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Tuesday, October 27, 2020

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The Current and Future State of E-commerce

the current and future state of ecommerce

Where are we now and where are we heading

The e-Commerce timeline has moved up significantly in just a few months by the Covid-19 epidemic. Online store development is the new gold rush with every company now having to look at ways to get online and fast. From your normal mom and pop store selling 1 or 5 products, to your favorite restaurant now having to pivot to online sales and food delivery. To retail giants scrambling to shift from physical locations to moving their merchandise online in record time. Many are struggling to understand this new world we live in but one thing is clear. No business has a choice anymore. You will either make the shift or struggle to keep up long after the effects of the epidemic have worn off. 

“One of the only ways to get out of a tight box is to invent your way out.”

Jeff Bezos

Those that have already made the shift online are far ahead of the competition but it is not too late for those only starting out. The tools available today make it possible to move online in record time. Platforms such as Shopify & BigCommerce make it feasible to start selling within a very short time. Gone are the days of building online stores from scratch with code that only the developer understood. Anyone can launch a basic store. For more advanced setups a developer is still required or if you need a more custom-designed look at feel. Traversing the more technical issues such as payment gateways and shipping can still be difficult for some.

Necessity Drives Innovation

Drone Deliveries in ecommerce
Drone Deliveries

Everyone knew it was coming, they just thought we had more time. Yet like all shifts of significance, this one came out of necessity. 

Necessity has always driven innovation throughout history. The pandemic of 1918 brought on a new understanding of the benefits of hygiene. World War 1 and 2 changed production forever with the ramping up of streamlined factories, especially in wartime America and post-war Japan. 

This new shift will be equal in its severity yet no less life-changing. 

Current sales figures are reaching black Friday levels, yet over a much longer period, as the rush to buy online continues to gain momentum. The latest data suggests that a large number of new users are buying online, and most importantly, returning for repeat purchases. This shows that these new users are becoming more comfortable with the process and forming new spending habits. Online grocery sales have seen the biggest shift in numbers with no letting up. This is the time to capture the hearts and minds of these new online customers. 

How customers continue to shop and how the e-commerce industry responds, will bring about a sea change in the world of online, and the offline retail landscape. 

What does the future of commerce and e-commerce hold?

Automation and AI

Warehouse Automation ecommerce
Warehouse Automation

Automation and AI will be at the forefront of this new world. This current epidemic has shown the fault lines in our global supply chain. It has placed a strain on the economies of the world by first threatening the manufacturing heartland of mainland China. Next, it threatened our freight and backed up our ports. This might point to commerce moving more localized in the near term. Long term the giants of the industry will have to look at ways to secure the things that keep our economies ticking. 

Automation will play a large part in this with robots moving more and more into the factories, ships, fulfillment centers, and stores. Amazon’s Cashierless stores promise more convenience with less human interaction. 

Evolving Fulfillment

Online stores are using the term contactless shipping to attract customers wary of COVID-19. Contactless curbside pickup and home delivery are becoming the new normal and a popular option with safety-conscious consumers.

Drone deliveries are already a reality in some countries, and this will only increase in the next year. Some see a future where drone ships cross the oceans powered by solar and wind, and steered by satellites and AI. Automated Harbors that run by digital harbormasters that keep goods flowing at an unmatched efficiency, constantly learning and adapting. Solar, driverless trucks shipping the goods to fulfillment centers where no humans are needed or present. And onto the cashier-less stores or home delivery bots that bring the goods to the consumers. Where we will all find jobs during this next evolution is another matter. Universal income might become a right, together with access to the internet. 

This new revolution will bring forth new jobs yet unimagined, the same way all big shifts have done throughout history. The agricultural revolution made it possible for craftsmen and artists to appear as people had more time away from subsistence farming. 

Fulfillment is the next battleground for giants such as Amazon, Walmart, and Shopify. Shopify is working aggressively expanding its footprint in the US against the well-established market leaders. Customers want products fast and efficiently and they are willing to pay. Retailers are looking for one-stop solutions that include warehousing and shipping that seamlessly integrates with their online stores.

Courier companies across the globe will have to keep offering better services and pricing to help merchants take on the big boys. 

“My belief is that eCommerce is the future, and [that] eCommerce is going to replace a lot of traditional ways of doing business,”

JACK MA

AI

e-Commerce search engines will begin to think more like humans. This will ensure that search results become more relevant to customers, instead of based on outdated algorithms.

Some of these AI tools are already available to us today in image recognition features in Pinterest, Automatic searching of videos, and other media. 

AI will change many areas of e-commerce including:

  • optimizing the sales process, 
  • prospecting new products, 
  • improved personalization, 
  • chatbots and virtual shopping assistants.

The Gamification of e-Commerce

social media shopping

This is one area garnering the most interest. Bringing together social media, interactive games, and e-commerce is the dream for many online retailers. Shopping is becoming more about the experience for the customers than a straight buy and pay model. It has become another form of entertainment where people shop for fun. eBay was one of the original drivers of making shopping fun with its bid and pay system, where you have to beat out other customers for the privilege of buying the item you desire. 

Loyalty programs and other points systems further extend Gamification into the online shopping experience.

Social Shopping

Facebook recently made a significant investment in India’s Reliance Jio. JioMart went live in Whatsapp days after the accusation in Mumbai, thereby dipping their toes in a potential userbase of 400 million Indians currently under lockdown. This will be a powerful tool for small businesses to get their products in front of potential customers. 

Did you know: The first-ever online transaction occurred in 1994 when a 21-year-old entrepreneur, Dan Kohn, sold a Sting Album, Ten Summoner’s Tales, to a friend in Philadelphia. The transaction of $12.48 was the first-ever protected by encryption technology.

New kid on the Social Media block, TikTok, recently launched a new initiative called Small Gestures where users can send virtual gifts from well-known brands to each other. This gives brands exposure to the millions of users flooding the platform as well as giving users the ability to “reward” content creators. This is just the start of TitTok’s evolution into online sales and advertising.

Screen time on Social Media has seen big increases in recent months as people try to stay connected during COVID 19. 87% of people claim that they use social platforms to help them decide to buy a product. This has given rise to Social Shopping where users can purchase directly through the social media platform. 

Pinterest’s recent update to its Shopify App, which includes shoppable pins, is a great example of how platforms are looking to profit from this. 

Yet it goes beyond a single channel. Consumers want to be able to interact through multiple channels be it email, social media, WhatsApp, or the online store. Research shows that they spent on average 80% more than single-channel shoppers. Retailers need to make sure that their brand is consistent and reachable across all platforms. 

Final Thoughts

e-Commerce cannot be ignored any longer by any business serious about its future. Things will not return to normal once the infection rates begin to fall. Users are becoming more comfortable with shopping from the comfort of their own homes. Getting your weekly groceries delivered to your door is now the norm and plays towards our inherent laziness. It is also more efficient than looking for parking & standing in guess at checkout. This will not change. It is time to look for the gaps in this new reality and see where one can innovate and expand to fill those gaps. 

The focus should be on the customer journey, the efficiency of production & fulfillment, and fine-tuning your marketing for the multi-channel reality.

“Challenges are gifts that force us to search for a new center of gravity. Don’t fight them. Just find a new way to stand.”

OPRAH WINFREY

e-Commerce Statistics

  • The Global eCommerce market is predicted to grow to $6.5 trillion in 2022
  • Currently the largest e-commerce market in the world is China
  • The US eCommerce market is set to grow from $365 Billion in 2020 to $600 Billion by 2024
  • The 3rd Biggest eCommerce market in the world is the UK with 586 Billion Pounds(31% through Amazon UK)
  • The biggest increase in e-commerce growth is expected in India
  • 95% of all purchases will be made through e-commerce by 2040
  • Men tend to outspend women online
  • E-commerce is estimated to grow to 17.5% by 2021
  • The average abandoned cart rate is 2.5% across categories
  • The category with the best conversion rate is gifts at 5% with the lowest being electronics at 1.4%
  • The highest conversion rate goes to food and drink at 7%
  • 70% of shoppers state free shipping is the reason they buy online
  • On average 30% of products are returned with clothing and shoes returned the most

Tips for anyone selling online or for those planning to

  • Decide on the platform best suited for your business.
  • Focus on quality Product Photos and include lifestyle images.
  • Create Videos and include it on product pages
  • Offer honest and open information to your clients to build trust
  • Respond to Customer Concerns and Recommendations
  • Focus on reducing abandoned cart rates
  • Design for mobile commerce and test, test and test
  • Improved Delivery Options in eCommerce
  • Have an SEO, Content & Social Media Strategy
  • Talk to your customers the way they want to. Provide live chat, WhatsApp, email, phone, Messenger, etc.
  • Understand your customer’s needs. Talk to your existing customers to find out what they need. 

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