Just a few years ago, e-commerce was seen largely as a new-fangled idea – an optional extra or a sidelined afterthought compared to a company’s real-world store. Nobody thought this new way of retailing would ever take off or particularly challenge the High Street, however in recent years, there has been a monumental shift in shopping habits, and e-commerce is now the norm rather than the exception.
In 2019 alone, e-commerce was worth $3.5 trillion – and there are no signs of it slowing. The recent emergence of Coronavirus further accelerated our move to shopping online, and many experts believe we are already undergoing a shift-change in shopping habits that will never fully reverse. Even by the most conservative estimations, e-com operations are expected to overtake traditional retail within the next ten years.
The future of this relatively new industry is as unclear as it is enticing, but there are some trends already developing, which might give hints to where online commerce is headed.
Emerging Markets
The emerging markets of Brazil, Russia, India, and China (the BRIC nations) will undoubtedly have a fundamental part to play in the future of e-commerce – both as suppliers and consumers. As these economies grow, so too their spending power will increase – with much of that spending being done online.
The Internet has always been a global marketplace; however, these growing economies are set to become the economic powerhouses of the future. It will be interesting to see the balance between output and consumption as international trade increases.
Improved Logistics and Order Tracking
Most consumers realize and accept ordering online incurs unavoidable delays in delivery – however, most now also expect some form of email updates and order tracking.
The prompt delivery of goods is cited as being one of the most important aspects of shopping online. Indeed, customers that receive poor or late delivery are far less likely to order from the same company again (some research estimates this to be as much as 70% less likely).
Delivery has become a burgeoning area of e-commerce to the point it has brought about the emergence of an entire specialist industry. Order supply and fulfillment are now an integral part of the e-commerce flow – even if the majority of consumers aren’t particularly aware of what it is.
To guarantee prompt delivery, distribution companies need to employ reliable transportation management systems to track each stage of a parcel’s journey (as well as its vehicles) to be able to relay accurate delivery updates to the consumer.
Order fulfillment and delivery is already a booming industry and will only get more significant over the coming years. As e-commerce increases, conversely, our patience with long deliveries is forecast to decrease. This process is already happening. By the end of this year, it is expected 65% of retailers will offer same-day delivery.
Direct to Customer Selling
An unfortunate byproduct of the growth of e-commerce for retailers is an increasing preponderance for manufacturers to sell directly to the consumer, thereby cutting out the middleman retailer.
Direct to customer (DTC) selling has considerable benefits for the manufacturer, which go way beyond just the obvious financial gains.
By selling direct, the manufacturer takes ownership of the customer relationship and has direct access to them and their contact details. Furthermore, if taken further, DTC can allow manufacturers to personalize products and the entire shopping experience – for example, individual designs produced bespoke for the consumer.
The Importance of Sales on Mobile Devices
As the world moves increasingly from desktop to mobile devices, the growth of e-commerce on mobile is expected to grow. In 2021 over 50% of all e-commerce transactions will happen over cellphones and mobile devices.
From a sales point of view, mobile users are far less patient with page loading times, so the design of mobile e-commerce platforms will increase in importance. Indeed, evidence shows mobile users will leave a page if it doesn’t load within three seconds.
With this in mind, successful e-commerce on mobile will likely move toward the development of specialist apps, pre-loaded on the user’s device.
Apps have a considerable advantage over mobile websites in that much of the design structure can already be built into the app platform – for example, the shopfront layout or navigation menu – thereby considerably reducing the time for pages and content to download. Rather than loading the full site, an app just pulls in the specific product content.
Growth in Shopping by Voice
An estimated 35% of all US households already have a voice-activated speaker system (e.g., Amazon’s Alexa Echo products), and around 25% of them have already ordered online by voice. As much as 4% even report ordering daily by voice.
As more voice-activated technology enters our homes, it’s expected ordering via voice will continue to increase. At present most voice ordering is for fast-moving consumer goods, e.g., groceries – however, there has also recently been a noticeable spike in clothing sales, which points to a willingness to use the technology for other items in the future.
A 3D Virtual You
Probably the most exciting prospect on the horizon for e-commerce is in the realm of fashion and virtual models. Returns are a massive problem for clothing companies selling online, and like many, 70% of all online shoppers report returning poor-fitting items.
Consequently, accurate sizing has become the holy grail of the online fashion industry, and vast amounts are being spent on improving the way customers evaluate the right size of clothing.
A few years ago, Amazon invested $70 million in a 3D modeling company called BodyLabs, which it hopes will allow it to produce accurate virtual models for customers.
Another equally ambitious approach has been taken by Acustom Apparel, which offers a full 3D body scanning service in their real-world shops. The system gathers over 2 million data reference points from the customer’s body, allowing the perfect fit of their goods after that.
The End of the Traditional High Street?
Opinions differ wildly on the future of the High Street; however, most evidence shows it is shrinking at an alarming rate, and analysts believe it will likely continue to do so. One theory for the future of the high street maybe the idea of shops moving from a pure selling role into more customer loyalty and brand awareness functions.
Elements of this can already be seen with Nike, and it’s “Houses of Innovation” concept where consumers are invited to engage with the brand through activities and actions (e.g., fitness tests or product try-outs) rather than necessarily making purchases.
A similar concept can be seen with Apple, which invites prospective consumers to try out their products or learn how their devices work. These workshops are primarily educational rather than sales-oriented – though, of course, there is always the option to buy.
“Experience” shopping goes a long way to building brand and enforces engagement in a way that online shops simply cannot do. The high street may not be done quite yet.
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