Ecommerce of the future - a brief wrap up of current trends

Ecommerce is just buying and selling stuff in the internet? True – but there are so many facets to think about! The customer experiences a whole customer journey including sales process, customer service, payment process etc. Further, the borders blur between classical ecommerce done via desktop, smartphone or tablet, and stores. The later become more digital as a result. This article will mainly focus on trends in fashion but considers other industries as well.

The Customer …

Firstly, let us take a closer look on the customers in ecommerce. A majority of ecommerce customers are digital natives. According to Statista (2017a), more than 60 Percent of people born 1980 or later purchased fashion or shoes lately. The older the people get, the less they buy online. Nevertheless, the trend is that bestagers become a target group as well. Let’s also face the gender difference. Yes, it’s true – women shop more often. But when men shop, they mostly buy complete outfits and spend more money per order than women, who prefer to buy single pieces (KPMG, 2015).

The Market …

Nowadays, 33% of fashion items are bought online in Germany (Comarch, 2017). In five years this will go up to 41% and mostly ordered from internet pure players like Amazon or Zalando. This is a major trend itself: internet pure players will play the leading role in the market, so believe 68% of the respondents in the KPMG fashion study (2015). Already today, 90% of Germans buy on Amazon and almost half of the respondents start their product research there (PwC, 2017).

The Trends …

Omni-Channel

Heading to a stationary store and simply buy something – that’s old-school! In times of conversational user interfaces, machine learning, interactive apps and beacons, the digital universe is strongly connected to the real world. It all started with the so-called cross channel approach. Best example for that are Click&Collect services, where you order something in the internet (online channel) and pick it up in the store (offline channel). The approach to start a product search online and purchase offline, or the other way around, is very common anyway (KPMG, 2015). Another example are flagship stores like mymuesli has opened to generate attention. The omni-channel experience takes this one level higher and integrates new technologies. Loyalty apps offer a very personalized user experience and enable the company to gather data and build a strong customer relationship. Further, these customers spent up to 10% more and returns surely more often (Harvard Business Review 2017).

Gamification

Gamification increases the fun, gives the user the feelings of competition, control and success and the possibility of exploring and teaming up. For businesses this increases customer reach and loyalty. Examples we all know are Ebay, the Nike running app or simple bonus cards. It should be kept in mind that there are minimum four types of gamification users. The Enjoyer: seeking for fun and surprises, this type spins the fortune wheel and expects quick success and prizes. The Farmer: to achieve or collet levels or badges his passion is to write reviews or rate products. The Networker: this type expects chats and communities, wants to network and give advice. The Self-seeker: by user ratings this type wants to influence and get accepted, leadership boards or extra points motivate him (Blog.amasty.com, 2014).

AR

It feels a bit magical, but it becomes more and more reality. AR is on the best way to become a part of the ecommerce user experience. Customers get a better idea of how the product will look like in reality and it is a nice gimmick for them as well. Companies, on the other side, improve their innovative image. But the core idea is that they can offer a possibility of testing and shorten decision making processes. Consequently, customer frustration is kept down to a minimum. In numbers: 40% would pay more when they can experience the product though AR, 61% prefer shops with integrated AR features (Retail Perceptions, 2016). Even though AR seems to be super popular, managers face several challenges. Users need an AR-capable device (which becomes more and more common), the feature needs to generate real value, it must be safe regarding data security and lastly, customers also must use this longer than in a hype (e.g. Pokemon GO). One exemplary use case did IKEA find in placing furniture in the room using AR. Another is implemented by Macy’s, using AR for In Store Navigation.

Personalization

Personalization is such a large field in the ecommerce world, so that it is hard to wrap this up in a few lines. Overall, personalization leads to individual products or product appearances which bring up fun and an emotional connection between shop, product and customer. As a result, customer loyalty increases, businesses build USPs and an incentive to buy.

Personalized products are one promising subfield. Mymuesli offers a self-mixed combination of ingredients, Adidas gives customers the option to create an individual shoe.

Personalized shops become a standard. Between bestagers only 26% wish for an individual shopping experience whereas almost 50% of Generation Z (18-24 years) expect AI based individuality (OnetoOne, 2017). Presenting the customer only clothes in his size or matching his taste is highly appreciated by every age. Tracking, machine learning etc. makes this possible.

Social Commerce even uses social networks to personalize. Not only does it use detected actions and behavior to predict preferences, it gives customers the possibility to share findings and purchase within the social network. Shops arise attention and social networks the activity within the platform. Social media is used for inspiration anyway – 46% of 18-35-year-olds look for shopping inspiration in Facebook or Twitter and even 26% in Instagram or Pinterest (PwC, 2017). Further, they read and write reviews and discover new brands and products.

Customized Pricing is probably the most controversial trend. Here we must differ between individual pricing, adjusting according customer-specific data like residence, and dynamic pricing, reacting to daytime, date or weather. According to a Statista (2017b) study 35% of the respondents think this is an interesting trend and e.g. Amazon already uses this in the section “Today’s deals”. Problematic is hereby the transparency, which is very important for most customers. In Germany law restricts this to an acceptable level with the “Preisangabenverordnung (PAngV)”. Pricing is mostly free, but no one can be discriminated because of race, age, gender or origin.

Personal Voice Assistants

“Hey, Goggle, please look for a new shirt!” This is how it will sound when the trend that Google, Siri, Alexa and co become our personal shopping assistants becomes reality. Customers appreciate the conveniences of natural speech communication and doing shopping simultaneously to other tasks. From the business perspective the new channel to customers must be used valuable and integrated in the customer journey. Even though 36% of Germans use voice assistants in their daily live, only 2% of customer purchases are made via them nowadays - but until 2021 this is assumed to rise to 13% (t3n, 2018). Between the first half-year of 2017 the number of Alexa Skills tripled (from 5.000 to 15.000) (Statista, 2017c). Pioneers from the USA are e.g. Walmart or Starbucks, who already experiment with it. This technology has huge potential. Nevertheless, the future development stays unclear as critical voices point to the missing visual aspect which is nowadays central in the ecommerce field.

Chatbots as personal assistants

Chatbots build on technology like machine and deep learning and conversional user interfaces. The unreal chatting partner have the big advantages of being accessible any time and offering an individual service. Simultaneously, they gather valuable data. The trend of messaging apps outpacing social media networks clearly gives this trend a further boost (BI Intelligence, 2017). The development from preprogrammed bots goes towards intelligent bots, which can react individually and help in making choices - almost like a perfect shopping assistant. From April to December 2017 the number of Facebook based bots doubled to 200.000. Mostly, those are used to get information about news (69%) and consult the bot about products and services (63%) according to Statista&YouGov (2017).

The Last Mile

There are many concepts popping up regarding the last step of the delivery process at the moment. I want to give you a quick overview of advantages and disadvantages. Customer-to-product is the first approach mostly realized with pick-up-stations. Package bundles are delivered to the station, so a personal attendance of the customer is not necessary. Nevertheless, getting the package takes time and the advantage of online shopping is a little less. A second solution are package boxes, installed in front of properties and accessible for the delivery service. Unfortunately, there is no standardized concept yet and these must be provided by property owners themselves. A third method is the delivery by drones. This way remote areas could be reached, and delivery speeded up. Also, here some problems occur: the volume is too high for drones, the drones cannot manage long distances and generally commercial drone flights are prohibited in Germany. Lastly, the idea is a crowdsourced delivery system, where people take packages with them and bring it to the receiver “on the way”. Therefor a minimum of people is necessary, which is why earlier projects failed.

Sustainability

Like in every other area of our daily lives, sustainability is a trend in ecommerce as well. 87% of the respondents believe that especially young people see fashion more as a consumption good. So there develops a trend contrary to that and 42% think importance of sustainability increases quickly (KPMG, 2015). In the beginning of the year Zalando asked for “preloved fashion” (worn clothes) and that customers should send it back. What their plans are is not clear yet, but other platforms already function as resellers like Rebelle or Mädchenflohmarkt.

Customer Loyalty

Machine learning, bots and customer profiling can have a huge impact on customer loyalty. From a customer perspective advantages like free shipping and individual care are central. For businesses it is more important to build a strong and long-lasting relationship between them and their customers. For that they can use customer data to increase retention. Customer loyalty programs are one central tool to do so, but they must have a real value for the customer to work out and get used. So are e.g. 77% of the Amazon Prime users mainly because of the free shipping part of the program (PwC, 2017).

The future …

This is just a brief collection of the major trends and even though there are many more, I hope you take some interesting thoughts out of it. We are all very excited about what’s coming next.

Sources:

• Blog.amasty.com (2014).THE COMPLETE GUIDE TO ECOMMERCE GAMIFICATION (https://amasty.com/blog/the-complete-guide-to-ecommerce-gamification/)
• Business Intelligence (2017). Messaging apps are now bigger than social networks (https://www.businessinsider.de/the-messaging-app-report-2015-11?r=UK&IR=T)
• Comarch (2017). Die Zukunft des Einkaufens, Die wichtigsten Trends im Fashion Einzelhandel heute und 2030
• Harvard Business Review (2017). A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works (https://hbr.org/2017/01/a-study-of-46000-shoppers-shows-that-omnichannel-retailing-works)
• OnetoOne (2017). Studie: Gemischte Gefühle gegenüber Künstlicher Intelligenz im E-Commerce (http://onetoone.de/de/artikel/studie-gemischte-gef%C3%BChle-gegen%C3%BCber-k%C3%BCnstlicher-intelligenz-im-e-commerce)
• KMPG (2015). Fashion 2025 - Studie zur Zukunft des Fashion-Markts in Deutschland
• PwC (2017). Total Retail 2017 - Sechs Trends, die den Handel nachhaltig verändern
• Retail Perceptions (2016). The Impact of Augmented Reality on Retail (http://www.retailperceptions.com/2016/10/the-impact-of-augmented-reality-on-retail/)
• Statista (2017a). (https://de.statista.com/statistik/daten/studie/726079/umfrage/online-kauf-von-schuhen-und-mode-nach-alter-in-deutschland/)
• Statista (2017b). (https://de.statista.com/statistik/daten/studie/715715/umfrage/bedeutung-von-dynamic-pricing-in-deutschland/)
• Statista (2017c). (https://de.statista.com/infografik/10134/verfuegbare-skills-fuer-amazons-digitale-assistentin-alexa/)
• Statista & YouGov (2017). Der Chatbot als Ratgeber (https://de.statista.com/infografik/9081/wofuer-die-deutschen-einen-chatbot-nutzen-wuerden/)
• t3n (2018). Sprachassistenten sollen 6 Mal mehr Umsatz im E-Commerce bringen – in nur 3 Jahren https://t3n.de/news/alexa-6x-mal-mehr-umsatz-mit-alexa-908922/