Top 10 E-Commerce Trends that you should be aware of in 2023
As per a recent report by Statista, retail e-commerce sales worldwide could grow from 3.53 trillion US Dollars in 2019 to almost double in 2022. Cumulative data over the recent period hints at an overall growth of more than 200%.
This staggering growth is partly contributed by the Pandemic, Faster penetration of the internet and mobile phones, and partly compounded by the fact that most businesses are moving to an omnichannel strategy with a major chunk of the attention going to their online shop.
Start-ups too are inclined towards e-commerce based business and are relentless in assessing their product-market fit and focusing on fulfilling unmet needs. Not only established big business houses but also Local Businesses are keen to design an online store to target and cost-effectively reach customers. This leads to the emergence of new Business Models.
Amid this enormous growth, there are key trends that will shape e-commerce in the years to come. With passing years, companies will inevitably come up with new business models and innovating marketing approaches to lure consumers. Let us Explore the ten key trends that are likely to shape E-Commerce in the Short and Medium Term.
Newer Formats of Targeted Ads
The Moment of Truth Model explains how Customers interact with a particular product offering right from the time they have their eyes on it till the time they have a tangible experience to share. Not only does a well-designed “Path to Purchase’ help to build stronger brand loyalty, but also helps to get immense ROI on the marketing budget.
Hence with the e-commerce channel gaining traction, the reliance on the novel and more personalized marketing channels are likely to be the top choice of the marketers. In a hyper-connected ecosystem, staying relevant in the eyes of the customers is crucial, especially with the massive information overload.
Paid and Organic Channels still work in silos. But shortly, we can expect to see innovations in Brand communications on the interweb. The major factor here is cost-effectively targeting the ideal Target market and reducing Customer Acquisition Cost to be profitable.
Changing Consumer Behaviour
In the wake of the Pandemic, New Consumer personas have emerged. Most of it is based on Purchase Patterns. In a recent study by the EY Consumer index, Novel Consumer segments have emerged ranging from “extremely Frugal” to “Cautiously Extravagant”.
Therefore tuning the sale tactics with major strategies to lure purchases is going to be a mammoth task for brands. For Luxurious brands, it is going to be a challenge to understand why customers have cut back on a product and have to think of newer ways of building needs and wants.
So, it is important to understand User Personas and User Journey on the e-commerce app to drive more customized product and service offerings cost-effectively.
Direct To Consumer Business Model
A major chunk of start-ups in the e-commerce ( sector) are most likely to be the “Direct To Customer” or DTC Startups. A Harvard article states, “The direct-to-consumer startups’ rise was enabled by an environment of abundant venture capital, low competition, and above all, the advertising arbitrage that could be exploited on under-priced social media platforms.”
Early successes of a few noted brands have led to competitors flooding in with confidence. Rather than listing on Platforms like Amazon, Brands are moving to a more “Company Owned Online Store” with platform partnership being the secondary strategy.
The DTC model helps companies to have a one-on-one relationship with their consumers. Besides, access to first-hand data about consumer preference is an added advantage. Plus DTC model eliminates the need for channel middlemen like distributors thereby improving profit margins.
Social Commerce is selling products via Social Media networks. It is an essential tool adopted by E-commerce companies in establishing meaningful conversations with Customers online and understanding their purchase intent.
Further, with brands going aggressively after influencer marketing, it’s essential to build Actionable product pages on social media to create a meaningful path to purchase. Social commerce strategies also provide potential avenues to customize the offerings by understanding the interests of the users online and gauging what is driving conversation at various times.
Quoting an article,
“According to Instagram, 60% of people discover new products on their platform. And users say that when they were inspired by something they saw, they would take steps to find and buy it straight away. So if you’ve taken the step to create a Facebook Shop, then it’s worth considering Instagram Shopping, too (you will need to set up a Facebook Shop first; your Instagram Shop will be pulling data from your Facebook catalog).”
User Purchase is not the goal. A longer Customer Life cycle is what the brands are aiming for. To improve the duration of association of a Customer with the platform it is essential to improve App Stickiness and Retention.
This will lead to Higher Customer Lifetime Value. Knowing customer lifetime value helps to Gauge profitability at the category level and helps the companies to make strategies around pricing and Loyalty programs. It also helps to plan paid Media accordingly so that the Marketing ROI is optimum.
Another important metric is to understand Customer Acquisition Cost (CAC). If the LTV and CAC ratio is too less, then the business will not be profitable. Besides, if the metrics are not tracked periodically, the business strategies won’t be able to meet the expectations and the output will be far from expected.
Hyper personalization not only entails providing tailor-made products and services but also involves showcasing tailor-made storefronts on the User Interface of the apps. Starting from customs-made offers on products that have been historically purchased to showing relevant recommendations, it involves immense usage of user data.
If the UI fails to entice Customers to the homepage, the attrition rate increases manifold. By using tools like A/B testing, CRM, Automation, and creating transactional systems, e-commerce companies are looking to give an impression of tailor-made services to their customers leading to massive user loyalty. However, with a large customer base, the companies would require sophisticated technologies and teams to be able to strategize this well.
The rise in Subscription-based Business Models
Subscription-based models help in habit building among customers. Besides if the offering is more of a need-based product the e-commerce companies can benefit from a stable Average Revenue Per User (ARPU).
When customers are assured that their products/services will be delivered to their doorstep without hassle, it’s good value addition and helps e-commerce companies retain customers for a longer time. Subscription-based services often offer products or services at a flat fee — making it easy for customers to predict spending and forecast expenses.
The rise in private labels is the direct result of the array of choices that the digital forums offer to consumers. Most e-commerce platforms that used to host major brands have now come up with private labels. E-commerce companies play big on consumer trust.
Besides an established logistic network and enhanced last-mile delivery strategies have enabled e-commerce giants to compete with bigger brands with their private labels. A Nielsen report suggests that when the economy is dwindling, Consumers prefer to purchase more private labels since cost saving is the major motivator. By the time the scenario improves, the Brand trust and purchase inertia that sets in give immense momentum to the private label sales Online.
E-commerce companies are keen to venture into Tier 2 and Tier 3 cities and complete digital transformation of the supply chain is paramount. The online stores interact with the customer through handheld devices. Hence the companies are strategizing to make the whole trial and purchase mechanism easier so that the consumers come back on the platform.
Checkout this ecommerce software development
Starting from novel business models to newer ways to revamp the operational model and Go-To-Market strategy, E-commerce companies shall continue to experiment. The inclusion of technologies like Augmented reality for online trials of make-up and apparel is an example of how some e-commerce companies can elevate the user experience. Cosmetic Giant, Loreal has already ventured into this by partnering with Modiface. The bottom line is to create a virtual showroom that will help customers with their purchase experience.
Hyperlocal e-commerce and SuperApps
Hyper-Local E-commerce refers to those online aggregators who help in delivering essential products and services to your doorstep. Example- Dunzo, Urban Company, etc.Hyperlocal e-commerce companies are giving tough competition to the big companies by acting as essential aggregators in rendering important services in the vicinity.
With the Pandemic preventing people from venturing out, this business model has grown in popularity. Moreover, the business establishments that have not built an omnichannel network yet benefit enormously by partnering with these Hyperlocal E-commerce companies.