The business of e-commerce is constantly changing. To attract customers, many retailers create or upgrade websites. According to recent research, e-commerce will account for more than 21.8% of the world’s total trade in 2023. This suggests that the e-commerce market is becoming more and more crowded.
The growth of e-commerce businesses can be due to various factors, but the most important is the Covid epidemic. The outbreak’s uncertainty and access restrictions have caused significant changes in customer behavior and physical traffic shifts to online retail businesses.
For e-commerce stores, staying abreast of changes in customer behavior and other changes is not an option; it is a requirement. While many aspects of e-retail are evolving, the following are the significant developments affecting business today and in the future.
Augmented and Virtual Reality
Augmented reality (AR) has revolutionized e-commerce. The technology allows online shoppers to see and experience items before buying them, enabling them to make more informed purchases. Augmented reality has improved the shopping experience for various sectors, including home decor and fashion. It allows consumers and potential customers to interact with products without being physically present.
Because this is a reality, numerous studies have shown that 37% of online shoppers believe they will buy online more often if they can try things before buying. Additionally, 28% are likely to stop shopping in physical stores when their preferred online retailers adopt Augmented Reality.
Customers can browse their internet items in 3D and imagine using them in Augmented Reality. With all the advantages, many e-commerce companies are ready to integrate augmented reality technology into their online storefronts and social media profiles. The most successful brands that have made it into AR and VR include:
Amazon: This vast online store allows customers to explore various items before purchasing using the Amazon AR Explore app. Customers can be sure they buy the right product because items are represented in accurate sizes and weights.
Zara: By placing their phones on top of the packages, shoppers can see holographic images of different models wearing the items they plan to buy.
IKEA: Customers can use IKEA’s studio app to create fully equipped rooms in 3D. Customers can change the color of furniture and walls, add shelves or storage, and other accessories. New models can be saved or exported in 2D and 3D formats.
Sephora customers can look at various beauty styles and take pictures of their outfits.
While the current VR and AR ideas are spectacular, the next generation of technologies will likely lead to bizarre advancements. It is believed that 59% of Gen Z will use AR to buy things in the next few years.
Many companies are becoming more environmentally conscious. The crisis has revealed that e-commerce companies have huge carbon footprints, and industry giants are facing severe criticism for their role in this growth. In addition, consumers are becoming increasingly aware of the environmental impact on their purchasing decisions.
According to a survey, more than half of consumers want green initiatives implemented in the fashion industry, and 77% want less packaging.
Therefore, e-commerce companies should also consider environmentally friendly packaging and delivery methods. For example, Amazon has embarked on several initiatives to reduce its carbon footprint to reach zero carbon emissions by 2039.
E-commerce companies typically use recycled packaging that is compostable, recyclable materials, cyclists as couriers, and rechargeable delivery vehicles to reduce the carbon footprint of their operations.
As mentioned, many companies are bringing their offline operations online. This means that incumbents and new competitors are fighting for interest and acquisitions. This results in increased advertising costs and a substantial decrease in advertising effectiveness or return on advertising investment. For example, the price for advertising on Facebook is 48% higher than in the past.
The enactment of data and privacy laws is compounding the problem. For example, recent iOS updates have privacy restrictions prohibiting sharing data between apps unless users explicitly opt-in. These changes will have an immediate impact. As a result, marketing on social media platforms like Instagram and Facebook has become less effective.
Companies in the e-commerce industry should try to improve the lifetime value of the acquisition cost ratio. To overcome this problem, e-commerce companies should look for untapped or innovative promotional tools.
Another approach to this situation is to increase customer retention. With customer acquisition costs constantly rising, e-commerce companies must focus on improving customer lifetime value to increase profit margins.
Every day, an average user spends more than two hours online on social networks. Online retailers can take advantage of this potential by putting their merchandise in front of potential buyers. As a result, social commerce has become an option that online sellers should pursue before competitors drive them away.
Fortunately, several businesses have found ways to make money from social commerce. For example, Facebook or Instagram pioneered live streaming shopping, which allows customers to interact with companies in real-time while showcasing various products. Customers can use the live stream to ask questions and purchase items without leaving the website.
The use of social marketing has grown and continues to grow. It is an effective tool for companies selling products online as it helps reduce customer journeys, improve conversions and increase customer loyalty.
Alternative financing methods are gradually becoming more popular as a source of financing for e-commerce businesses. For example, e-commerce business owners increasingly turn to inventory-based and revenue-based financing instead of traditional loans or equity swaps.
There are many reasons behind this fundamental change in financial strategies. Most online stores have a list of the various reasons that led to switching from loans to alternative financing options:
- The process of applying for bank loans is long.
- Most online stores do not have assets that can be used to secure a loan, such as cars or real estate.
- Fixed loan rates put pressure on the company’s cash flow.
However, switching from conventional loans and transferring to alternative financing is challenging. Therefore, online businesses should consider alternative financing. Various financing options adapted to modern companies have been developed in the last decade. Online entrepreneurs need to research and learn about these funding sources.
Regarding payment options, customers have their preferences and reservations. They might only be willing to buy if they can find their preferred payment option on your e-commerce site. Offering a wide range of payment options is a great way to increase conversion rates for online customers. Plus, if users save their payment information on your website and then use it later, they’ll be able to pay quickly next time.
Numerous other innovations have transformed the world of e-commerce. However, some trends are interesting to think about. Online business owners should evaluate and identify trends worth their time and attention. While some trends are highly beneficial, some may be inappropriate for your target market or expensive to set up and maintain.
Understanding your customers, competitors, and market dynamics is crucial to deciding on a direction that will work for your business. These aspects should help you make a decision:
Monitoring industry influencers’ journals, publications, and influencers to keep abreast of the latest changes, online retailers should seek relevant blogs, influencers, and information.
Industry Research Reports
As every industry changes over time, the latest studies and data analysis can help predict the future. However, relying on actual research rather than sourced information is best.
Forecast and analyze consumer behavior using analytics and digital tools. Analyzing and analyzing customer data can help online businesses identify the most relevant trends. A successful concept in another company won’t necessarily benefit your business.
To determine customer trends from different sources, use various data collection methods.
Gather feedback from customers. Feel free to ask your customers what they want to see from your business. Customer feedback is essential for gathering business-specific information. For example, customers can recommend a product to be added to the market.
Check out their adopted trends and how they made them work for them. But you are only bound to follow some of your competition’s trends.
The e-commerce industry is changing rapidly. Changes in customer behavior and the evolution of technology have led to paradigm shifts that e-commerce companies must adapt to be competitive. Companies need to consider big data bots, video marketing, bots like voice-based searches, or even personalization. Store owners must stay abreast of these and other advancements and integrate the appropriate technologies to grow their businesses.