The onset of the coronavirus pandemic in March forced a number of businesses to quickly adapt their digital strategies. What were likely long-term plans before COVID-19 are now short-term requirements for companies to keep up and maintain a lifeline – all required to be executed in the most efficient and…
The E-Commerce Trends You Can’t Afford to Ignore in 2020
E-commerce continues to eat away at traditional, brick and mortar retailer sales, with 22 major retailers going bankrupt in 2019 alone, up from 17 the previous year.
Year after year, the slice of the overall retail profit pie is growing for the e-commerce sector, and online retail giant Amazon continues to entrench itself among the world’s most valuable companies.
For traditional retailers looking to e-commerce to save them from the impending “retail apocalypse,” or online sellers who are looking for a good spot to ride the rising e-commerce wave to success, here are five important trends to consider in 2020.
A Renewed Focus on Online Sales
The list of major retail firms that went out of business or filed for bankruptcy protection last year included staple names such as luxury department store Barneys New York, denim fashion brand Diesel, as well as fast-fashion chain Forever 21.
The latter said it would shutter more than a third of its stores globally after filing for bankruptcy protection some months ago. Now, Forever 21 has announced a shift in strategy, with a renewed focus on online sales. This way, it hopes to manage a turnaround and jump on the bandwagon of legacy businesses that are fighting to revamp their sales with the help of e-commerce.
Another example of the trend to double down on spending to improve and refresh e-commerce platforms is Walmart, which last year fought arduously to claw back market share and surpass Amazon as the number one online grocery seller on its home turf, the United States.
Renewed Focus on High-Growth Sectors
Walmart’s example also illustrates how vital it is to focus on the right product niche. The grocery product segment still offers plenty of e-commerce opportunities: Online sales make up less than 10% of spending in the U.S., when it comes to groceries, according to consultancy Brick Meets Click.
At the same time, e-commerce is a rapidly growing sales channel, while the growth of in-store sales has essentially remained flat. And this year, the share of online sales in the U.S. grocery market is expected to grow further, according to the research firm.
A look at e-commerce sales share by product category last year can give us insight into which markets are still prime for high growth in 2020. Especially with social distancing measures during the time of COVID-19, e-retailers could see a boom in online sales of health, personal care and beauty products, as well as auto parts and food and beverage products.
India as an Emerging Market
As e-commerce growth begins to slow down in developed economies, businesses will increasingly focus their attention on rapidly expanding emerging markets to ensure their ability to grow.
Earlier this month, Amazon Chief Executive Jeff Bezos unveiled the company’s plan to invest $1 billion in India, the world’s fastest-growing e-commerce market. Part of the effort aims at boosting the number of local merchants that are selling online, and Bezos said he also expects a jump in exports to the U.S.
“Over the next five years, Amazon will invest an incremental $1 billion to digitize micro and small businesses in cities, towns, and villages across India, helping them reach more customers than ever before. This initiative will use Amazon’s global footprint to create US$10 billion in India exports by 2025,” he said in a company statement.
Companies should position themselves now to benefit from the emergence of rapidly growing economies if they want to have a shot at coming out on top in the years to come.
Capitalizing on Machine Learning and Artificial Intelligence
Making intelligent use of the vast amounts of data e-commerce transactions generate is becoming more and more crucial as a tool to fuel new business. Machine learning and artificial intelligence can help make sense of the massive trove of information collected. It allows for precisely tailored software, which can bring customer experience and conversion rates to the next level.
These new technologies will also allow businesses to target clients’ specific needs even better and offer highly individualized solutions, boosting sales in the process.
Put simply, this is a vital tool too useful to ignore.
Increased Focus On Omnichannel And Social Commerce
Social media continues to play an increasingly important role in influencing online purchasing decisions. According to eMarketer, referrals from social media to e-commerce companies grew 110% over the last two years, more than any other referral channel.
While initial barriers like security have affected the growth of the social commerce channel, Business Insider reports that improving commerce capabilities of social platforms, coupled with their overall reach and influence, make this channel attractive for e-commerce companies despite the modest amount of inbound traffic it currently contributes to e-retailers.
At the end of 2019, Facebook still drove the majority of referrals to e-commerce sites compared to other social platforms. However, Instagram and Pinterest are within range and according to eMarketer, have the most “contextually relevant platforms” for social commerce. Look for these platforms to move to snatch up market share in 2020, as well as China’s Tik Tok, which allowed some users to add links to e-commerce sites late last year.
E-retailers who make investments in social commerce today will benefit when the industry matures tomorrow.
With the future in their sights, traditional retailers trying to move sales online to avoid the impending “retail apocalypse,” as well as e-commerce veterans who are looking to stay ahead of the pack, will keep these above trends in mind when making important decisions in 2020.