The Clyde platform was created to meet the needs of eCommerce companies. To stay abreast of the latest trends and developments within the space, we’ve invested time and resources to remain well read on the subjects that matter most to our customers. Check in on this weekly “conversation” to read, watch and listen to stories that are shaping the eCommerce industry.
5 Trends Shaping the Future of eCommerce
As reported by Statista, the eCommerce market reached $3.3 trillion in revenue in 2021 with that figure expect to top $4 trillion by 2024. As the eCommerce pie grows, so too does competition for customers.
In a recent article published by Retail Touchpoints, five eCommerce trends were singled out. A combination of tactics and technologies are set to play a major role in 2022.
- Omnichannel shopping — 74% of customers do online research before visiting a physical store;
- AI and AR — these tools will be increasingly essential to retailers as capabilities such as AI-enabled chatbots and personalized shopping experiences become the norm;
- New payment options — frictionless is the name of the game in eCommerce, and that includes offering customers a variety of ways to pay for their purchases — from digital wallets and mobile payments to cryptocurrency;
- Visual commerce — sophisticated visual communication through video, high-quality photos and AR is increasingly important to grab consumers’ attention amid the onslaught of content online; and
- Data-driven dynamic pricing — Optimizing pricing strategies to stay competitive as more players enter the eCommerce arena will be crucial.
Ominchannel shopping refers to brands that integrate both their digital and brick-and-mortar sales channels at the same time. For instance that could mean connecting with a potential customer face-to-face, via their smartphone, and within their customer service platform. According to Logiq, 74% of customers in 2021 conducted online research before visiting a physical store, the highest percentage since that data point was first tracked in 2010.
Augmented Reality is expected to explode in coming years, with research from Fact & Factors estimating the global AR market reaching $88.4 billion by 2026. This technology is particularly useful for retailers marketing products for the home. Augmented reality can help customers figure out exactly how furniture, kitchen appliances and workout equipment will fit in their homes.
Ultimately, dynamic payment options achieve one critical outcome for retails: a reduction in cart abandonment figures. Digital wallets, mobile payments, and even cryptocurrency compatibility help retailers access customers who would previously have been on the sidelines.
Retail Touchpoints article also pointed out that multimedia is no longer a nice-to-have feature for a retailer, it’s a must-have. High-quality product photos, video content and augmented reality offerings are a highly effective way to create a positive brand image.
Finally, data-driven dynamic pricing is quickly becoming a key differentiator for eCommerce businesses. In a paper written by Dimitris Bertsimas and Phebe Vayanos of MIT, dynamic pricing is described in this way.
"Dynamic pricing policies have been long-employed in the travel, hospitality, and energy sectors (where short-term capacity is rigid) to mitigate imbalances in supply and demand. The main reason for the early adoption of dynamic pricing strategies in these industries was the ability to change prices at low cost and in a centralized fashion. In contrast, in industries with more flexible supply, such as retail, imbalances between supply and demand have traditionally been moderated by means of dynamic inventory control. While active inventory management is a useful tool for increasing profit, it only serves to decrease costs. Dynamic pricing on the other hand provides a means for also affecting revenues provided the population to which the product is offered is price-sensitive. Unfortunately, high menu costs precluded such industries from regularly adjusting their prices. The emergence of the internet as a sales channel and the increasing use of digital price tags have drastically decreased such costs, while technological advances are by and large permitting the automation of price changes. Dynamic pricing is thus becoming ubiquitous across most industries, enabling retailers to leverage on both sides of the profit equation."
To give perspective on the impact dynamic pricing can have, McKinsey recently conducted a pilot program and found that a major retailer experienced “a 3% increase in both revenue and margins,” while utilizing dynamic pricing.
According to CBRE, “eCommerce expansion that will fuel the need for more warehouse space, along with the “growing economy, population migration and the desire for ‘safety stock’ onshore.” eCommerce sales grew 21.6% to total retail sales for Q2 2020, which was up from 16.2% the previous quarter, as the result of the pandemic. And for Q3 2021, sales are still above pre-pandemic levels at 20%. This trend will continue in 2022.”
Material Handling & Logistics News quantified the exact needs of businesses in 2022. “As eCommerce sales continue, so too does the need for more warehouses. In Q3 of 2021, 448.9 million sq. ft. of space was under construction, which sets a record. This number does reflect projects that were not completed due to the pandemic. And this demand will continue, the report notes. In 2022, availability will remain tight, particularly for Class A space, leading to a higher number of lease renewals. While this will support high rents, it may slow the pace of new leasing activity in 2022. For these reasons and others, such as a lack of available space in highly populated areas and challenges with finding enough workers to operate facilities, retailers and wholesalers will look to outsource functions to third-party logistics companies (3PLs).
NPR’s financial podcast “The Indicator” also examined the world of warehouses and how the evolution of American shopping habits have brought the industry to a breaking point.
To succeed in the current eCommerce climate merchants need a dynamic and efficient tech stack. Outsourcing those needs has become the industry standard. So too has the need to for these disparate technologies to “talk to one another” while sharing data safely and efficiently.
But what about cost? Is your tech stack still a financial anchor that is only viewed as a line item, a mere cost of doing business?
What if you could create a cashflow-positive tech stack? What kinds of opportunities would that open up for your business?
To find out what it would take we spoke to two leaders in the tech community and examined how the technological arms race in eCommerce is ramping up. Click the image to the left to read our whitepaper.