2020 was, without doubt, the year of e-commerce: According to recent research by Digital Commerce 360, online consumer spending in the USA grew by an impressive 44% during 2020 as a result of the COVID19 pandemic outbreak early in the year. COVID19 accelerated the digital transformation of industrial enterprises, including their investments in e-commerce. Companies were obliged to reduce their physical activities and scale their digital channels. In this context, digital trends and e-commerce innovation have accelerated. These trends will be sustained following the end of the pandemic i.e. in the new normal. Furthermore, the adoption of cutting-edge digital technologies will be realized faster than expected, which will boost the innovation capacity of e-commerce enterprises and will improve customer experience. In this landscape, e-commerce stakeholders need to understand the trends that will shape the future of e-commerce in the short and medium-term i.e., until the end of the pandemic and in the new normal.
1. Exceptional and Realistic User Experiences with Augmented Reality
Despite the benefits of e-commerce and continual improvements in e-shopping experiences, there are still many cases where physical shopping remains way better than digital shopping. For example, consumers are deeply concerned about the physical size and the placement of home products in their house, yet state-of-the-art e-shopping does not help them to understand this placement. To alleviate such limitations future e-commerce services will employ Augmented Reality (AR) functionalities to provide realistic cyber-representations of real-world objects in physical spaces. This will revolutionize user-experiences and will make digital shopping very similar to physical shopping.
2. Increased Use of Voice Platforms
Hey Siri! “I would like my favorite coffee!” This is how consumers are expected to shop in the coming years. E-commerce sites will provide voice-enabled functionalities, including search and transaction completion functionalities. Google searches via speech modalities are proliferating and the same will happen with on-line transactions. In this direction, e-commerce platforms will be integrated with voice platforms, beyond Siri, Alexa and Hey Google. Vertical voice platforms for e-commerce functionalities will proliferate. This will provide end-users with opportunities for natural interactions while shopping on-line.
3. BigData Analytics and AI Empowering Customer-Centric Personalization
E-commerce platforms are currently collecting and managing significant amounts of data about the consumers’ shopping behaviour. In several cases, they also maintain personal information about their users, including for example demographic information. Leveraging on this data, online merchants and e-commerce providers can create accurate profiles for their customers. The latter can drive unprecedented personalization features, including individualized shopping experiences. Machine Learning and Artificial Intelligence (AI) algorithms will play a key role here: First for profiling and clustering the users and second for providing personalized recommendations to them. E-commerce providers are already providing personalization features. In the coming years, these functionalities will be provided at a larger scale and for an increased number of users, leading to the vision of mass personalization.
4. Chatbots improve the shopping experience
Chatbots is yet another AI application that is gradually transforming e-commerce. We are living in an era where large segments of the population (e.g., millennials, generation Z) prefer text and asynchronous interactions over synchronous ones. This is one of the main reasons why we will see a proliferation of chatbots in the years to come. Chatbots will support a multitude of interactions between consumers and e-commerce sites, from acquiring product information to the completion of shopping transactions. In several cases, chatbots will be connected to voice platforms, as can both rely on the same workflows of e-commerce interactions. In essence, a voice platform could be built as a voice-enabled chatbot.
5. Proliferation of Payment Modalities
Nowadays, e-commerce sites provide more payment modalities than ever before. Consumers can pay using credit cards, debit cards, gift cards, accumulated balance systems, PayPal, Apple Pay and many other ways. These payment options will proliferate towards fulfilling users’ payment preferences. The advent of Open Banking and relevant regulatory developments (e.g., the 2nd Payment Services Directive (PSDII) in Europe) will enable more companies to offer innovative payment services that bring convenience and ease to end-users. Merchants will gradually support such solutions in addition to legacy payment methods. Payment innovations will make e-commerce accessible to a broader range of users, including unbanked users in developing countries.
6. More Videos and Interactivity
In recent years there is a proliferation of video content through platforms like Instagram, YouTube, PodCasts, and more lately TikTok. This happens for a reason: Video content is rich, informative and engaging for end-users. E-Commerce sites are riding the wave of video content as a means of promoting products and services while boosting customers’ engagement. In the next couple of years, e-commerce videos will proliferate to increase information richness and shoppers’ engagement. Several videos will be interactive, including links to polls, blogs, and other videos.
7. Conversion-First Marketing
Digital marketing is currently exploding, as companies leverage digital channels for the promotion, advertising, and sales of their products. Hence, the future is not about whether companies will be using digital marketing, but rather about using it in the best possible way. As marketing platforms increasing in number and marketing budgets are limited, e-shops will focus on combinations of channels that yield the best conversion rates. While creating an audience is very important, converting the interactions of this audience to sales is even better. Therefore, companies will strive to identify the channels that work best for their products, while considering the cost-benefit ratio for using these channels.
8. Sustainability and Environmental Performance will be a Priority
Nowadays, climate change is at the very top of political agendas and a strategic priority for many enterprises. Likewise, environmental awareness has reached an all-time high. In this context, e-commerce sites cannot afford to ignore the impact of sustainability-related offerings. For instance, they will offer eco-friendly packaging, along with an increased variety of sustainable products. Sustainability will become part of their branding strategies and will help them foster a relationship of trust with consumers.
The above list of trends is not exhaustive. E-commerce stakeholders will be also impacted by other trends such as the need to reinforce their mobile-first strategies and to collaborate with more influencers. Furthermore, e-commerce strategies will be influenced by global trends in demographics and purchasing powers. Therefore, online merchants and operators of e-commerce platforms will have to consider multiple trends, facts and figures when shaping their future strategies. In this direction, the eight mega-trends presented above can provide a solid starting point.
