewers.
A good point that PwC brings up in its report is that a company should know its customers’ Internet culture well. Sometimes, corporate attempts to be hip can come off as poorly-researched pandering. This phenomenon is known as “How do you do, fellow kids?” and will not help your business. Trust me, it won’t.
So better follow China’s example and actually find a marketer who knows how to talk to your target audience online.
Entering the Chinese market may not be an option for smaller online businesses. However, they can borrow some ideas from it and implement them in their markets. If done right, it can lead to immense success.