Every year, the eCommerce industry seems to swell (more than) a little. Many have attributed that to the COVID outbreak and its tremendous impacts. However, take the US economy for example - the US eCommerce penetration in Q3 2021 was at the level it is supposed to be whether the pandemic happened or not, according to Statista. Looking back at the eCommerce spending in 2021, it is safe to say that the acceleration perhaps wasn’t a step-change after all.
Of course, the discrepancy in newly rising markets such as South East Asia and mature markets such as the UK and US are way bigger. But, we can’t stop thinking about eCommerce and its impact - did the pandemic boost eCommerce? What happened in 2021 and what is supposed to happen in 2022?
With that being said, SmartOSC wants to give you a brief overview of what it looks like for eCommerce in 2022 - maybe SWOT analytics where we look into things considered strengths, weaknesses, opportunities and threats to see what the future holds?
Let’s dive in!
The ongoing pandemic, fueled by the COVID-19 virus, has had dramatic effects on the growth of eCommerce in any aspect possible.
As of our most beloved blog posts in 2021, live commerce and social commerce are all the rage among the merchants. With the pandemic continuing its scheme with many variants, social media and its usages have now come in handy for businesses all over the world. New types of commerces are now growing at an unprecedented pace to 2022:
Live Commerce: In the past, all we had was Home Shopping Channels but now, Live Commerce is becoming big as retailers in rising markets such as South East Asia and China are investing heavily in it. For example, China has Viya, a 'live-streaming queen' who made more than 3 million yuan (approximately $472,619) in sales in just one day. The trend also makes Western big players like Amazon and Walmart incorporate live streams for their events on social channels.
Social Commerce: Another trend that got its sails through the ubiquity of smartphones and technologies is Social commerce. Brands continue to shift more resources to platforms like Instagram, Snapchat, TikTok, etc not for buying advertisements only, but for customers’ direct, real-time and quick engagement.
Quick commerce: As in our conversation with Bhavin Patel, Group Managing Director of Digital, Omnichannel & Platforms of CT Corp & President Director / CEO of CT Corp Digital, customers are being less and less patient with delivery. First, it was two-day shipping, then we had next-day delivery, and now it’s 30 minutes or less delivery for fresh or cooked foods and so on. Among such a cut-throat competition, customers have too many other choices rather than waiting for your multiple-day delivery. What’s in it for 2022? You can expect even more competition.
Subscription commerce: The eCommerce giant Amazon has started this trend of subscriptions that give customers access to benefits they wouldn’t have otherwise. They offer a variety of subscription boxes for kids and adults, delivery subscriptions, and so on to increase the frequency of purchase and thus, loyalty and LTV for each customer. Gartner forecasts that two-thirds of D2C eCommerce companies will offer a subscription service of some kind by 2023.10
AR is now providing online stores a competitive advantage, especially if you sell something that consumers want to experience before buying
With the trend of the metaverse, AR and VR are sure to thrive more. This technology advancement allows online shoppers to see the items right in their homes, in their hands, or even virtually try on (for clothing, makeup, or eyeglasses, and more) while they don’t need to leave their house.
Even though a large percentage of revenue is still coming from brick-and-mortar shops, AR is now providing online stores a competitive advantage, especially if you sell something that consumers want to experience before buying. That advantage can get them to buy it immediately, or urge them to the showroom to physically try it on - either way, if your competitor lets shoppers “try on” an item and you don’t, you may end up at a competitive disadvantage.
In a post-pandemic world where inflation and recession have been looming ahead and people are struggling to make ends meet, it is clear that shoppers are more sensitive to prices than ever before
One of the hottest topics any marketers talk about in 2021 was the change in Data privacy initiated by Apple. That decision tanked a key source of customer information for any digital advertisers when it allows users to choose if they want to be tracked on their iOS 14.5. The party with the biggest loss can be no other than Facebook, which has been using user behavior data analytics to earn 84.2 billion U.S. dollars, 97% of their revenue in 2020.
But the true victims here are brands who rely on Facebook ads to sell. And in 2022, the situation doesn’t seem to have any improvement. Brands now need to agilely adapt to changes and future-proof themselves from bigger modifications by putting more focus and resources on collecting data directly from their customers (zero-party data) and leveraging it for personalized marketing.
In a post-pandemic world where inflation and recession have been looming ahead and people are struggling to make ends meet, it is clear that shoppers are more sensitive to prices than ever before. As per Intelligence Node's survey of 1,000 US shoppers, 94% of shoppers compare prices at least once in a while, when buying online.
So despite the blooming of personalization, customer experiences, and any trending marketing jargon, pricing or shoppers' eternal quest to find the best prices for their purchases is still king. In 2022, pricing will be a key player in converting shoppers into loyal customers because the priority of customers has shifted - retailers across eCommerce platforms will have to revisit their pricing strategies to win the race for customer acquisition and loyalty.
Amazon’s pricing policy is one example of this trend: The company makes over 250 million price changes every day with the prices for millions of its SKUs changed every 10 minutes to ensure it offers the best prices to its competitors.
Many define cross-border selling as an opportunity but some see it as a threat because their competitors are everywhere, not stopping from domestic online sellers or brick-and-mortar stores but brands all around the world, as long as they have an online presence. Entering 2022, we are now moving from the scenario where one company may have had the majority market share in its native country to companies from other across the border eating into the market share.
Cross-border sales to the US consumers were up 42% YoY in May 2020, and 10.2% for January to June 2020.8 And 23.55% of online sales in Europe are cross-border sales.
As we enter web 3.0, terms like cryptocurrency and NFTs are making investors and early-adopters on edge - they can be a great investment to some, but also in terms of eCommerce, they are opening a ladder of opportunities. NFTs have become a great way for individuals and businesses to capitalize on unique assets, engage customers and potentially generate revenue while staying ahead of the curve and keeping pace with innovations in commerce.
See how NFTs define the future of eCommerce HERE.
It’s safe to say that the line between digital and physical is blurring. In 2021, we see that B2B/Wholesale sellers take notes on what’s been learned from B2C sellers. We learn that after all, we are not selling to a business but to people - who demand intuitive, personalized, engagement-oriented eCommerce experience rather than a cookie-cutter approach.
2022 is the year where we will see a hybrid digital-physical model coming into stores. We are heading to a future where B2B, B2C, and DTC are to be on a single website. Having the ability to sell wholesale, retail, and direct-to-consumer on a single site gives sellers the best of all worlds, allowing them to use a central command center to get the most out of every channel.
Customer expectations are at an all-time high, and it won’t diminish in 2022. In other words, high customer expectations will be one of the biggest challenges in eCommerce in the 12 months ahead
Along with opportunities are the challenges that retailers must overcome. Today, customers find brands in different and unpredictable ways:
While customers are headed to the digital landscape for shopping more than ever, their need for added convenience, simplicity of digital payments and personalized experiences are making the competition between retailers more intense than ever. Businesses all over the globe are expanding payment options with QR codes, digital wallets, loyal programs, within their social media platforms and more.
With customers spreading all over the internet, on every app at any time, the average touchpoint to make a sales increase from 9 to 22 in 2021 and it can be higher in the time to come. With advertising channels, policies and platforms constantly expanding, connecting with and attracting customers is becoming more and more challenging.
If you ask any retailer which image will haunt them the most in 2021, chances are there will be a picture of empty shelves in their store, or in their warehouse. The pandemic outbreak has boosted the consumer demand for shopping, but at the same time, caused disruptive factors such as raw-material shortages, port congestion, and a lack of adequate workers - all combined to result in supply shortages.
Disruptions caused new challenges for brands and retailers: they have to increase their pricing - in fact, the US prices are increasing at their fastest rate since 1982. Economists at Forbes expect the global supply chain problems and elevated inflation is going to be worse in 2022.
Customer expectations are at an all-time high, and it won’t diminish in 2022. In other words, high customer expectations will be one of the biggest challenges in eCommerce in the 12 months ahead.
Customers expect a lot - they expect things they may not even yet realize they want. While many complaints are about undelivered packages, others are for more subtle reasons and may never be reported. In fact, only a 9% chance that an unhappy customer will complain as compared to just going elsewhere. Brands can be losing customers every minute without acknowledging before it’s too late.
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