Thursday, December 1 2022

From the rise of the market model to the resurgence of second-hand clothing, here are the 8 key trends to watch in digital commerce in the coming year.

By Khalid Khan, UK Sales and Marketing Manager, VTEX

Digital commerce technology has come a long way since Amazon began selling books online in the mid-1990s. Competition in online retail has intensified dramatically, especially in the past two years, as the pandemic drove consumers to websites when physical stores closed. As a result, online retailers face new challenges to stand out and stay relevant.

In such a competitive environment, where margins are under constant pressure, keeping up with industry trends is more important than ever. Consumer expectations adjust quickly as they adapt to what’s in vogue, with trends becoming industry mainstays within months. If consumers don’t see your business keeping pace – with the desired level of choice readily available to them – they will quickly click away and buy elsewhere.

To help you understand what’s going on right now, here are 8 online retail trends shaping the industry today and in the coming months.

  1. Rise of the market model

According to Edge by Ascential’s 2022 Annual Future of Marketplaces Report, by 2027 third-party sales through marketplaces will be the largest and fastest growing retail channel. fastest in the world, accounting for 38% of global retail sales growth.

With the popularity of giant marketplaces like Amazon and Alibaba, consumers have grown accustomed to a wider range of choices as well as the ability to compare brands and prices all in one place.

A marketplace model offers benefits to the retailer, including the ability to increase revenue without increasing expenses by partnering with third-party sellers. They can also overcome issues with their run systems, such as being unable to access their full inventory.

Get ready for more retailers to implement marketplace models in the months and years to come.

  1. Sustainable trade is gaining ground

As attitudes change, consumers are going green by choosing more sustainable merchants, materials, packaging and delivery options.

In some ways, it’s also slow fashion, with consumers focusing on the environmental impact of their clothing choices to focus on longevity rather than disposable. Against many expectations, customers are also increasingly showing a commitment to sustainable transportation, even if that means waiting a little longer for their orders to arrive.

A useful way for e-commerce vendors to play their part is by using an order management system that allows you to ship from the closest location possible to reduce the carbon footprint of fulfillment.

  1. Towards circular trade

As part of the current push towards sustainability, businesses are moving from linear to circular commerce. Some believe that the circular economy “is the biggest wave of business transformation that companies have embarked on since the industrial revolution.” Circular can mean renting, buying used items or buying products made with recycled materials.

We see more and more examples of circular commerce. For example, IKEA’s commercial property company, Ingka Centres, has launched a new “Library of Things” rental platform at its new Hammersmith retail development in London, which allows people to rent items such as drills, audio systems and sewing machines.

Simple steps by retailers to help customers live more sustainable lives will become the mainstay in the years to come – something e-commerce platforms should look to build into their proposition.

  1. The occasion is making a comeback

Growing interest in sustainability is encouraging consumers to buy and sell used clothing online, making used clothing a booming segment of the industry.

According to ThredUp’s 2021 Resale Report, 42% of retailers say used clothing will be a significant part of their business and nearly 24,000 would like to sell used clothing. Watch for the increase in second-hand clothing retail in the coming years.

Interestingly, the ThredUp report also indicates that most retailers would rather partner with a used clothing supplier than start from scratch, making the marketplace model an ideal way to add used clothing. as a product offering. As such, finding an e-commerce platform that makes the marketplace model easy to implement is of paramount importance.

  1. Execution adaptations are imperative

When retailers had to quickly adapt to online shopping, home delivery and curbside pickup in

2020, many have discovered costly limitations with their fulfillment systems, such as being unable to access their entire inventory, especially across multiple fulfillment sites. Going forward, online retailers are implementing order management features that improve their ability to fulfill orders quickly and accurately.

Having a well-functioning order management system can help retailers ensure inventory availability and fulfillment, as well as the ability to add or swap suppliers as needed. To ensure your efforts are setting your retail business up for success, keep these retail inventory management best practices on your radar.

  1. Conversational commerce is here to stay

The pandemic has proven that humans crave interactions with other humans. Online shopping only met the need to shop, not to interact. This is where conversational commerce comes in, with positive results.

The demand for technology in customer service is clear, with a forthcoming report from the Institute of Customer Service in the UK claiming that 82% of customers regularly use digital channels to contact an organisation.

A recent example of this can be found at Tramontina Brazil, which has implemented a chat solution as well as direct communication with sellers in physical stores. As a result, the retailer saw their e-commerce conversion rate increase by 20%.

Over the next year, we’ll see more and more retailers implement chatbots or messaging apps that allow consumers to “chat” with a real person in real time.

  1. Buy now, pay later Apps are growing in popularity

Buy Now, Pay Later (BNPL) apps are rapidly gaining popularity. Companies such as Klarna, Afterpay and Affirm allow customers to make purchases online but pay for them over time in weekly, bi-weekly or monthly installments. And even BNPL has a sustainability angle: younger customers are using it to buy fewer but better (and therefore more expensive) items.

Retailers are embracing this trend because it offers many benefits, from higher customer spending rates to lower cart abandonment rates. Plus, retailers don’t need an in-house solution. They can partner with an e-commerce platform provider that has BNPL integration, ready to be activated with just a few clicks.

However, BNPL companies have more recently come under pressure from watchdogs over contract terms, so caution is advised and responsible implementation is advised.

  1. Don’t underestimate live shopping

Despite the pandemic, shopping remains a leisure activity for many consumers, although much of it is now done online. The challenge is that shopping online can’t compare to shopping in person at a physical store with a real salesperson to help and real products to touch and feel.

Live shopping is the answer to that. In addition to TikTok, platforms such as Amazon, YouTube, Facebook and Instagram have all tested live e-commerce, which brings together entertainment and shopping backed by the power of attraction of influencers.

Live shopping means that sellers, influencers or experts showcase products in a live stream while customers watch from home. Live shopping has been huge in China for years, but the pandemic has helped push it to the United States and Europe.

The presence of such powerful internet platforms seems destined to catalyze the transition, so expect more brands to start using live shopping for customer engagement and sales.

While technology can enable rapid change in today’s world, consumer expectations are also driving that change. You can future-proof your online retail business by staying on top of trends because that way you will also meet consumer expectations.

As consumers and businesses continue to adapt to new ways of shopping, embracing upcoming digital commerce trends will provide a competitive advantage that will result in increased sales and consumer confidence. With the speed at which change is happening, digital commerce is set to become the new normal. The faster you can adapt, the more competitive you will be.

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