E-commerce Current Trends And Outlook

 

The COVID-19 pandemic accelerated the growth of e-commerce into a mature industry. Mobility restrictions and physical store closures forced consumers to turn to e-commerce, which reached an all-time high of 16.4% of total global retail sales in 2020. This stage changed consumer purchasing habits, who began to prefer and trust the convenience of home delivery and the security of digital payments. The smartphone boom also allowed for greater access to the internet and more people to go online to shop online. In this sense, 66% of online shoppers say that convenience is the main reason for purchasing from retailers. Due to this, companies invested in technology to improve the user experience, and platforms such as Amazon, eBay and Alibaba emerged and grew exponentially to further consolidate themselves as market leaders. The global e-commerce market can be segmented into home appliances, apparel, footwear and accessories, books, cosmetics, groceries, and others. The home appliances segment was the most driven as it allowed customers to easily access, review, and purchase products from their locations. This, together with the growing dependence on technology in everyday life and the use of advanced home appliances, greatly boosted its consumption.

A current trend is the use of mobile payment applications for online shopping. According to statistics, 10% of sales worldwide are through mobile phones and are expected to increase in the future. This has meant large investments in adaptations for mobile screens and other applications.

On the other hand, the globalization of supply chains and the increase in external logistics providers are facilitating and reducing the cost of cross-border e-commerce with a greater variety of products.

However, these supply chains slowed down during the pandemic, and although they were set to be regulated in 2023, the war between Ukraine and Russia has disrupted and made several channels more expensive, accumulating financial losses.

Business owners are addressing supply chain challenges by diversifying suppliers and adjusting inventory levels. This is quite costly at first, but will strengthen the supply chain in the long term against potential logistical problems. In fact, more processes are also being digitized to detect disruptions (Shopify Plus, 2023).

However, external factors such as recession fears make it difficult for 73% of brands that seek external financing, and this means that both these brands and consumers are cutting back on spending in the inflationary scenario. According to studies, this adverse scenario means that 81% of brands that increase their prices will have to significantly highlight their value to keep their customers.

Looking ahead, the global market is projected to grow at a CAGR of 15%, with the market growing from $14.14 trillion in 2022 to $57.22 trillion in 2032. If we were to segment it into Business to Business (B2B) and Business to Consumer (B2C), B2B is projected to maintain its largest market share going forward.

Some media outlets point out that the development of e-commerce in China may come to define the market over the next decade due to the Chinese population being tech-savvy and mobile-friendly, Chinese e-commerce giants are constantly driving the market and expanding into other markets, and even innovating in payment methods, logistics, and other areas of online commerce.

Emerging technologies such as artificial intelligence, virtual and augmented reality, and machine learning are a crucial growth driver that is transforming the way products are presented and experienced online. Tech giants are competing for augmented and virtual reality, growing by 79.2%, and many consumers expect physical and virtual realities to be interchangeable within a decade. According to the Shopify Plus study (2023), “we are on the threshold of a new era of digital connection: the metaverse,” so the first companies to settle in the new competitive environment will be the ones that will have the most benefits.

As for social networks, internet and social media users show practically equal numbers (5.07 billion vs 4.74 billion), so every person who is on the internet already has or uses a social network today. Social e-commerce on social networks facilitates the step from discovery to conversion by simplifying one-to-one interaction and potential sales. According to the Shopify Plus study (2023), 84% believe that it will be crucial to have a consistent brand experience across all commerce channels in the future. Other important aspects such as web analytics allow obtaining relevant information for decision-making such as the number of times a product is added and removed from the shopping cart, the growing number of automated marketing tasks (especially with the recent application of artificial intelligence in this field), and loyalty programs focused on aspects such as providing value to the customer or relationship marketing.

The most used strategies by major brands to attract and retain customers are promotions on social networks (with influencers, valuable content, etc.), offering more premium products and services, using e-commerce platforms, offering more payment methods (which must always be secure and reliable) and the use of customer data for better targeting, segmentation and personalization.

The use of customer data encompasses Big Data analysis and the machine learning capabilities of artificial intelligence, which can automatically optimize processes that currently consume too many resources thanks to their tools and real-time analysis. These new resources allow for deep personalization, item suggestions, price and inventory optimization, better customer service with chatbots, and greater security by detecting patterns of possible fraud.

On the other hand, Business Intelligence complements them by converting complex data into clear and actionable information and creates customized templates with real-time key performance indicators (KPIs), which facilitates more informed decision-making after analyzing internal and external data to the company on different products, time periods, among others. This technology offers solutions such as big data marketing, with which studies can be carried out such as the performance analysis of marketing campaigns (identifying both areas for improvement and growth opportunities) or customer segmentation to personalize promotion or loyalty campaigns with interaction and analytics strategies, and improve the retention and attention of already loyal customers. This technology makes it possible to identify key customers, get to know each one better, and personalize both the offer to be made to them and the communication with them. The tools used are known as customer analytics and cover all phases of the customer life cycle (including customer loss). Finally, all this data has positive implications such as predicting product demand more accurately, and thereby also improving other aspects such as inventory management and logistics. In conclusion, digital-only businesses will become the norm rather than the exception given the rapid advance of technology and the conveniences and benefits it offers to both the customer and the company, and many brick-and-mortar stores will close, providing lower profitability and scalability overall.