The state of e-commerce in 2022

The pandemic saw a 40% jump in online sales as consumers shifted their buying online. However, is this behaviour going to be permanent?

One of the most transformative aspects of the pandemic is how online commerce accelerated its development. Already on a massive upward trajectory, Covid-19 move this expansion into the fast lane. Retail businesses well understood the importance of the omnichannel, but we are now seeing an emergence of customer-driven frictionless shopping focused on the mobile channel.

In its report, Facebook states: “With a wealth of shopping choices, consumers increasingly want to feel that they’re making the right purchase decisions. Brands can help consumers feel reassured, inspired and in control of their choices by creating easy mobile-friendly ways for them to switch between digital and in-store journeys.”

Also, Omar Zayat, Head of Industry, e-commerce, Facebook, commented: "Discovery will be more important than ever. Covid-19 shifted consumers’ willingness to be monogamous to brands, and they are now expecting to discover new products and services. As a result, relevancy, purchase friction and creative quality will be paramount to winning."

The commercial relationships that retailers have with their customers will increasingly become multimodal. Here, contextual e-commerce will become an essential factor in the fight for consumer spending. Ovum predicts: “By 2026, contextual location will be an integral part of the retail experience, driven by mobile technology.

“Also, the ability to identify a user’s location and deliver targeted, timely, contextually relevant information, advertising and marketing messages is a powerful, compelling proposition. Moreover, the real-time aspect of location analytics will offer a more adaptive approach to marketing, enabling retailers to change their marketing and engagement in real time to meet an individual consumer’s needs.”

Making close connections with each customer no matter their location across multiple devices is now the norm within the digital retail space. Businesses that have rapidly evolved their systems to manage these touch points are reaping the rewards of market dominance and customer loyalty.

Neo commerce Many of the most successful retailers, especially across their digital channels, have leveraged the masses of customer data they have collected. As consumers become more aware of the level of personal data they must exchange with retailers, these relationships must be transparent and honest. Consumers now demand this level of insight from all the businesses they buy from. Any hint of data misappropriation will result in very vocal criticism. Successful e-commerce means also being world-class with fostering positive consumer sentiment.

Head of Retail Insights at referral engineering platform Mention Me, commented: "A primary driver behind e-commerce at the moment is disappearing third-party data. Cookies and trackers are on their way out, kickstarted by Apple's iOS 14.5 update last year. Now retailers have been left scrambling for a better data source to plug that gap. The outcome is that the "standard" digital marketing methods (PPC, social) are less effective and more expensive. The drive here should be to understand customers without relying on third parties.

“Our referral data shows this gap is widening between the brands leveraging their customer data to drive customer acquisition and loyalty, and those left struggling to adapt to the world of e-commerce,” Simon continued. “As brands look to earn loyal customers (and more consumers seek out their friends’ recommendations), referral will become an increasingly crucial channel for long-term growth.”

Samantha Phillips, Partner at McKinsey & Company said “Since the onset of Covid-19, 58% of all consumers tried a new shopping behaviour, and one third (33%) have switched brands when faced with stock shortages — meaning brand loyalty is up for grabs."

Samantha continued: “Smaller online stores would have been impacted by key trends in both directions — tailwinds from the overall shift online and digital comfort, willingness to switch, but potentially headwinds from likely availability issues, growth in shopping local and need for speed and convenience.”

And will consumers embrace digital spaces as Facebook would have us believe with the Metaverse becoming an immersive social and retail space? More use of AR in physical retail spaces will expand. We saw earlier; contextual location retailing is the perfect opportunity to deliver these messages to consumers no matter their location. Let’s not forget that e-commerce now integrates with the physical retail space. Click and collect has been a massively successful initiative for many retailers. “High-street retailers need to implement seamless, streamlined supply chains so they can have shelves stocked timely and flawlessly in a way that rivals the online world,” explains Jamil Ahmed, distinguished engineer at Solace.

“To do this, they must embrace a real-time data strategy. With this, retailers could start to produce and stock items that are intelligently managed through the detection and prediction of buying trends. Correctly used data from loyalty or membership schemes could also help craft desirable in-store personalised experiences for shoppers, changing the face of high-street shopping for good.”

The buying experience A clear trend across all e-commerce channels is to ensure that customer experiences through their purchasing journey are always excellent. Research from Salesforce found that 79% of global consumers value their experiences just as much as the products or services the company sells. And these experiences must be increasingly personalised. Accenture estimates that retailers could unlock $2.95 trillion over the next 10 years if they implement personalised shopping across their brands and customer touch points.

Making immediate connections with customers is also vital for smaller businesses, as these services can be a significant differentiator in their marketplaces. For example, messaging services have rapidly expanded as consumers want fast responses to their questions — often linked to their purchase decisions. This “conversational commerce” is a clear trend that larger retailers can implement, whereas smaller companies may struggle to provide that level of customer interaction.

Also, as Phil Kiel, MD at Hello Earth points out, consumers also want the businesses they buy from to understand them as people: “The pandemic made consumers both more aware of themselves, the products they consume and brands they support, it also made consumers more aware of society and the planet. Brands should both be aware of these topics and strive to enter conversations in a meaningful way. Businesses that can prioritise these points will be better equipped to grow into 2023 and beyond.”

e-commerce is now a space that has seen massive change over the last two years. As the pandemic deepened, the shift to online retailing shows no sign of slowing. The upsurge in digital channels should, though, be seen in the context of the overall retail environment. Digital commerce has massively expanded but should still be one component of an integrated retail strategy.