E-commerce is becoming more robust with each passing year, and there is no turning back. According to Statista, online sales corresponded for almost 12 percent of all retail sales worldwide in 2017, and close to 22 percent of the world population currently buys on the internet. These numbers are only increasing.
Here are some driving forces already impacting online sales that will also shape the future of e-commerce:
The end of brick-and-mortar? Not really!
Even though brick-and-mortar stores still account for the majority of retail sales, many specialists overstate the demise of physical retailers – the so-called “retail apocalypse.” While this has been true for some big box stores, such as Sears and Toys “R” Us, there are also many online-only brands (known as Digitally Native Vertical Brands) that are either investing in opening their own physical stores or partnering with traditional retailers. Target, for example, is now selling products from online direct-to-consumer brands such as Casper mattresses.
Recently, the online brand Kylie Cosmetics partnered with the beauty retailer Ulta to sell products in brick-and-mortar stores and reach a new set of consumers. As stated by Kylie Jenner, owner of the company and youngest self-made billionaire ever: people want to “see, touch, and feel before they buy.” Pop-up stores are also an excellent way for online brands to create awareness and engage with consumers.
The subscription economy
With the rise of e-commerce, the subscription box industry has expanded rapidly: according to Mckinsey, this automated form of purchasing grew 100 percent per year in the last five years. By delivering goods ranging from pet food to apparel, subscription boxes appeal to consumers not only because they are convenient but also because they bring novelty, allowing people to experiment with new products with little risk.
The subscription model will be taken to the next level by meeting the consumer’s need to express individuality through the products they use. A good example comes from cosmetics: inspired by meal kits, make-up brands will send kits of ingredients that can be combined to create a unique product.
Curation and personalization
Subscription boxes curate products to meet the consumer’s need for novelty, but they are not the only way to deliver curation: The second wave of the digital commerce revolution consists of improving learning algorithms that understand consumers’ purchase behavior to predict their needs, searching the web for the best deals and giving tailored recommendations.
We live in a collaborative economy where consumers trust peer-to-peer evaluations to make their purchase decisions. Looking ahead, the buying experience could be enhanced by review aggregators that find people with similar buying habits across multiple platforms, providing more relevant and reliable information, thus increasing consumers’ confidence in their purchases.
Another possible use of learning algorithms is to create digital retail curators that would present the best deals to consumers or advise them to postpone a purchase if a sales promotion is expected soon. Lastly, by combining artificial intelligence and human interaction, digital personal shoppers would assist e-commerce shoppers to find products that match their taste.
While they are still bringing to life the drone delivery service, Amazon has already deployed many initiatives to make delivery more convenient for customers. Most recently, the company launched a 30-minute curbside pickup service at Whole Foods. Through this service, customers can order groceries on the Prime Now app and have them loaded into their car upon arrival at the store. Amazon has gone even further with the Amazon Key service, where a delivery person gains access to your home to drop your orders off while you are out. Similarly, Walmart is testing a new service that delivers groceries straight into your refrigerator.
In some locations in the U.S., self-driving car delivery services have become a reality: Robomart is already licensing its technology to grocers. Robots delivering goods are no longer just sci-fiction either. Amazon, again, is leading the race with a service called Amazon Scout. Numerous start-ups are testing similar services as well.
The Internet of Things
Smart appliances, such as smart speakers and smart fridges, are gaining popularity. Today, voice-controlled assistants are used mostly to research, but sales through them totalled $2.1 billion in 2018, according to eMarketer. Smart speakers’ adoption increased 15 percent in the same period, so conversational commerce through voice assistants will undoubtedly gain traction in the future.
Due to environmental and shipping cost concerns, many manufacturers are focusing on reducing the amount of plastic in their packaging: P&G has released Tide’s “Ecobox,” for example, which uses significantly less plastic and water.
A newly created eco-conscious subscription service called Loop has recently partnered with brands such as PepsiCo and Unilever to utilize reusable packaging and reduce their environmental footprint. Amazon, on the other hand, is demanding CPG’s develop more sustainable and easier to ship packaging.
Consumers are looking for curated products and services that deliver convenience, and they will continue to do so. They also engage with brands and retailers that share their values, which explains the growing importance of packaging tailored to e-commerce. When developing packaging exclusively for online commerce, CPG companies must not only meet the customer’s expectation of sustainability but also the online retailer’s need for logistics optimization.
Brands now have an omni-channel presence, and the boundaries of online and offline are blurred. Irrespective of how customers interact with a brand, they expect to have a consistent experience across all touchpoints and channels. Every opportunity to reduce friction on the consumer’s buying journey and to make online shopping more convenient should be leveraged. As the adage goes: the most critical moment in online commerce actually happens offline, when brands deliver.