Digital retail is one of the economy’s most promising sectors and one worth watching to understand the strategies companies in the sector will need to adopt in order to remain competitive tomorrow. Let’s see what are trends in e-commerce industry.
E-commerce is a retail sector whose importance is visible to all. Compared to all more traditional sectors, it is the only one (with very few exceptions) to record truly exceptional growth. After all, users all over the world, including Italy, have become accustomed to using e-commerce platforms to make purchases.
Among other things, it is interesting to note that almost all types of products can now be purchased online. So, in terms of the offering, e-commerce is moving towards a wider and more varied choice, which aims, in a way, to replicate what shoppers can find in most any supermarket aisle. And if supply is not lacking, demand is even increasing. It is interesting to note that there is continuous growth in spending for all the different product categories available on an e-commerce platform.
The fashion and beauty category, for example, marks +16% compared to 2019; tech has grown by +15%; food and products for personal well-being are up +20%, as are furnishings and accessories for the home. Other segments are up, too: video games (+5.5%), games and leisure items (5.3%) and, finally, travel (2%). In light of these figures, it is hardly surprising that the value of the world’s retail e-commerce market grew 12% year-on-year in 2019, reaching $2.875 billion last year, or 11% of the total value of global retail sales.
Even so, this result, which is remarkable in itself, is bound to be surpassed, since the total value of the retail market is expected to increase until 2022, reaching a value of $4.035 billion.
Revenues are growing, the importance is growing
This remarkable revenue growth means that e-commerce, which we remember is a relatively recent segment, is beginning to play an increasingly important role in the global economy. The importance of this sector is demonstrated by several factors. In just a few years, for example, there have been many interventions at the legislative level that are aimed at regulating and promoting the spread of e-commerce.
In Europe, one of the most important of these measures is the Payment Service Directive 2 (PSD2), the European directive on payment services via digital platforms. Among the most important innovations of PSD2, which was approved in January 2018 but only officially came into force in Italy on September 14, 2019, is that it has increased competition in the European Union banking sector of the European Union, making it possible for third-party operators to provide payment services. Thanks to this Directive, users can choose providers outside the typical list of “institutional” providers to carry out a large proportion of financial transactions (from payments, to checking and savings accounts).
For their part, banks have found themselves obliged to “open” the doors of their databases to these third-party operators, who are putting new services and innovative user-centered products on the market without having to pass through the bank’s servers. As a consequence, banks can no longer exploit its institutional position as a sort of bottleneck to restrict the scope of action of smaller players (money.it). This has simplified payment transactions, making them more efficient, fluid, and at the same time, both easy and safe for users, inaugurating a phase of open banking that will certainly favor the use of online payment systems on e-commerce platforms.
Another provision that goes in this direction is one that eliminates geoblocking for e-shoppers. In this way, e-commerce sites can no longer block visitors from other European countries. As a result, cross border data will only increase, making the customer’s shopping experience even easier and more satisfying.
In addition, GDPR has guaranteed all users who want to make purchases on the Internet more protection and guarantees, especially regarding the management and traffic of sensitive data and information. It is no coincidence that controls and appeals for privacy violations have increased, discouraging unfair telemarketing practices.
Another factor that demonstrates the importance of the digital retail sector in recent years is the fact that even traditional retailers are beginning to take notice and thinking about how to reinvent their businesses. Think, for example, of the large supermarket chains that are creating dedicated e-commerce sections on their websites so that customers can shop without leaving home. Italian grocery chains Esselunga, Conad, and the Coop Group are also emphasizing these new purchasing methods by offering home delivery services.
This contamination is also important because it stimulates large retail groups to rethink the customer experience they are offering, pushing them to enrich it through other touch points that are fundamental to remain competitive and survive on the market.
E-commerce trends for retail
Now, let’s look at some of the trends in e-commerce industry that will impact the sector in the coming years.
1. Increasingly Phygital
The first of the trends in e-commerce industry in importance is the increasingly frequent convergence between the analog and the digital shopping experience. This is known as phygital, a name that indicates the “union” between the physical and digital world. A phygital experience will play a fundamental role in offering a personalized and quality customer experience especially in sectors like retail where the customer has a central position. On closer inspection, there are many ways to approach a phygital business model.
One example is that of Amazon or Alibaba, which, in order to get a foot in the door, have decided to add a physical point of sale to their digital stores, where the smartphone becomes the device through which to make purchases or activate services.
The opposite also happens, as mentioned above, when talking about some of the main Italian supermarket chains, which now give customers the opportunity to shop online. This trend is interesting because it shows that when it comes to retail, it is very difficult to completely give up the physical store, if only to use it to create interest in demand; here’s where social media, apps, gaming, and the digital world in general, all have a role to play (wired.com).
2. Increasingly mobile… but not only
Another trend in the retail sector is the widespread use of the smartphone by consumers, which is rapidly becoming the preferred device to do many things, including buying.
Among other things, this trend is even more relevant for Italian retailers, since in Italy the smartphone is used by online shoppers much more than in the rest of Europe, although e-commerce is proportionally less widespread in Italy than in other EU countries. For example, 85% of the web population uses mobile for shopping; 34% of Italians say they use it often, while 14% say they always use it.
That’s why it’s essential for digital retailers to ensure a fluid, effective, and satisfying customer experience even when delivered through a smartphone. It’s also important because users frequently use the smartphone not as a replacement device for analog purchases, but as a tool for integrating the experience into the store. It turns out that more than half of consumers will check the availability of a product before going to the store, while 38% said they check the presence or absence of a product just before arriving at the physical point of purchase. Instead, 34% use their smartphone even directly in the store to look for information and reviews on a particular product.
Therefore, not having a mobile customer experience detracts from the overall experience; it can also directly affect revenues, since 39% of consumers consider it unlikely or very unlikely to go to a physical store if they are not able to get information about the products in stock from the website.
The wide use of the smartphone is certainly an important topic of the trends in e-commerce industry, but let’s not forget the other devices that users employ to search and purchase products or services. Customers use many devices, often at the same time and many consider the digital and analog shopping experience as a whole, which must develop in a fluid and uninterrupted way. For this reason, and for some time now, retailers have been building a customer experience that is as omnichannel as possible, in order to make it more immersive and satisfying for the customer.
From the consumer’s point of view, there is nothing worse than running into unnecessary repetitions, overlaps, and unjustified interruptions in the purchase operation: the frustration generated often results in a lost sale.
However, being omni device is not enough: users also expect an omni device customer experience (tws.it), one that can integrate several devices within it through and through which they can seamlessly carry out their shopping experience. For example, the customer must be able to check the presence of the product they prefer online, pre-order it with their smartphone, pick it up at a physical point, register for the welcome discount from a kiosk or tablet in the store and, finally, pay with their smartphone.
3. Paying must be easy
Speaking of paying with the smartphone: another fundamental topic that is part of the trends in e-commerce industry is to guarantee an increasingly varied number of payment methods so that customers can choose the one they prefer.
So, in addition to cash, credit cards, or debit cards, applications such as Satispay and Paypal must also be embraced to prevent customers from dropping out of their purchase due to the frustration of not being able to pay, something that happens almost 70% of the time (baymard.com).
As we have seen above, regulations favor this and are pushing the market to offer increasingly efficient and safe services.
4. Buying just one item
Another interesting trend for the near future is that of voice shopping, made possible by the widespread domestic use of smart speakers, which are able to perform certain operations simply stimulated by the owner’s voice.
This trend, born in the United States, actually proves one thing: buying in itself is an operation that requires a relationship, both with a real salesperson and a digital assistant. In fact, research on the subject shows that 46% of consumers feel equally comfortable talking to a smart speaker or a real person.
5. Digital also thinks about the environment
The last of the trends in e-commerce industry: another interesting to highlight is one that sees online sellers taking actions aimed at environmental sustainability.
Although digital retailers may not have a storefront, this does not mean that their business doesn’t impact the environment. On the contrary, research has revealed that large digital retailers play a decisive role in the increase in urban pollution (corriere.it); in order to deliver ordered products quickly, they often run empty trucks, to the detriment of logistics and the health of all citizens. Then, there is the large amount of waste generated by packaging that is produced for every single purchase.
At a time of such great attention to climate change, even giants like Amazon and Alibaba are being called upon to play their part in this battle.
There are many ways: from proposing goods that offer a social or environmental benefit to reducing shipping waste, perhaps using recycled or biodegradable materials.
This shows that once again, and this is the most important trend of all, real and digital are destined to walk together, intertwining, and transforming each other.