Seven e-commerce trends for 2023 and 2024

What are the most important e-commerce trends for the next two years? It is good to ask yourself this question every once in a while. In the third quarter comes the time to set the strategy for the next year and make the right investments that will allow you to enter the next phase of growth.

2022 will be seen by many as a lost e-commerce year, given the first-quarter results of bol.com and Amazon, among others. It is a year to recover from the exceptional growth rates during the corona pandemic. The next year may bring the focus back to growth. Although it will be in a different way than before. Because apart from growth, the call for profitability will increase. The e-commerce market has come of age and we will have to make money. Quite a challenge, given high inflation, uncertainties in supply chains and the very tight labor market.

This article previously appeared on www.retailtrends.nl. Image: stock photo.

This article describes about seven trends intended for anyone involved in corporate strategy formation. Sometimes the trends are described somewhat sharply and perhaps provocatively. This is done mainly to get you thinking and to start the discussion. They are a number of observations from everyday e-commerce practice.

1. Online selling is the new normal

Your customers buy online first and foremost

The global pandemic has shifted consumer focus. It is search and buy online unless there is no other way. Advice-insensitive products lend themselves perfectly to online sales. But consumers are also increasingly buying more advice-sensitive products, such as tailored clothing, furniture and package travel, online.

The alternative is also lackluster. On Saturday afternoons, consumers are not exactly pampered in a store right now. First of all, you pay ten euros for parking, have to walk 15 minutes to the store, wait for a salesperson and then find out that the most popular variant is not in stock. It is clear: buying online has become the new norm. Bustling city centers and 'experience shopping' cannot change that much.

GfK has been tracking the online share of total retail spending for years. Looking specifically at apparel, the online share pre-corona was about 35 percent. That rose to nearly 91 percent during the lockdown, when all stores were closed. After corona, this online share in March 2022 is still 47 percent. We are not going back to the old values.

From an IT project, e-commerce is evolving into the strategic pillar behind the company's growth. Online sales are becoming the basis of the sales strategy, around which everything and everyone is allowed to organize. Consider the IT systems, ERP landscape, financial flows, customer service (open at times when customers are online) and marketing activities.

Implications for Strategy 2023/2024 Online has become the most important and fastest growing sales channel. It is becoming online first. This requires a different way of organizing. All departments focus on online sales; the marketing department, customer service, IT department, warehousing and logistics. Everything is focused on making the online channel flourish. E-commerce is no longer a department or project; it is at the center of the organization. As ceo of a company, you have to be at least digital savvy (e-commerce flows through your veins), otherwise you'd better retire.

Mobile only instead of mobile first

Desktop is finished in 2023, all focus may be on mobile

The online buying experience of mobile shopping has improved. The user-friendliness can be called good, the mobile site fast enough and the integration with online payments perfectly arranged. Corona provided the final turnaround and won over the last doubters. The tipping point is already some time behind us; the time when more sales were made via mobile devices than via the desktop.

Facebook was one of the first companies to talk openly about the mobile first strategy. Makes sense in hindsight, since no right-thinking person watches his or her social media channels on the desktop. By now we are many years down the road. We can confidently preach mobile only in 2023. Create a web shop for the desktop? No longer necessary. Everything may focus on the mobile experience. This has many advantages, better integration with online payments. In addition, you can use consumer location data and a personalized approach is easier for mobile.

Implications for Strategy 2023/2024 The entire marketing and IT team may focus on the mobile experience, unique functionalities (AR, VR, 3D, location-based services and integration with social media), screen size and more. Get rid of the desktop. It's mobile only starting in 2023. Does your team have multiple phones to test the mobile experience? Android, iOS, Apple, Samsung, Xiaomi, OnePlus, Motorola, Redmi and OPPO: you better have them in the house.

3. Social media claim prominent role

Social media are the gateway to initial customer contact

Social media are the gateways (touchpoints) to the customer. Retailers will have more pre-sales contact with their customers through social media in 2023 than through their own websites or stores. Social media are one of the most important marketing tools for retailers and businesses. The exploratory customer contact does not always lead to a direct sale, but it is an indispensable link in the customer journey.

At the same time, the relationship between social media and one's own (mobile) shop is becoming stronger and simpler. Instagram, Pinterest, TikTok, Facebook: all make look, click & buy possible. The challenge is to find social media touchpoints with which to reach the most customers while achieving the highest possible conversion rate. Thereby, we see two directions emerging: social commerce that starts on social media but where the actual purchase takes place on one's own webshop, and online sales that start and end on the social medium itself.

Implications for strategy 2023/2024 The path from social media to the online sales environment must be seamless. Without barriers, the consumer steps from the social medium into the seller's trap. It is important to have or buy enough expertise to make the most of the opportunities of social media, visual commerce and influencer marketing, otherwise you will miss access to a sea of customers.

4. Retention marketing gets high priority

Focus on selling more and profitably to existing customers

With so many consumers having been introduced to e-commerce during the pandemic, the key is to continue to serve these customers. Customers who only buy something from you once are simply too expensive to be profitable. The acquisition cost of the first-time buyer is many times higher than that of the returning customer. For a profitable e-commerce operation, it is essential to keep a close eye on the retention ratio and to drive it in 2023. It is the KPI of 2023/2024.

Opportunities of retention marketing include rewarding loyalty. Consider a discount on a subsequent purchase. Or setting up a loyalty program. Capturing and analyzing customer data allows you to make more targeted offers. You can estimate when a purchased product will run out or end of life. And based on brand preferences, you can make more personalized offers.

Implications for Strategy 2023/2024 Ask yourself how well you are able to get customers to buy from you online more often. From acquiring to retaining customers. That's the challenge of 2023. Building a lasting relationship with the customer. And learning to serve the customer better based on his customer behavior, purchase history, surfing behavior and (brand) preferences. Customer retention will increase sales. It is cheaper than acquiring new customers and will improve the profitability of the e-commerce operation.

5. Artificial Intelligence is taking shape within e-commerce

AI is nothing more than the creation of smart behavioral and content rules

AI sounds exciting; it's been the new egg of Columbus for years. In 2023 and 2024, we are going to use AI to better serve and retain visitors and customers. The goal is to come up with better insights into consumer needs and behavior to make more personalized offers accordingly. From hailstorming to sharp shooting, with data collection, visitor knowledge and AI technology. We will tailor content and the tone of voice to the specific customer. True 1-to-1 marketing, it's been the promise for so long. Now we can start reaping the benefits. With the goal of personalizing ads, content and products. Using AI to analyze large amounts of data and recognize patterns. Based on the knowledge gained, a more personalized experience can then be provided.

The challenge is to create (AI) behavioral rules and content rules that allow you as a company to shape customer interaction in a better way. More focused, personalized and valuable. In 2023, we demystify AI and reduce it to understandable proportions: developing if-then-else scenarios. AI sounds beautiful, sexy and has something mystical about it. It's time to throw off the veil of AI and make it applicable to the most basic activity: customer communication. Because fair is fair, face-to-face communication remains the richest form of customer interaction. We need smart software to start emulating this rich form online.

Implications for strategy 2023/2024 Invest in visitor and customer data collection and rule based marketing technology that can dramatically improve customer communications.

6. Sustainability is beyond the stage of greenwashing

Sustainable business practices have become a requirement

The awareness is now there among consumers that online shopping has an impact on people and the environment. Packaging, transportation, working conditions of employees, the rampant returns: these are issues that are on the minds and hearts of consumers. Even if he or she still doesn't want to pay for it.

At the same time, we see brands embracing sustainability, such as Yumeko, Tony's Chocolonely and Patagonia enjoying enormous popularity. The retailer of tomorrow is getting to work on making its online operation more sustainable. Components of sustainability include packaging, transportation and assortment.

Manner of packaging

Necessarily packing orders gives a large carbon footprint. Necessary because you want to minimize damage during transport (and return). Packaging is almost always immediate waste and only used once. With deployment of packing machines, you can make custom boxes that contain less air than when using standard-sized boxes. This makes the package smaller on average, so more boxes fit in one shipment. This leads to better volume-to-weight ratios and less consumer irritation. Because you often saddle them with far too much packaging material. In addition, you can invest in more sustainable packaging materials (stop using foam and plastic). There are plenty of packaging materials made from recycled materials.

Manner of transportation

You can offer sustainable shipping options in the checkout: delivery with a bicycle courier, delivery with electric vehicles. And you can encourage the use of pickup points. In April 2022, Amazon invested one billion euros in a fund dedicated to improving logistics processes. Partly with the goal of becoming the earth's safest place to work. Also a form of sustainability.

Sustainability of assortment

Another important element is looking critically at the sustainability of the assortment itself. What materials are used? Are there more sustainable alternatives? What is the quality and lifespan of the product?

For example, it can be interesting (from sustainability and profitability perspectives) to remove products that are frequently returned from the assortment. Products that you can only use a few times should be removed from the assortment. Get rid of the Chinese junk and disposable products from other continents. It is no longer justifiable and out of date. Look for more locally produced products with a long(er) lifespan.

Implications for Strategy 2023/2024 Sustainability is creeping into the minds and hearts of consumers. As an online retailer, you can no longer ignore the topic of sustainability. It is becoming a ticket to the game. By 2023, make sure you have a clear sustainability strategy and show the areas in which you will become more sustainable. Make the plan measurable and report on progress. It will also have a positive effect on your ability to engage and retain your own employees.

7. Brake profitability and growth due to tight labor market

Binding and engaging staff deserves top priority in 2023

The labor market tightness has broken records in the first quarter of 2022, according to CBS. Against 133 vacancies, there are currently 100 unemployed. Labor market tightness is no longer a temporary phenomenon. We have to learn to live with a permanent shortage of good (skilled) personnel. A sharp increase in labor costs in logistics, customer service, product management and administration will worsen the profitability of the e-commerce operation.

Implications for strategy 2023/2024

In 2023, ensure a strong recruitment & selection policy. Corporate branding is more important than ever. Make sure you become an attractive employer for diverse groups (young, old, male, female, multiple cultures). You will need to entice potential employees to come work for you. In addition, engaging and retaining existing employees will be allowed to be high on the strategic agenda. Ask yourself the question: am I a cool and attractive company to work for? And calculate on the back of a beer mat what will happen to the profitability of the e-commerce operation if wages increase by twenty percent. Because they will, you can be sure of that.

Conclusion

The future is difficult to predict. And yet, it is important to recognize and anticipate some trends. To grow, you need to look ahead and make choices now that will affect success in the coming year.

I do not hold the truth. Some developments do seem to be slowly emerging for 2023/2024. Online will become the most important channel. This may include a full focus on mobile. With a strong presence on social media. Focused on better serving existing customers in particular with the use of artificial intelligence. Sustainable business with a keen eye for good entrepreneurship. In which you create a workplace that is attractive to a large group of people. Ultimately, it is the employees who make the difference. It is up to you to find and exploit this potential.

It's all about the people. Those are your existing customers as well as your existing employees. Let 2023 and 2024 be a celebration for them.