Key eCommerce trends to ride to a competitive advantage in an uncertain economy
E-commerce
is no longer the rising tide for Retail. (Yep, at Tidal, we use a lot of tide
analogies). As per Deloitte Economists Danny
Bachman and Akrur Barua,
a slowing economy will keep retail growth in check; they forecast GDP growth to
slow to 0.9% in 2023 from an estimated 2% in 2022 to 5.9% in 2021. And there is
a significant chance that a recession would make things much worse. In the
event of a recession (Deloitte rates at a 35% probability), the economy would
contract, and unemployment would rise.
While
the overall Retail forecast is bleak, e-commerce is expected to account for 47%
of retail growth by 2027. However, the penetration rates of digital Commerce
in developed e-commerce markets such as the United States and Canada may have hit
the ceiling in certain retail categories.
Therefore,
it is safe to assume that competition will only intensify. As a result, brand
owners and retailers will need to implement new strategies and deploy
bleeding-edge retail technologies to extract growth.
Given
this scenario, we expect the following eight e-commerce trends to play out.
1. Augmented reality enhances online shopping.
Augmented reality (AR) enables shoppers to see a 3D model of a product in a real situation. As per Google Consumer AR Survey, 66% say they are interested in using AR for help when shopping.
AR has been a game changer for eCommerce, specifically for the fashion and home decor industries, because the customer can get a better feel for the item without seeing it in person.
2. Greater use of AI helps retailers learn about shoppers.
Artificial Intelligence (AI) has become all the rage since the beta launch of ChatGPT, followed by Google’s Bard, but what about AI in Retail?
AI and Machine Learning (ML) allow customers to have automated, personalized shopping experiences by continuously collecting data on how they shop, what they are looking for in a product and when they buy.
AI will likely reshape the entire industry with AI-driven Inventory management, Adaptive Homepage, Dynamic Outreach, Interactive Chat, Visual Curation, Guided Discovery, Conversational Support, Emotional Response, Customer Engagement, Operational Optimization, Responsive R&D, Demand Forecasting and Customized Selection.
As AI technology improves, it will become omnipresent, leading to AI-powered hyper-personalization. You can learn more by registering for our upcoming panel with Shopify and AI industry experts.
3. Chatbots improve shopping experiences, and the top and bottom line
Shoppers are impatient, especially online. They want to find, compare and buy in a few clicks; if not, they get frustrated and will likely move on. Here’s where a chatbot can engage like a store sales associate and save the sale. According to Salesforce, 23% of customer service companies already use AI chatbots.
A study by Userlike found that over 80% of internet consumers had interacted with chatbots at least once that year.
As chatbots become more intuitive, personal shopping assistant bots will become more prevalent. For example, using previous shopper data to help present new products the shopper would like, just like Netflix does with movies and shows.
According to Juniper Research, by 2024, consumer retail spending via chatbots worldwide will reach $142 billion.
Personal shopping assistance bots help improve customer experience and help generate more sales, but they can also drop operational costs and reduce agent attrition.
4. Shift to API-first Headless and Composable Commerce for ongoing innovation.
Simulating in-person shopping online is the holy grail. Well, now it is possible. Established global brands and disruptive startups are using new technology supported by Web 3.0 to create multisensory customer experiences that evoke all senses like touch, smell and taste.
L’Oréal, the world’s largest cosmetic company, uses a novel auditory tech to help convey the scent over the internet using sound frequencies. Using a method based on psychoacoustic research, which explores how our ears perceive sounds, they created a palette of sounds that were as close as possible to the sensations we get when smelling perfume.
Here’s another innovative example, Amorepacific, a South Korean beauty company, collaborated with MIT to develop an intelligent touch sensor that allows the user to measure skin sensation in response to external stimuli. This sensor enables the development of precision cosmetic products by adjusting how products feel against the skin.
5. Sustainability is becoming a powerful differentiator.
Forward-thinking organizations must pursue the triple bottom line philosophy of profit, people and environment because consumers are more conscious about where they shop and the environmental impact and related effects.
One survey found that 50% of respondents wanted more sustainability in the fashion industry, and 75% wanted to see less packaging. According to research by First Insight and the Baker Retailing Centre at the Wharton Business School, when it comes to making buying decisions, 75% of US Gen Z consumers base it on sustainability. In contrast, only 49% go by a brand’s name. Sustainability also ranked high among Gen Xers (73%) and millennials (71%).
The success of Allbirds, the American footwear and apparel brand’s focus on sustainability, is a case in point.
6. Customized shopping experiences sell more
According to a BCG study, when the shopping experience was highly personalized, customers were 110% more likely to add more items to their cart, spend 40% more than planned, and rate the merchant 20% higher. McKinsey’s research also supports these findings.
While customers want personalization benefits, according to Retail dive’s consumer survey, most shoppers are hesitant to provide personal information in exchange for more tailored experiences or to receive special promotions and loyalty points because of fears of cybersecurity breaches; 43% are open.
AI makes it possible to provide buyers with personalized product recommendations and detailed customer service. Harnessing and leveraging data coupled with AI will help create relevant experiences for shoppers that feel tailor-made.
In a retail environment where many retailers are struggling, Sephora is a prime example of a company achieving strong revenue and share growth driven by it best in class personalization efforts, as reported by its holding company LVMH.
Sephora offers a best-in-class loyalty program, which adds personalization to customer interactions. In addition, its mobile app combines innovative tech like augmented reality (AR) and personalized, in-app messaging that aligns its site, mobile, and email content to the consumer’s behaviour.
7. Gamification to engage and retain customers.
We love playing games because they fulfil our natural needs for competence, autonomy, and relatedness. Gamification is about implementing gaming-related concepts like rewards and competition into a non-game concept, like marketing. Disruptive retailers successfully engage customers in their brand and its products by gamifying their experience using points, leaderboards, virtual currencies, badges and certification to inspire in-app activity.
Companies are also integrating these features to collect valuable first-party data, which has become more difficult as privacy regulations tighten.
https://segmentify.com/blog/boost-sales-with-gamification/
As per the gamification market trends report by Research and Markets, gamification can increase customer acquisitions by as much as 700%. Gamification tactics raised engagement and loyalty by 30% for brands like Walgreens, eBay and Threadless.
8. Multisensory Customer Experience.
Simulating in-person shopping online is the holy grail. Well, now it is possible. Established global brands and disruptive startups are using new technology supported by Web 3.0 to create multisensory customer experiences that evoke all senses like touch, smell and taste.
L’Oréal, the world’s largest cosmetic company, uses a novel auditory tech to help convey the scent over the internet using sound frequencies. Using a method based on psychoacoustic research, which explores how our ears perceive sounds, they created a palette of sounds that were as close as possible to the sensations we get when smelling perfume.
Here’s another innovative example, Amorepacific, a South Korean beauty company, collaborated with MIT to develop an intelligent touch sensor that allows the user to measure skin sensation in response to external stimuli. This sensor enables the development of precision cosmetic products by adjusting how products feel against the skin.
