The opportunity for eCommerce software in 2023 has never been more exciting, more global, or more relevant. The industry has witnessed massive growth in recent years, and eCommerce is poised to amplify its presence in almost every aspect of daily life. Today, 57% of consumers prefer to shop online vs. in person and 52% of B2B buyers express frustration with the current status quo in online buying. While the broader macroeconomic environment has become choppier, these same dynamics have created opportunities for innovative eCommerce software. For example:
- Consumer demand for goods and services has been muted due to an uncertain economic outlook. This has spurred growth in solutions with demonstrated and measurable ROI, especially those dedicated to streamlining customer acquisition.
- Cookie restrictions and the difficulty around targeted paid advertising due to privacy initiatives and the war between Google/Facebook/Apple have shifted wallet share at large retailers and brands alike to “organic” acquisition efforts such as UGC (User-Generated Content) and influencer marketing and content.
- Finally, recent shortcomings in the supply chain, along with the “Amazon effect” (consumers expecting 2-day delivery, easy returns, local pickup, etc.), have driven attention towards inventory/order management systems as well as end-to-end logistics solutions.
Brands and retailers have responded to examples like these with greater technology adoption, a response that represents the broader theme that underlies our thoughts below: a maniacal focus on enhancing the customer experience.
Businesses that invest in next-gen eCommerce technology will be better positioned to provide an enhanced experience before, during, and after purchase. We have divided our market map into front end vs. back-end to demarcate between eCommerce technology that users interact with (on the front-end) vs. solutions that optimize the infrastructure of the website as well as order details and fulfillment (on the back-end). PeakSpan is excited to share its thesis on how businesses will embrace these disruptive solutions with fervor to cater to their ever-evolving breed of customers.
Personalization of Everything
- 80% of consumers are more likely to make a purchase when brands offer a personalized experience, and in a market that is full of alternatives, retailers must drive brand affinity to turn customers into brand champions. This concept grows ten-fold in a recessionary environment where spend is constrained.
- Significant opportunity exists in improving personalization: 71% of brands and retailers think they excel in marketing personalization, while only 34% of consumers think the same.. Software to drive personalization across the entire journey and across channels will be critical to meet the next wave of shoppers in 2023.
Users = New Content Creators
- All-time highs in CAC and a murky, post-iOS 14.5 landscape have made social proof and trust a key criteria for purchasers. Social media platforms such as TikTok, Meta, and Pinterest have become a primary purchasing channel for the consumer. In fact, 60% of consumers consider UGC to be the most authentic form of content — driving a click rate 4x higher than traditional advertising.
- Although UGC allows brands to meet the customer where they are, the rise of the “Influencer” has driven all sorts of second derivative complexity regarding influencer / UGC visibility, opening ample opportunity for new technology to manage this population and create and encourage social proof.
- Onsite engagement has been proven to drive material uplift in conversion rates, one of the tenets of our thesis for Tidio. One of the main reasons companies are adopting automated engagement solutions is to help combat abandoned carts. 70% of shopping carts are still abandoned, amounting to trillions of dollars of lost revenue (more on this later…).
- AI-powered customer service software can help eCommerce businesses provide 24/7 support, and with the help of advanced machine learning algorithms, chatbots provide an “always on” human interaction for customer queries. This resource helps diminish support headcount required and uplevels existing talent to provide a superior CX.
Bridging Online and Offline Experiences
- In the coming years, we can expect to see a rise in augmented reality (AR) and virtual reality (VR) in eCommerce. Brands are embracing these new modalities to engage customers to simultaneously boost CX and reduce returns across a wide range of industries and verticals. For example, a customer can try on a dress, see how a couch looks in an apartment, and visualize how a product fits in their lives — all on their smartphone. This trend is not expected to slow by any means: in a recent survey, 56% of retailers expect to increase spending on virtual reality in the next 12 months.
- Shoppers also jump at the chance to use augmented reality: 48% of consumers are more likely to shop at a retailer that uses AR, a quite impressive statistic considering the technology’s novelty. By combining the “easy” nature of eCommerce with the “physical touch” experience of brick-and-mortar, retailers can offer a best-in-class product experience and move one step further than static images.
- Social platforms have moved from a way to connect with friends and family to a customer acquisition channel and are now moving beyond that to a full storefront. Sales via social commerce will grow by a CAGR of 26% through 2025 to reach $1.5T, a trajectory driven by the need to shorten the path from discovery to purchase.
- 65% of consumers have already bought through social media platforms, making these platforms’ impact on the future of eCommerce quite significant. To stay competitive, brands and retailers will consider how they can best leverage tools to increase their visibility on platforms such as Instagram, TikTok, and Facebook to not just any audience, but the right audience. Similar to the point above, unique targeting strategies such as UGC will be key in a cookie-less world. With teams asking themselves, “how will I segment and target?”, brands will be more likely to adopt solutions for campaign attribution, audience analysis, and personalization strategies.
- 70%+ of purchases today are made from a mobile device and, on average, 4.2 hours a day are spent on a mobile device. Younger generations are catalysts for this trend, and the need to cater to Gen Z and Millennial consumers emphasizes the criticality of delivering a flawless UX across devices. As such, merchants have prioritized and orchestrated shopping journeys on mobile browsers, mobile apps, and social media.
- The rapid rise of omnichannel commerce has made mobile commerce adoption even more critical for eCommerce retailers. Mobile commerce plays a critical role in omnichannel retail as it allows businesses to reach customers anytime, anywhere, and on any device. Although mobile commerce has served as a boon to meeting consumers where they are, retailers now have to maintain an accessible and enjoyable experience across multiple modalities. With smartphone usage expected to increase in the coming years, so will the bar for seamless cross-channel and cross-device functionality.
- With today’s software advancements in eCommerce, real-time price changes allow sellers to reflect changes in supply and demand in a matter of seconds, offering superior flexibility and visibility. Most notably is the democratization of price discovery. Further, consumers have come to embrace “price shopping” as a result of Amazon’s hold on the market (57% of online shoppers visit Amazon for product searches before making a purchase elsewhere). The eCommerce giant’s continued dominance of the market and increasing variety of white-label products will be top-of-mind for online retailers in 2023. Further, its algorithmic pricing has set a precedent for dynamic pricing, which allows retailers to adjust prices in real-time based on factors such as demand, competition, and inventory levels. This has led to an increased focus and budget allocation to price optimization tools to stay ahead of the competition.
- As brands and retailers go head-to-head with Amazon (currently 13% of eCommerce store visits come from the site), price optimization has become a lever to grab buyers’ attention without sacrificing profitability. Price often breaks the tie for a consumer, meaning greater visibility across channels and sites will be a key ingredient in the eCommerce recipe for success.
Post-Purchase Returns Management
- Several eCommerce merchants today have sought to increase customer retention by adopting returns management software. Customers are more likely to shop with an eCommerce brand that has a seamless returns process — one that is as easy as purchasing the item itself. This helps build customer loyalty and repeat purchases in the long run.
- Shortcomings in the supply chain were made evident in 2020 and have persisted ever since, increasing pressure on procurement and efficient logistics. Thus, merchants now must go above and beyond to minimize order delays to keep their customers happy. In tandem, Amazon continues to set the bar for consumer expectations (2-day delivery, easy returns, etc.) This one-two punch has driven heightened attention and budget towards inventory / order management and end-to-end logistics.
- By implementing an efficient and effective returns process, eCommerce brands can build trust and credibility with their customers to ultimately improve their bottom line. We believe businesses will continue to adopt software to achieve this and more (predict demand, optimize inventory, and reduce delivery times) all to offer a best-in-class customer experience.
- eCommerce brands today must understand that an unmatched checkout experience is key to customer retention and acquisition . For starters, a hassle-free checkout experience can increase customer loyalty and help brands build a strong brand reputation as reliable and trustworthy.
- A poor checkout experience is often the culprit of abandoned carts — one of the biggest challenges facing retailers today and a problem currently valued at around $8.5T. Thus, visibility into the post-checkout experience has taken priority as retailers seek to lower their abandoned carts by removing friction from the path to purchase. eCommerce merchants have responded by offering multiple checkout options: Buy Now Pay Later (BNPL), try-before-you-buy, and Buy Now, Pickup In-Store.
- The double-edged sword comes with the effort to minimize fraud but keep transactions authentic and personalized. This dangerous balance beam for retailers will be a key item for software providers to address in this arena. Buyers will be looking for checkout solutions that offer added layers of protection.