2022 was a challenging year for retailers of all business models.
Many leaders were expecting the covid ecommerce boom to continue and hedged their bets on only to find themselves having to make some difficult decisions with redundancies and general ‘belt tightening’ being a common trend across platforms and retailers this year.
It isn’t all doom and gloom though and while commerce growth is slowing, total retail sales in 2022 have climbed 15% since 2020, and they’re projected to continue to slowly grow to more than $31 trillion in 2025. Even with the economic contraction, Ecommerce growth in 2023 is projected to be 5% higher than from before the pandemic and will stabilize in the years following.
By the end of 2023, one in every five retail sales will be made online and considering there was $27 trillion USD of retail sales worldwide in 2022, there still remains much opportunity to be carved out for clever brands and retailers*
One of the biggest concerns effecting consumer spending habits in 2022 was inflation.
The average person is 208% more concerned about inflation than the coronavirus, which is now of less concern to people globally and represents a major departure from the focus of the past couple years.
The world trade organisation has had to revise its growth estimate for 2023 reducing it down from their initial estimate of 3.4% to 1%. (1) Other economic agencies and NGO’s have followed suit.
This is influencing consumer confidence and also business in both their hiring practices and marketing budgets. Inflation is likely to continue effecting global markets until at least the end of 2023 (8), so businesses will have to be smart in how they invest their money and operate in the next couple years if they want to not just survive but thrive.
B2B sales remain one of the biggest opportunities in eCommerce and in 2023 this projected growth will continue.
According to figures presented by Adobe at their summit in Sydney this year, B2B e-Commerce spend in 2021 was just 9.8% of total retail spend or 95.2bn. (7) In real dollar terms this equated to a 96.2bn slice of a 971.1bn pie and was a 46.7% increase YOY
Contrast this with online B2C’s 19.3% of total retail spend (or 62.3bn of 323.7bn total spend) (7). Many tech platforms will be looking to capitalise on this and grow the B2B share of retail spend in 2023, adding new features and growing this market through the same tech advancements that drove D2C growth the past few years.
McKinsey & Company research shows that 65% of B2B companies are exclusively selling online in 2022. And, for the first time, B2B’s are more likely to offer ecommerce over in-person sales.(6) The numbers show Ecommerce is no longer an afterthought sales channel that B2B businesses are just experimenting with.
B2B customers want the same easy to purchase experience of D2C commerce and platforms like Shopify are realising this and have added long requested B2B features like tiered pricing lists and more configurable customer accounts, so the best of both worlds is now in the grasp of B2B businesses.
In 2023 the same D2C trends will continue to permeate their way through B2B as platforms add features and bridge the two worlds. So, if you are a B2B business you should be investing in your online business and making it a focus area in 2023 because if you don’t the data shows your competitors will.
The rise of marketplaces continued in 2022 and many consumers turn to these channels as a trusted place to shop due to the many protections and the endless isles on offer. More than 50% of global ecommerce sales were completed on marketplaces in 2019, so they aren’t something that should be an afterthought (12).
73% of shoppers surveyed use multiple channels before making a purchase (12) and so merchants who delivered a truly seamless Omnichannel strategy will have seen the most success. Buyers continue to expect the same experiences and consistent brand messaging across channels and to be able to access speedy fulfilment, quick customer service response times and consistent post purchase communication.
Those who focused on customising their product data for each channel will have had more chance for conversion and reaching more buyers. A good quality integration can make this task a lot simpler by automating the adding of keywords and required data points. They can also make sure your inventory stays in sync across channels and locations, and this can include the use of stock buffers, so you aren’t disappointing buyers by cancelling orders for not being in stock and are able to accurately display inventory levels. Many customer service tools such as Zendesk, Gorgias and Freshdesk also have quality multichannel integrations available, meaning you can manage buyer communication in a single tool, making it easier to deliver a consistent experience and not have siloed services.
Quick handling time and multicarrier models ensure marketplace performance standard requirements were still met when certain carriers had challenges in staffing levels due to illness in various parts of 2022.
Sellers who could offer these improved standards gain additional exposure from the marketplaces via things like badging to highlight those improved service standards over other sellers on those platforms or improved performance in search and filtering.
Customer data is often not provided with orders when selling on marketplaces, and you don’t ‘own’ the customer, so a different marketing strategy is required to access these customers and often the use of separate marketplace promotional mechanics is required.
Marketplaces will also often have co-marketing/promotional activities including investing in the discounts themselves at key seasonal moments and retailers can often take advantage of these additional discounts by adding to them and improving the offer or just participating and taking advantage of the funded discount.
These marketplaces are also good advertising channels, with Amazon being one of the largest advertising platforms in the world, so having a budget and strategy for this is good practice. eBay Australia has over 12 million monthly visitors as another example (11), which represents an opportunity to advertise to one of the largest buyer groups in Australia. Giving each channel its due attention is required and crafting an independent strategy for each is necessary to do well on these marketplaces. This can be a lot of work, so outsourcing to an agency or full-service platform with expertise is often a good idea if you don’t have the in-house experience and capacity.
Platforms like marketplacer and Mirakl are also now making it easier than ever for brands and retailers to launch their own marketplaces and these are integrated with major platforms like Shopify Plus, so we will continue to see marketplaces be as relevant as ever in the future.
These marketplaces do have to offer something different to have an impact due to saturation, so unless you are a large retailer or brand or can fit a particular niche, this strategy isn’t generally for smaller business.
But if you have a large audience, starting your own marketplace can be an effective way to offer new inventory to your customer base without the risk of holding and fulfilling it yourself and make your own offering more attractive getting access to new customers.
It presents an opportunity to collaborate with your suppliers and partners and create your own eco-system. A good example of this was medcart which created a unique D2C marketplace for medical products, filling a niche that didn’t exist previously but became noticeably required during the global pandemic.
This is a trend we will see more of in 2023 as technology continues to make this more approachable.
Social commerce further matured in 2022 with platforms like Tiktok having a huge impact on shopping habits. Next year, TikTok will add nearly 10 million social buyers, nearly two times the combined increase for Facebook, Instagram, and Pinterest. (5)
Brands that got this right were able to capture a particularly challenging audience when it comes to marketing, Gen Z. Content styles for these platforms do differ from other marketing channels requiring content teams to adapt.
Nine in 10 people buy from brands they follow on social media, highlighting the importance of having a consistent Omnichannel strategy and presence. Brands that could create an authentic identity on these platforms found themselves connecting with more buyers and seeing success in 2022.(1)
Using influences for brand content was a trend that continued, and data showed for many D2C brands this was a good use of their marketing budgets. Content created by influences were 3X more effective than brand created content. User generated content is even better again being 8.7 times more effective than brand created content! (1)
To capture Gen Z users, short-video platforms are the most popular places to partner with collaborators. Almost 40% of Gen Z use TikTok and Instagram for search over Google, and 61% say they’re even more influenced by user-generated content since COVID.(1)
Social commerce will continue to play a big part in 2023 with platforms like TikTok continuing to offer more commerce and advertising functionality in their platforms and utilise the same powerful algorithms it uses for personalised video recommendations. Buy buttons will appear in more locations than ever before.
Brands and retailers that can capitalise on user generated content will seem more authentic and resonate with a younger audience.
The death of third-party cookies has been one of the largest talking points in ecommerce marketing in recent years and represents a turning point in customer privacy and how brands collect data.
Apple and Mozilla have already removed cookies, and Google is following in 2024. When Apple started letting its customers opt in to tracking in October 2021, advertisers lost 30% accuracy on targeting algorithms overnight which cost an estimated $10 billion USD in ad revenue. (2)
At least 28% of technology decision makers around the world expected changes to customer data and privacy regulations to hinder their 2022 growth goals. Which shows leaders and finding this a real challenge, though many are coming up with new strategies in the wake of this change.(1)
In 2022, 42% of brands plan to offer their customers personalized product recommendations through tools like quizzes, custom mobile apps, and first party or third-party behavioural data. And to encourage data sharing, 44% of brands already plan to be more transparent with their use of customer information. (1)
Only 33% of customers believe brands use their data responsibly, so there is space here for brands to use privacy to differentiate themselves and gain buyers trust in an area prime for change.
Due to these changes customer data platforms will continue to be an important part of a business tech stack the next few years from both a GDPR compliance and marketing point of view.
The cost per click for paid search ads increased by 15% between the second and third quarters of 2021 alone (2) and brands are losing a record average of $29 for every customer they acquire—a 222% increase in the last eight years (1). So, businesses must be smarter than ever in how they spend their money.
Many retailers and brands are refocusing their efforts on SEO due to these cost increases, making sure they are squeezing every bit of traffic possible out of organic channels instead of relying as heavily on their advertising budget. And as mentioned above, brands are also turning to new channels like TikTok and other social media platforms to get access to new customers.
Even with rising costs 41% of brands plan to increase their investment in paid search (2) and with that competition expertise is required to keep budgets in check and make sure this is put into the right channels.
Good quality marketing platforms like Klaviyo and Emarsys continue to be important as ever at getting buyers to return to your site and minimise cart abandonment. Data shows these are often the most effective tools in most digital marketer’s quiver and having the right flows setup can have a large impact on conversion rates.
Brands are now starting to leverage both retailers digital and physical spaces to promote their products. One big advantage of these spaces are ads are placed closer to the point of purchase which is where they are going to be the most effective at converting buyers.
In return, brands receive new insights and analytics on the effectiveness of their ads effectiveness and see results in real time. Which in a time where third party cookies are ending, this presents a new opportunity to get first party data insights and make sure advertising budgets are being put in the most effective place.
Coresight Research estimates that the global retail media industry will total $75.1 billion in 2022, up 80.1% from 2021. (5) Insider intelligence forecasts that retail media spending will approach $60 billion by 2024 (5). This makes it one of the fastest growing advertising channels.
According to a survey conducted by McKinsey in June 2022, 82% of advertisers plan to increase their retail media spending in the next 12 months. (5)
While Amazon is the biggest global player, we will continue to see other platforms leverage these spaces and marketers and advertisers make more use of these new ways to reach audiences.
Fast and free shipping is the new standard and a requirement for trading on many marketplaces, but supply chain issues make that hard to meet for many businesses.
Having a multicarrier model for fulfilment can help protect against issues with individual carriers and market conditions and this wasn’t truer than in 2022 with illness from Covid stymying a return to normality for many logistics providers and making it hard for them to keep up with demand.
Product shortages also motivate nearly half of all brand switching: 46% of consumers move to competitors who have the products they want in stock (1). This highlights the need for an effective warehousing and fulfilment strategy by leveraging good quality warehouse management practices, 3PL’s and multiple carriers where required to be able to meet buyer expectations, making sure you are accurately forecasting inventory and displaying correct stock counts so buyers aren’t being left disappointed.
With platforms like Shopify and inexpensive translations and tax & duty calculation applications, it is easier to reach new buyers in other countries and global warehousing solutions mean you can have stock where your buyers are should the demand be there or simply fulfil from your existing country using a global carrier.
57% of buyers surveyed by PayPal said they completed an international purchase in 2022, and according to research by emarketer (13), 70% of online buyers have made purchases from foreign sites. So, making sure you are servicing all potential customers is as important as ever (15)
More brands and retailers will open themselves up to the global markets in 2023 and leverage these improvements in technology that allows simplified cross border trade.
For many customers 2022 was a return to stores and the physical connection those spaces provide but buyers now are entering stores also with the expectations of the conveniences they receive online.
About three-quarters of U.S. shoppers research products online before making a purchase either online or in person and so brands and retailers who can bridge their on and offline worlds will see more loyalty from buyers.
“Online and offline are effectively one continuous experience,” says Shopify director of product retail and messaging, Arpan Podduturi. “Very few people walk into a retail store without having done their homework. They usually started on their phone. They’re following some brand and they go into stores with purpose.”
Showrooming is also a trend that has appeared in recent years where buyers will visit stores to touch and feel the products but will complete the purchase online. Showing the importance of considering the unified experience and not treating them as independent entities.
This means having things like an Omnichannel loyalty program, unified customer data and consistent customer service between online and instore. All things a good quality point of sale system that’s tightly integrated with your webstore can assist with.
Price is no longer the most important factor anymore with Environmental, social, and governance concerns influencing about half of global consumers. Particularly in western markets and amongst younger generations is this a growing trend.
According to a commissioned study conducted by Forrester Consulting on behalf of Shopify, 47% of the consumers said having a local presence was a significant factor for which brands they shop from. Consumers are 4x more likely to purchase from a company with strong brand values.(1)
And 77% are concerned about the environmental impact of the products they buy. (1) They’re willing to spend more money and accept slower shipping times—for the right brand.
Fifty-two percent of shoppers are more likely to purchase from a company with shared values, and 53% of brands are creating products in 2022 that align with their values.(1)
If you do take an ethical stance on social or environmental issues, then you need to live your values and demonstrate this consistently to customers otherwise it can seem hollow and unauthentic.
Collaboration will continue to be king in 2023, with brands partnering together to get access to new customers and the first party data that comes along with it. Technology has made it easier than ever attribute revenue and co-market with multiple parties.
Consumers want to connect with people, not just businesses. Almost one-third of shoppers say influencer recommendations are more important than recommendations from friends and family, and 71% of businesses expect online influencers to become even more important in the future.(1)
Good examples of this have been in the sneaker market with Nike collaborating with many non-competing artists and brands such as supreme and even collaborating with the eBay marketplace earlier this year (9). This sort of collaboration will start to work its way into other verticals in 2023 and could be a good way to get access to new customers.
A trend that has exploded in recent years across marketplaces and brand.com sites is free and easy returns. This was a lot easier an offering before the recent economic slowdown, but many businesses are now looking to rain this in 2023 as after crunching the numbers the benefits don’t seem to have stacked up.
That’s not to say returns should be made more difficult for customers and removing friction should be a priority, but businesses should be looking at other ways to keep this money in house through exchanges and other loyalty programs. Data should be driving business decisions and not just following trends, so if you are going to offer long free return periods, make sure you are measuring its impact and its having the intended effect of increasing overall conversion and sales. Use technology to automate the returns process as much as possible and make the returns experience omnichannel, if you are going of offer returns you need to make it easy is as any friction here will turn buyers to your competitors for their next purchase. As always, make sure you only offer what you can deliver as with any service you maintain.
Another trend that continued in 2022 was headless commerce. Headless architecture lets B2B brands separate the website’s front end from its back end. This structure gives retailers more freedom to build and customize anything they like and give more control over site speed, which as you will see below has possibly the largest impact on conversion and buyers have strong expectations around this.
- 79% of customers “dissatisfied” with a site’s performance are less likely to buy from them again. (8)
- 64% of smartphone users expect a website to load in four seconds or less. (8)
- 47% of online shoppers expect web pages to load in two seconds or less.(8)
Another advantage of headless is being able to deliver a more consistent experience across channels, which as we have mentioned elsewhere in this article, is key to being successful at Omnichannel retail. Having a single back end means your different front ends such as your website or mobile app have shared consistent content. It also means reduced IT costs as the backend won’t need to be updated to accommodate the front end whenever simple changes are required.
These costs savings do depend on the quality of the implementation and making sure the right reasons are being selected for going headless. In many cases headless does not make sense, so make sure you are making informed decisions if making the change. Often there is significant performance increases that can be made just by optimising the existing site before even needing to consider headless. Remember site speed and conversion is the goal, whatever achieves that in the cheapest and most efficient way is the best tech stack for your business.
As platforms like Shopify continue improve their headless offering and move to a more composable architecture. We will see more large and midmarket brands make the leap.
More than ever retailers will need good advice in 2023 to navigate an ever-challenging landscape. There are many options that make it easier to sell online more than ever, but it’s this abundance of options that also makes it easy to choose incorrectly and the wrong investment could have disastrous consequences to the long-term success of a business, especially for critical decisions like CRM or ecommerce platform.
Choosing an experience agency like SAI Digital can give you the expertise you need to achieve your digital goals in 2023.
For more information regarding customer experience, customer journey mapping and how you can implement it in your business, contact us.