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Written by Cheryl Tan
These are exciting times for those of us in the e-commerce sector. The introduction of disruptive new technologies coupled with the coming-of-age of a digitally-native generation is giving rise to a flurry of new developments in this space. Here are some noteworthy trends that could have an impact on your e-commerce go-to-market strategy:
1. Artificial Intelligence (AI) for greater personalization and lower operational costs
Artificial Intelligence continues its prevalence in all aspects of our lives, and both consumers and retailers are just as eager to jump on the AI bandwagon.
Personalized Shopping Experiences. While personalization of the customer journey itself is not a new concept, companies are now leveraging AI to analyze customer data and behavior, allowing for even more deeply personalized product recommendations and marketing strategies. AI-powered chatbots can provide instant customer support and assistance, addressing concerns and reducing abandonment.
Automated Content Creation. AI-powered content tools such as Jasper.ai and Canva ensure faster time-to-market for new products and promotions. These AI-generated images and marketing campaigns can dramatically reduce costs associated with traditional content creation.
2. Adoption of Augmented and Virtual Reality (AR and VR)
As more consumers become familiar with AR and VR, e-commerce companies are better positioned to adopt these technologies to enhance the shopping experience.
Immersive Product Experiences. AR allows customers to visualize products in their environment, leading to higher confidence in purchasing decisions. VR-powered virtual stores create an engaging shopping experience similar to physical retail environments. There are also opportunities for more innovative marketing. Brands can create viral campaigns and interactive experiences using AR filters and VR simulations.
Virtual Try-on Before You Buy. AR helps customers accurately assess product dimensions and features before purchasing, reducing the likelihood of returns. Virtual try-on experiences for fashion and beauty products improve customer satisfaction and decrease return rates. For example, Perfect Corp allows customers to try on products virtually which drives both improved conversion as well as lower return rates.
3. In-App Shopping Experiences
E-commerce has moved beyond our browsers into native apps, and more e-commerce retailers are finding ways to convert consumers within content-driven apps like TikTok and Instagram.
Enhanced User Engagement and Conversion. Seamless integration of shopping features within popular apps like TikTok and Instagram enhances user convenience and reduces friction in the buying process, reducing the steps from product discovery to checkout. In-app notifications, personalized recommendations, and even exclusive offers can incentivize immediate purchases and improve user retention and conversion rates.
Data Monetization Opportunities. In-app shopping data provides valuable insights into user behavior and preferences for targeted advertising and product recommendations – including real-time feedback so companies can be responsive to trending topics and products. Partnerships with app developers and influencers can also create new revenue streams through affiliate marketing and sponsored content.
4. Flexible E-commerce Payments
At the last step in the purchase funnel, e-commerce retailers can now offer a flurry of payment options to remove any hurdles to final order confirmation.
Buy Now, Pay Later. The number of e-commerce transactions using “buy now pay later” services from companies such as Affirm, Klarna, and Afterpay continues to grow. According to a recent report from Adobe, a record high of $25.9 billion of e-commerce spending between January 2024 and April 2024 involved BNPL platforms, accounting for an 11.8% year-over-year increase. This offers a new payment option for customers who may not historically have had access to credit.
Mobile Payment and Digital Wallets. Digitally-savvy customers are adopting mobile-first commerce, and 60% of e-commerce transactions are now happening on mobile devices. The use of digital wallets such as Apple Pay, Google Pay, and PayPal is fast becoming the e-commerce payment channel of choice worldwide, and companies are quickly integrating digital wallet and mobile payment options into their purchase funnel.
5. Sustainability across the E-commerce Value Chain
As consumers place an increasing weight on sustainability and consider moving away from fast fashion and non-biodegradable materials, e-commerce companies are finding ways to leverage sustainable practices to grow customer loyalty while reducing costs along the supply chain.
Sustainability commitments to drive brand loyalty. E-commerce retailers are seeing that a serious commitment to sustainable practices can enhance their brand credibility with eco-conscious consumers. Companies like Patagonia, Blueland, and Allbirds have invested in more consumer education and awareness campaigns to encourage more sustainable consumption habits while enhancing their brand reputation.
Innovation in recycling and waste reduction. More retailers are adopting eco-friendly packaging and materials and are investing in circular economy initiatives, which can, in turn, increase recycling adoption, reduce waste throughout their product lifecycle, and lower operational costs in the long run. To reduce their carbon footprint, companies are also encouraging customers to choose slower shipping methods, which often involve ground transportation, which is generally more fuel-efficient than air freight. They may pass on the savings in the form of discounts to consumers to persuade them to choose the greener and more cost-effective shipping choice – a win-win for everyone.
Conclusion
While e-commerce trends do evolve, leveraging the latest technology can help improve operational efficiency while enhancing customer satisfaction and engagement. Companies must continue to stay abreast of relevant trends and consider how to best position themselves to leverage each relevant opportunity and remain competitive in the digital age.
About the Author
Cheryl Tan (Harvard MBA, former McKinsey) is a fractional CMO, brand strategist and business builder. She’s developed and executed against marketing strategy with community-led brands like Stella & Dot, KonMari (founded by tidying guru Marie Kondo), Minted, and True Botanicals. She also advises enterprises in technology, automotive, chemicals, and healthcare that are looking to unlock new growth via digital transformation. Learn more about her consulting practice at cheryltanconsulting.com.
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