Trends in eCommerce 2022
In the last 2 years eCommerce has been facing new challenges: Covid-19, broken supply chains - onshoring, nearshoring, changes in last mile logistics and restrictions on traditional trade, war in Ukraine resulting in sanctions, rising prices of fuel, raw materials and components, inflation, tax changes affecting revenues and creating a sense of uncertainty among consumers. On the other hand, there is a continuous growth - in some markets even a jump - of sales through electronic channels, and e-tailers are finally starting to take full advantage of the benefits of the approach: remote, contactless, self-service.
Megatrends
War on data
Customer data, the way how it can be collected and used, and consumer identification are becoming a fierce battlefield between technology and service providers, intermediaries, national or international regulators, various industry organisations and the business community.
Impact on eCommerce:
The lack of data enabling targeting, segmentation, personalisation, identification and distinguishing anonymous customers from regular ones makes it very difficult not only to conduct but also to start any activity on the Internet, the so-called cold start. These changes have a negative impact on advertising and marketing effectiveness, sales, customer service, building commitment and loyalty. On the other hand, using the potential of the so-called 1st party data collected by commercial companies allows them to build their own advertising systems for producers or suppliers of goods, the so-called Retail Media, and generate significant revenues using them.
Areas:
expiry of support for 3rd party cookies in all web browsers in 2023.
content fortress - a model of building a stronghold based on 1st party data: media, marketplaces, intermediaries, telecoms, service providers, Retail Media
customer identification cross channel, cross device - own ID graph
restrictions on user tracking in the Apple ecosystem: web browser, all mobile apps, email marketing, logging in with Apple ID etc
the role of technology tools and market standards: CDP, Marketing Automation, CRM, Consent Management, TCF, Programmatic buying
Impact: big
Regulation affecting technology companies
The technology industry has become so large that technology companies, taking advantage of natural mechanisms facilitating the creation of monopolies (i.e. economies of scale, network effect, globalisation of the Internet, etc.), dominate the market for digital consumer solutions, which is met with a natural reaction from regulators in both national and international markets.
Impact on eCommerce:
Limitation and impediment of customer and data acquisition opportunities. Balkanisation of global IT solutions through the requirement to adapt them to regulations in local markets. High costs of adapting organisations to diverse, inconsistent local regulations.
Areas:
Digital Market Act, Digital Service Act, Data Act in the European Union regulating gatekeepers and technology service providers
Antitrust regulation: United States, European Union, China, etc.
Restrictions on the ability to operate in foreign markets (including IPOs) national or even local - cities: China, India, United States, Netherlands
Charters and regulatory compliance orders imposed by local regulators on Google, Apple, Facebook, Amazon etc.
Environmental Social and Corporate Governance regulations
Impact: big
Mass application of Machine Learning/Artificial Intelligence
The rapid development of machine learning technology makes it possible to use it in all areas of an organisation's operations where we are dealing with large sets of digital data and the possibility of using different types of algorithms to analyse them, build and apply models and automate routine processes.
Impact on eCommerce:
Ultimately every IT solution that collects any type of event data - customers, competitors, products, prices, sales/returns, supply chain/logistics, warehousing etc will have a built-in analytics module using dedicated Machine Learning models. The use of ML will be as common as the current use of ordinary databases and BI analytics or spreadsheets.
Areas:
- advertising and marketing - personalisation, segmentation, targeting
- logistics and supply chain - prediction and optimisation
- sales - prediction and optimization of resources
- payments - fraud prediction and optimisation
- content production - improving quality and generating images, text, sound, video
- search - visual and voice search & virtual try on (via AR)
- autonomous shops - shops in physical locations that recognise goods and complete transactions in an unmanned form
Impact: big
Metaverse
Metaverse is a concept of a new generation of the Internet based on a virtual, three-dimensional world, which users enjoy thanks to virtual and augmented reality sets. The idea is to bring absolutely all social interaction into this virtual world.
Impact on eCommerce:
Moving the entire business to a 3-dimensional virtual world replicating in detail the same functions of the organisation as in the flat 2-dimensional Internet and the 3-dimensional real world but enriched with the possibility of using current and new IT solutions and new and current data.
Areas:
Next generations of VR, AR, MR hardware as interfaces to enable the Metaverse
Aiming for photorealistic quality of world representation - both completely fantasy worlds and mirror copies of reality
Taking current social interactions to a new level, as well as completely new social interactions
Virtual goods and services
Avatars, bots and Non-Player Character (NPC) - an NPC is any virtual character that is not controlled by a living person
Telepresence, remote interaction in three-dimensional reality
Next generations of VR, AR, MR hardware as interfaces to enable the Metaverse
Aiming for photorealistic quality of world representation - both completely fantasy worlds and mirror copies of reality
Taking current social interactions to a new level, as well as completely new social interactions
Virtual goods and services
Avatars, bots and Non-Player Character (NPC) - an NPC is any virtual character that is not controlled by a living person
Telepresence, remote interaction in three-dimensional reality
Impact: difficult to assess at this stage
Web3
The concept of a new iteration of the internet, underpinned by blockchain technology, smart contracts, radical decentralisation of resources and a token-based economy. Often presented as a contrast to Web 2.0, in which data and content are centralised in a small group of companies, sometimes referred to as 'Big Tech'.
Impact on eCommerce:
The potential of Web3 so far rests on the digitisation not of the products themselves but of the unambiguous assignment of inviolable property rights to goods. This allows goods to be traded on a fully decentralised blockchain-based trust system, providing new methods of rewarding consumer engagement/loyalty.
Areas:
Cryptocurrencies - a digital currency designed as a medium of exchange via a computer network (blockchain) that is not dependent on any central authority, such as a government or bank, to hold or sell e.g. Bitcoin, Ethereum,
Stablecoins - cryptocurrencies where the price is linked to the cryptocurrency, fiat money or exchange-traded commodities (i.e. precious metals or industrial metals) e.g. Tether, USD Coin, Binance USD
Central Bank Digital Currency (CBDC) - A central bank digital currency is a digital currency issued by a central bank rather than a commercial bank
Non Fungible Tokens (NFT) - a non- fungible token is a non-exchangeable data unit stored in a blockchain, a form of digital ledger that can be sold and traded. Types of NFT data units can be linked to digital files such as photos, videos and audio and even durable goods.
Decentralized finance (DeFi) - decentralized finance offers financial instruments without relying on intermediaries such as brokerages, exchanges or banks, through the use of smart contracts on blockchain
Decentralized Autonomous Organization (DAO) - A decentralized autonomous organization, sometimes referred to as a decentralized autonomous corporation, is an organization represented by rules coded as a computer program that is transparent, controlled by the members of the organization and not influenced by the central government.
Smart contract - A smart contract is a computer program that is designed to automatically perform, control or document events and actions according to the terms of a contract most commonly defined as a program stored in a blockchain that runs when predetermined conditions are met.
Tokenization of all assets and use of smart contracts to automate processes. Token understood as a digital asset that operates on the blockchain of cryptocurrency, like many decentralised financial tokens (or DeFi). They potentially have a huge range of functions, from helping to enable the decentralised exchange of goods to selling rare items in computer games.
Cryptocurrencies - a digital currency designed as a medium of exchange via a computer network (blockchain) that is not dependent on any central authority, such as a government or bank, to hold or sell e.g. Bitcoin, Ethereum,
Stablecoins - cryptocurrencies where the price is linked to the cryptocurrency, fiat money or exchange-traded commodities (i.e. precious metals or industrial metals) e.g. Tether, USD Coin, Binance USD
Central Bank Digital Currency (CBDC) - A central bank digital currency is a digital currency issued by a central bank rather than a commercial bank
Non Fungible Tokens (NFT) - a non- fungible token is a non-exchangeable data unit stored in a blockchain, a form of digital ledger that can be sold and traded. Types of NFT data units can be linked to digital files such as photos, videos and audio and even durable goods.
Decentralized finance (DeFi) - decentralized finance offers financial instruments without relying on intermediaries such as brokerages, exchanges or banks, through the use of smart contracts on blockchain
Decentralized Autonomous Organization (DAO) - A decentralized autonomous organization, sometimes referred to as a decentralized autonomous corporation, is an organization represented by rules coded as a computer program that is transparent, controlled by the members of the organization and not influenced by the central government.
Smart contract - A smart contract is a computer program that is designed to automatically perform, control or document events and actions according to the terms of a contract most commonly defined as a program stored in a blockchain that runs when predetermined conditions are met.
Tokenization of all assets and use of smart contracts to automate processes. Token understood as a digital asset that operates on the blockchain of cryptocurrency, like many decentralised financial tokens (or DeFi). They potentially have a huge range of functions, from helping to enable the decentralised exchange of goods to selling rare items in computer games.
Impact: difficult to assess at this stage
More: Crypto Center
Cloud computing and API proliferation
The availability of cloud infrastructure, the entry into the market of the National Cloud Operator offering Google and Microsoft services, the announcement of the launch of the AWS region and the mass adoption of SaaS and no-code solutions by business customers are rapidly changing the landscape of IT solutions in organisations by allowing them to get rid of their hardware infrastructure.
Impact on eCommerce:
Ability to freely scale IT hardware resources, i.e. processor performance, memory capacity, etc., ensuring adaptation to sudden traffic surges. Easy construction of software infrastructure by means of ready-made SaaS solutions, combining various solutions into enterprise stacks via API. Faster "time to market", onboarding and training of business employees, cheaper and easier to optimise costs of IT infrastructure and solutions.
Areas:
Software as a service (SaaS) - Software as a service enables the use of applications running on cloud infrastructure accessible on various client devices via, for example, a web browser. The service recipient does not manage or control the cloud infrastructure, eliminating the need to install and run the application on the client's computer. The SaaS model shifts the responsibility for installation, management, updates, technical support from the client to the service provider, and assumes cyclical payments (subscription) for access to the programme, which becomes a permanent expense for the business user, not a one-off.
Headless - software capable of running on a device without a graphical user interface. Such software receives input and provides output through interfaces i.e. Application Programming Interface (API) - a set of rules that describe how programs communicate with each other. Traditional websites have their own backend and frontend (graphical user interface). All elements run on the same code and communicate to form the website as a whole. A headless frontend is a standalone piece of software that communicates with the backend through an API.
Microservices and containerization - a style of service-oriented computer application development that treats an application as a collection of loosely coupled small services that communicate through lightweight communication protocols. Applications (processes, configuration and dependencies) are placed in a virtual unit called a container. From the application point of view, these containers are separate and independent instances. Such architecture allows to increase the reliability of the infrastructure, the availability of applications and the services they offer.
Progressive Web App (PWA) - a web application that is launched like a regular website, but works like a native mobile application providing the ability to, among other things, save the application icon on the desktop, work offline, use push notifications, etc.
No code, low code - low-code IT solutions require the user to have basic programming knowledge, while no-code systems are solutions based 100% on drag-and-drop interfaces, which do not require any programming knowledge. No-code platforms are addressed primarily to business users. They allow for the implementation of all functions and workflows within the solution directly in the application, while low-code - are intended for programmers who want to save time and reduce the costs of a given project.
Software as a service (SaaS) - Software as a service enables the use of applications running on cloud infrastructure accessible on various client devices via, for example, a web browser. The service recipient does not manage or control the cloud infrastructure, eliminating the need to install and run the application on the client's computer. The SaaS model shifts the responsibility for installation, management, updates, technical support from the client to the service provider, and assumes cyclical payments (subscription) for access to the programme, which becomes a permanent expense for the business user, not a one-off.
Headless - software capable of running on a device without a graphical user interface. Such software receives input and provides output through interfaces i.e. Application Programming Interface (API) - a set of rules that describe how programs communicate with each other. Traditional websites have their own backend and frontend (graphical user interface). All elements run on the same code and communicate to form the website as a whole. A headless frontend is a standalone piece of software that communicates with the backend through an API.
Microservices and containerization - a style of service-oriented computer application development that treats an application as a collection of loosely coupled small services that communicate through lightweight communication protocols. Applications (processes, configuration and dependencies) are placed in a virtual unit called a container. From the application point of view, these containers are separate and independent instances. Such architecture allows to increase the reliability of the infrastructure, the availability of applications and the services they offer.
Progressive Web App (PWA) - a web application that is launched like a regular website, but works like a native mobile application providing the ability to, among other things, save the application icon on the desktop, work offline, use push notifications, etc.
No code, low code - low-code IT solutions require the user to have basic programming knowledge, while no-code systems are solutions based 100% on drag-and-drop interfaces, which do not require any programming knowledge. No-code platforms are addressed primarily to business users. They allow for the implementation of all functions and workflows within the solution directly in the application, while low-code - are intended for programmers who want to save time and reduce the costs of a given project.
Impact: medium
Trends
“Marketplacisation” - Build your own Amazon
The marketplace, or digital exchange that connects supply and demand and ensures the smooth flow of goods or services, has become the winning business model of the last 10 years. Self-service sales of goods by independent merchants on online marketplaces aggregating customer demand (often also in the auction model) has also made it possible to diversify revenue sources - from sales or fulfilment commissions, to selling advertising to business customers or consumers participating in paid benefit and loyalty programmes.
Impact on eCommerce:
Further large eCommerce providers and multi-channel retailers are launching their own marketplace platforms, expanding their product or service portfolios and dominating ever wider areas of the market. Manufacturers or players with strong brands can implement Direct-2-Consumer strategies or use marketplaces as additional distribution channels.
Areas:
- Every major eCommerce will have its own marketplace, either as an open exchange for all willing sellers or based on manual selection of partners
- Marketplaces mediate the sale of both products and services
- You can find both niche marketplaces with a broad portfolio of products in a particular segment or mass marketplaces trading goods from many segments
- There are many off-the-shelf IT solutions available for building marketplaces
- Marketplaces are building business moats by automating an increasingly broad spectrum of workflows on both sides of the supply and demand markets
Impact: big
“Fintechisation” - Start your own bank
Fintechs, like Marketplaces, are taking the world by storm. Nothing stands in the way of commerce using its ideal position as an intermediary and relying on financial flows between suppliers of goods and their buyers to build a broad portfolio of diverse, proprietary financial services.
Impact on eCommerce:
Major retailers have long realised that loans to consumers who don't have enough 'until payday' and longer payment terms to suppliers offer the opportunity to build additional margin on cashflow. Today, information technology, data and the ease of fintech models allow the biggest players to create their own financial services, smaller retailers have a range of service providers offering similar solutions.
Areas:
Buy now pay later (BNPL) - deferred payments - delay or split the cost of purchases into instalments without paying interest, unless the customer misses a payment
Proprietary financial services - proprietary cards, loans, discounts, guarantees, pre/post payments, instalments, etc.
Deferred payments linked to an extended return period - allows you not to pay for goods for the time remaining to return e.g. 100 days
Digital wallet - a digital wallet (e-wallet), is an electronic device, online service, mobile application or software that allows one party to transact electronically with another party by exchanging units of currency for goods and services
New payment methods - pay by link, BLIK, mobile, contactless payments
- Crowdfunding - crowdfunding, a form of financing various types of projects by the community that is or will be organized around these projects
Impact: big
Więcej: FinTech
Retail Media - Earn money on your own Googleu
Retailers have been making money from advertising for a long time, but it was not until the scale of Amazon's success that retailers took a fresh look at their own e-shops as a new type of advertising space ($9.7 billion Amazon advertising revenue in the quarter, the 3rd largest advertising player in the US after Google and Meta (Facebook)). More and more retailers are launching advertising systems that allow ads to be aired in search results, in banners emitted both on their own pages and, based on knowledge of their own customers, outside their own online space (via DSP systems - Demand Side Platforms).
Impact on eCommerce:
With first-hand knowledge of customers' own preferences (goods search, basket content and composition, shopping frequency and repetition, device type/operating system, household information, age, gender, size, weight, preferences for colours, diets, material textures, etc.), interactions with advertising, susceptibility to promotion, value of final transactions, payment method, delivery locations and even returns - eCommerce has much more to offer advertisers than online publishers or digital intermediaries. Advanced advertising systems can provide a significant new source of revenue.
Areas:
Use of your own customers' 1st party data to sell targeted, personalised advertising
In the marketplace model, possibility of selling ads to merchants trading in our marketplace, as well as manufacturers who want to increase the scale/share of sales of their own goods on eCommerce sites, e.g. FMCG
The possibility of issuing campaigns in the auction model (real time bidding) which increases their price - the so-called buy box auction
Positioning of advertising within your own online properties - search, display, email marketing, push notifications etc. but also advertising leaflets or samples in physical deliveries
Use of Demand Side Platform (DSP) tools allowing you to sell advertising to your own customers on independent external online properties to independent advertisers
Hyper-personalisation of advertising, targeting campaigns based on data not available anywhere else
ready-to-use IT tools enabling the launch of Retail Media class solutions
Impact: big
Q-commerce & Dark stores/Kitchens
A model that involves delivery of products in a maximum of a few tens of minutes (15-30 mins) after ordering, often via sub-contracted couriers. Q-commerce can use regular retail outlets or restaurants as sources of goods, or dedicated distribution centres that deal exclusively with shopping or cooking for online customers (dark store/kitchen).
Impact on eCommerce:
The model responds to the needs of impulse purchases of some, e.g. missing goods (small value of the shopping basket), with a not very wide range of products in small but densely scattered warehouses located as close as possible to the sources of demand - housing estates, office complexes. At the current stage, the business model is not fully verified and is heavily subsidised by venture capital. In some countries, its operation is subject to municipal restrictions.
Areas:
immediacy - guarantee of fast delivery to address impulse buying
limited product portfolio - small selection of basic necessities or ready-made meals
hyper-locality - the requirement to have a dense network of dispersed warehouses or restaurants close to buyers
Mobile first - a mobile application as a purchasing tool for customers and service by suppliers
The requirement to match the appropriate scale of outlets and product portfolio to demand in a given location, as well as a logistical structure that enables delivery at the declared speed
Impact: medium
Live Commerce
It involves selling products online via live video streaming, where shoppers interact with the seller and the brand in real time. For Live Commerce to work, it requires collaborative tools such as - video streaming, online chat and an integrated shopping cart for order processing and payment, all working in real time and moderated to ensure the highest quality of service. Consumers can stream a product demonstration, chat with a presenter and shop remotely from the comfort of their own home.
Impact on eCommerce:
Live commerce, carried out by influencers building their own live commerce empires, is the domain of Asian countries, while in the US it is more a case of moving teleshopping from the traditional TV screen to the Internet and carrying it out live. Slowly, this form of sales is also breaking through to the European market. Dedicated full-featured platforms for live trading are provided by both domestic and foreign start-ups, as well as partly by online platforms such as YouTube, Meta (Facebook).
Areas:
Teleshopping by traditional TV channels in a new online distribution channel
Influencers generating sales for independent merchandise providers based on their own audience groups
Dedicated multi-functional live video sales solutions or limited online platforms provided by market leaders testing the new sales model, often requiring integration with existing eCommerce solutions
The requirement to involve professional presenters who can work live during video broadcasts, know and understand the features or benefits of the products, professional or semi-professional filming studios, editors, sound engineers, lighting engineers, beauticians, wardrobe staff, etc. increase start-up costs
Impact: medium
Shortening the purchase path
Recognising the increasingly shortening attention spans of internet users (~8 seconds), technology and eCommerce platform providers, advertising technologies, online publishers, payment providers are all trying to leverage their solutions to make the ad impression as close as possible to the purchase of goods. One click shopping, which we have known for years, is slowly being replaced by the possibility to purchase goods in the ad itself, whether on social media platforms or video, without the need to redirect the consumer to the basket and complete the transaction process.
Impact on eCommerce:
Each subsequent step in the transactional process causes us to lose some portion of consumers interested in purchasing, hence the continuous optimisation of the shopping experience is one of the key challenges of any eCommerce company. Shortening the transaction path to an ad integrated with the shopping basket, our profile e.g. in Social Media and electronic wallet significantly affects the scale of customer conversions.
Areas:
The growing role of creation and content in building customer interest and engagement
A range of supporting technology solutions - Dynamic Creative Optimization, Marketing Automation, Connected/Addressable TV, Customer Data Platform, Data Management Platform/Demand Side Platform, Adserver, Content Management Systems, Digital Asset Management
The growing role of customer data and insight in increasing conversions
Requirement for full integration of advertising and transactional system
Impact: medium
Subscriptions/membership programmes
The fight for customers and their positive experience and convenience has led some e-traders to introduce programmes allowing recurring payments for content, products or services. More and more often we can also find membership programmes guaranteeing a number of different benefits e.g. free fast delivery of goods, access to unique content e.g. music, films, ebooks or services e.g. Cloud for documents or photos, guarantee of exchange of devices for the newest ones coming on sale, anonymisation and privacy protection, special events, access to unique products, pre-sales etc.
Impact on eCommerce:
For consumers, membership or subscription solutions are designed to make it easier for them to purchase (pay for) a wide range of benefits and to be able to use them freely at a specific time. From a business perspective, they are aimed at building a business moat making it difficult for competitors to take over loyal customers "tied" to the vendor by means of the service.
Areas:
A wide portfolio of products or services provided in-house by the e-shop/platform as part of its portfolio or on the basis of partnerships extending or deepening its offer
Freedom of solutions - both digital and traditional products, online and offline services
Construction of the so-called Rundle (Recurring Revenue Bundle) - rich packages of paid solutions in a recurring model
Impact: medium
Re-commerce
Selling (sometimes renting) previously owned, new or used products through online channels to buyers who use them, repair them if necessary, and then reuse, recycle or re-sell (return) them.
Impact on eCommerce:
With increasing public awareness of the environmental costs of production and distribution, or even the impossibility of selling some goods, more and more manufacturers and traders are addressing consumers' needs by introducing models that facilitate the marketing, repair or lease of new or second-hand goods.
Areas:
Various models - renting, lending, repairing, reselling new and used goods
Some companies carry out these functions through their own dedicated online or offline platforms, others enter into partnerships with independent solution providers and services
Addressing Environmental Social and Corporate Governance regulations or CSR policies
Impact: small
Contact us
