Despite barely existing only a few decades ago, e-commerce is a huge part of the shopping experience today. Most people buy something online at least once a month, with many of those choosing it as their primary means of shopping.
Over the years, a number of leading fashion entrepreneurs, such as Matches entrepreneur Tom Chapman and Farfetch CEO Jose Neves, have taken advantage of the latest e-commerce trends to build hugely successful companies.
If you’re looking to build the next big e-commerce business, here are four trends you should keep an eye out for, whether you are an online retailer, a tech investor or just an online shopper.
Online shopping is becoming a hyper-personalised experience
Buyers are much more receptive to shopping experiences that feel tailored to them than to soulless, unresponsive ones. Personalising shopping experiences, as well as marketing and advertising has been shown to have a significant effect on revenue, as well as customer retention. In a physical shop, personalisation can be achieved by training staff to interact fruitfully with customers. But obviously this is not possible with online shopping, so retailers much look to other solutions.
Big data and AI have been the answer for an ever-increasing number of businesses. Online retailers generally have access to huge amounts of data on their customers’ preferences and behaviour. While the sites are continuously collecting data on how a customer shops, when they buy purchases and what they’re looking for in a product or a service, AI software can learn from this and react.
AI lets retailers offer customers the right product at the right time, boosting conversion rates by tapping into impulse buying patterns. Where physical shops have assistants, listening and advising, online shops have databases and machine learning.
Augmented reality is revolutionising shopping
Augmented reality (AR) has introduced literally a whole world of possibilities for ecommerce. Previously, the options for potential buyers have been to physically interact with a product or decide using the limited information a website can communicate. But with augmented reality technology, shoppers can see the item they’re shopping for without leaving their seat.
Users can see the product looks as if it is there in front of them – whether they are putting on a jacket or fitting a fridge. It is no wonder that there is now a trend of increasing using AR in many industries.
The changes extend beyond the particular shop you are in too. High profile developments in AR technology, most notably the metaverse, are setting a course for a future where we shop on completely digital highstreets. Unlike ‘real’ highstreets, there is no limit on who can set up shop where: there are no entry costs, nor expenses like rent, nor practical issues like distance. Now anyone can sell anything to anyone, anywhere, while still maintaining almost all the benefits of conventional shopping.
Buyers are recognising that virtual marketplaces offer the prospect of wider choice, easier access, and, most importantly, cheaper products. The role they play in commerce is only going to grow as the technology becomes more available to the majority of shoppers.
The field of payment options is widening
The vast majority of online transactions have historically used direct bank transfers for payment. This is still true today. However, the process for this can be irritating for customers, who have to enter their details every time they shop somewhere new or use a new account.
This has led to the rise of a wide range of services which cut down the procedure. Big names like PayPal, Google Wallet, and Apple Pay are increasingly the go to method of payment for many online purchases now.
However, there is a rising trend which has the potential to further revolutionise online payment. Though much of the coverage of cryptocurrencies focuses on speculation, they were originally made as a means of exchange. The past year has seen a big rise in this use which will likely continue. How easy it is to buy and sell cryptos gives companies confidence that they are not going to be stuck with them and more than ever are now accepting cryptocurrencies as payment.
There are currently two major downsides: high levels of government scrutiny and volatility in value. But as crypto becomes better established, more people will appreciate its real use. More cryptocurrencies are likely to emerge, establishing them more.
Competition for customers is getting intense
E-commerce enjoyed a great boost during the pandemic, as many shops closed their doors or limited capacity. Many expected the increase to be a temporary fluctuation, but online sales have barely slowed since businesses reopened. As it has become clear that demand for online shopping experiences is only going in one direction, many more companies entered the fray, vying for attention.
This increased competition has made working hard on standing out mandatory. There has been a massive frenzy of investment in brand building and advertising, as everyone tries to increase customer lifetime value, boost conversion rates in the short term, and attract out-of-market buyers in the long term.
As a result, digital advertising costs are taking bigger chunks of quarterly budgets, which may hurt retailers during difficult times when demand slumps. In the future, this will inevitably drive innovation in digital marketing strategy. It will not be enough for a marketing strategy to be more expensive than the competition’s: it will also need to be more sophisticated.