Today, the retail market is at a tipping point thanks to the steady rise of e-commerce. E-retailers are leveraging new and exciting capabilities in old retail models to expand existing markets like grocery, personal care, and apparel. The recent e-commerce development is attributed to the fast growth of online shopping. This article focuses on e-commerce market trends, retail trend 2020, and the future of e-commerce.
E-commerce Market Trends
The first quarter of 2016 saw retail spending to the tune of $92.8 billion, representing 7.8% of retail sales in the same period. Although still in its infancy, e-commerce is expected to grow at an exponential rate of 23.7% in 2016 alone. Total e-commerce sales are estimated to reach $3.578 trillion in 2019 and $4.058 trillion in 2020, the latter representing 14.6% of the total retail spending. Below are three general e-commerce trends:• Online stores are popping up.• Mobile Internet has become all the rage.• Cloud computing is slowly becoming the norm.
1. Online Stores
The evolution of technology and the Internet is the biggest source of disruption for retailers worldwide. A recent study carried out by the eMarketer reveals that e-commerce sales are growing faster than previous estimates. The report predicts that online sales growth will surpass brick-and-mortar sales growth by 2020.
In today’s ultra-competitive market, it is no longer enough to operate an online store. Rather, success is dependent on the ability to deliver individualized shopping experiences while enabling customer interaction with your brand.
Our client Aidan Gray closed it’s retail store this year and exclusively will be selling on the through their online store because the business model just fits better. The small radius of which customers can reach clients through retail is not sufficient enough to justify the overhead of having a storefront vs. selling to the masses and concentrating on the entire continental United States.
Sears Holdings Corp. alone would need to close 300, or 43%, of its Sears stores to regain the sales per square foot it had in 2006, adjusted for inflation, according to Green Street.
2. Mobile Internet
Social Media and Mobile are the key drivers of e-commerce development moving forward. The global smartphone penetration has reached unprecedented heights; thus, owning a smartphone and using the Internet are quickly becoming the same thing.
SMBs must also take advantage of the potential of mobile devices to increase sales. As of 2016, online shopping using mobile digital assistants like Cortana, Google Now, and Siri accounted for over $2 billion in sales.
Retailers are capitalizing on this development by coming up with easy-to-use mobile applications to optimize customers’ shopping experiences. By 2020, the smartphone will become a major platform that supports the entire shopping journey, from search and discovery to recommendations, comparisons, and payments.
Mobile Device Usage:
Mobile Usage Worldwide:
Mobile Worldwide Subscriptions:
Top 5 Mobile Stats to Consider
- Today this is over 36% of mobile subscribers who use iPhones or iPads to read email. 34% of subscribers only use mobile devices to read emails. (Informz)
- 80% of all internet users own a smartphone. (Smart Insights)
- 48% of consumers start mobile research with a search engine. (Smart Insights)
- 33% of consumers start mobile research with a branded website. (Smart Insights)
- 26% of consumers start mobile research with a branded app. (Smart Insights)
3. The Cloud
Companies are migrating to the cloud because it enables them to enrich their customers’ shopping experiences, push forward their brands, and make transactions easy. Moreover, companies can keep their operating costs low and innovate quickly.
The cloud enables businesses to access consumer data such as wants, behaviors, concerns, needs, and expectations. The Oracle Integration Cloud Service allows point-and-click integration between on-premises and SaaS applications from vendors. These data mapping tools allow businesses to easily integrate technologies as well as access product and consumer data between applications.
What’s more, companies will use modern analytics tools built into their respective cloud e-commerce platforms. These tools will enable businesses to analyze and measure consumer behavior across various non-mobile and mobile channels.
Top 5 Cloud Stats to Consider
- Private cloud adoption increased from 63% to 77%, driving hybrid cloud adoption up from 51% to 71% year-over-year.
- Cloud users are running applications in an average of 1.5 public clouds and 1.7 private clouds. They are experimenting with an additional 1.5 public clouds and 1.3 private clouds.
- 17% of enterprises now have more than 1,000 VMs in public cloud, up from 13% in 2015.
- 4. The IaaS/PaaS markets are often dubbed the “cloud infrastructure” market. IaaS spending — fueled by the growing need for remote computing power and storage — could rise from $38 billion this year to $173 billion in 2026, according to Forbes.
- Spending on PaaS, which is often overshadowed and merged with IaaS solutions, could hit $7.5 billion by 2020 as developers create more applications within the cloud, according to Global Industry Analysts. 50% of PaaS spending could be focused on the Internet of Things (IoT) market by 2020, according to Gartner.
Retail Trends 2020
By the year 2020, e-commerce market trends will have significantly changed the retail industry. More consumers will be able to order products by just clicking on their smartphones. They will also enjoy same-day delivery systems like in-store digital, click and collect, and drones.
Retail trends already underway include:
• Growth of e-commerce companies
• Purchase and pick-up systems
• In-store digital systems
E-Commerce B2B Sales:
E-Commerce B2C Sales:
1. The Growth of Amazon
E-commerce giant, Amazon, recently became the fourth largest company in the U.S. due to its stock market value. The company is considered by market experts to have one of the most strong business models in the world. By 2020, analysts predict that it will become the largest company in the U.S.
Amazon Growth Statistics:
The reason why Amazon has managed to grow exponentially year-on-year is that it holds a significant position in cloud computing and online retail. Today, the company owns roughly 40% of the U.S. e-commerce market. With the online retail market expected to grow annually, companies like Amazon are securing themselves a bigger piece of a quickly growing pie.
2. Purchase and Pick-Up
This model increases a retailers’ average purchase value. At least 7% of customers who personally pick up their purchases end up spending more while on site. This model is increasingly gaining popularity from retailers because of the following advantages:
- Increases retailers’ net sales because customers end up buying more items while at the store.
- Increases conversion rates because customers can easily pick up their merchandise.
- Reduces the shipping costs incurred by retailers.
- It decreases returns by customers because of the in-store exchange option.
3. In-Store Digital
In-store digital refers to a system where customers can purchase items online while inside the retailer’s physical store.
Moreover, retailers are going a step further by providing in-store digital customization options. One good example is the Smart Dressing Room offered by Rebecca Minkoff in partnership with eBay and Magento. The system tracks and collects data on what customers try out at the store as well as what they purchase. It later sends updates to shoppers upon new arrivals.
The Future of E-commerce
The future of online shopping and e-commerce will see developments like:
- The rise of online stores.
- The decline of brick and mortar stores.
- The evolution of multiple shopping channels.
1. The Rise of Online Stores
Small and midsized businesses (SMBs) need platforms with a complete digital experience. Since these businesses are small, many roles overlap; therefore, one person oversees brand strategy. By 2020, many SMBs will have leveraged enterprise-grade technology – that too at an affordable cost.
The Oracle Commerce Cloud is an excellent platform that allows SMBs to design and release customizable, feature-rich storefronts for both mobile devices and desktops within a few months. The future of e-commerce demands that these online sites be easy to navigate, have a good design, and process payments quickly.
2. The Internet will Crush Brick and Mortar Stores
The boom in Internet retail and e-commerce comes at the expense of brick and mortar department stores. With digital sales growing at double digits, many traditional brick and mortar stores are expanding into online retail. The reason being that the internet generation has fewer reservations against shopping online.
Brick and Mortar Vs. Internet Sales:
As many branded products move to the Internet, the demand for physical retail space will diminish with time. Eventually, physical retail will need a reason to exist. By 2020, more start-up retailers will create an online presence before establishing physical stores (think of companies like Fabletics).
New business models are already shaping up, like the UK’s click-and-collect, which allow shoppers to purchase products online and collect them at the company’s nearest retail outlet. U.S. retail giant, Walmart, also offers click-and-collect services.
3. Multiple Shopping Channels
By 2020, consumers’ shopping experiences will not be limited to mobile devices, desktop computers, or physical stores. Instead, customers will use multiple channels simultaneously when shopping. They will compare department store prices using smartphones when browsing.
Shopping Channels Stats:
With the shortening attention span of many customers coupled with increased consumer expectations, companies will be hard-pressed to come up with a smooth online shopping experience. Businesses that fail to evolve with these market dynamics and innovate will risk being left redundant.
At Bright Vessel, we appreciate the relevance of e-commerce and its impact on the retail industry. We specialize in digital marketing, website design, search engine optimization as well as social media and content marketing services. Call us today at (561) 935-6418 or contact us to learn more about our digital marketing strategy.