Online shopping is quickly becoming the preferred way to buy goods for millions of people around the world. By 2021, global eCommerce sales are expected to reach $4.5 trillion, nearly double the expected volume of 2017. To accommodate this growth, retailers need to find innovative ways to engage with their customers more effectively.
Fortunately, the increasing accessibility of modern technology has led to several trends in eCommerce that make online shopping easier for both retailers and their customers.
Augmented reality (AR) is a fundamental shift in the way we interact with computers and the world. AR overlays computer-generated images on top of the real world. Unlike virtual reality (VR), which creates a completely simulated environment, AR adds to or modifies the user’s current surroundings.
AR works with as little as a camera and a screen, meaning customers can use existing devices (such as a smartphone or tablet) as full AR platforms. This puts AR capabilities in the hands of an estimated 2.53 billion people around the world. It’s not just a fad, either; according to a report by Retail Perceptions, 40% of consumers would pay more for a product if they could first experience it through AR.
One way AR is transforming eCommerce is in the furniture industry. Using just their smartphones, Ikea customers can see how furniture will look and fit in their homes in real time. Users point their cameras, choose an item from the app’s product catalog, then watch as the item automatically moves on their screen to fit the space.
This technology isn’t restricted to high-end devices, either: Ikea’s app is built on ARKit, an Apple-developed AR platform available on almost all iOS devices after the iPhone 6s. With ARCore rolling out for Android devices and the Web, AR is going to become increasingly prevalent in the lives of millions of shoppers.
Payment processing has been a challenge since the beginning of online shopping. Retailers had to store payment information themselves (opening themselves to liability in case of a data breach), or rely on third-party payment processing systems and lose revenue to merchant fees. eWallets aim to resolve this by providing a way for customers and retailers to exchange money and perform transactions without exposing sensitive data such as credit card numbers.
For consumers, eWallets are a secure alternative to using credit cards both in-store and online. Credit card fraud accounted for $24.71 billion in losses in 2017, and nearly half of credit card owning Americans have had their card information stolen in the past 5 years. While credit cards aren’t going away, eWallets reduce risk by placing credit card details in an encrypted vault that can only be opened using a PIN, password, fingerprint, or face scan.
However, eWallets aren’t a magic solution. For one, they become a single point of failure: if an attacker gains access to the wallet, then he or she could gain access to any cards or bank accounts linked to that wallet. Retailers will also need to consider the multitude of eWallet providers their business needs to support such as Google Pay, Apple Pay, Samsung Pay, PayPal, and Stripe.
Despite their limitations, eWallets are continuing to develop as preferred payment methods, and by 2021 they’re expected to become the most popular payment method for online transactions.
An increasing number of websites are turning to automated chat assistants (or chatbots) to help customers perform actions. Chatbots mix natural language processing, artificial intelligence, and machine learning to communicate with users as if they were a real person. The result is a seamless, interactive, and realistic chat experience that responds almost instantaneously to customers.
Compared to traditional customer service representatives, chatbots are faster, scalable, and can pull from enormous data sources to tailor results specifically to the customer’s needs. Chatbots are becoming so popular that by 2020, they’re expected to manage 85% of customer service interactions.
One of the most successful eCommerce chatbots is eBay’s ShopBot. Launched on Facebook Messenger in 2016, ShopBot lets users search through eBay’s extensive catalog via text or by providing a photo. Searching is contextual, which means ShopBot provides different, more relevant results for each individual user. The result is a shopping experience that’s not only faster but requires less effort on the user’s side.
Mobile Device Optimization
Mobile devices account for the majority of online interactions today, and eCommerce is no exception. According to OuterBox CEO Justin Smith, 62% of smartphone users made an online purchase using their phones in the last half of 2017. That translates to over 75 million shoppers in the US alone, and that number is only going to increase as smartphones and tablets become more prevalent around the world.
However, simply having a mobile-friendly website isn’t enough for most shoppers. 40% of shoppers who have a bad experience while shopping will abandon the site for a competitor. Despite this, an incredible 84% of shoppers have had difficulty completing a mobile transaction.
A strong mobile presence won’t just make you more accessible to shoppers, but it will also give you a measurable advantage over your competitors. SEO optimization, responsive layouts, SMS integration, and visually-oriented content are all techniques that will help create an engaging mobile experience.
Dynamic and Intelligent Pricing
Dynamic pricing — adjusting prices based on market conditions — isn’t new to commerce. Retailers use dynamic pricing to maintain profitability while responding to changes in supply, customer demand, and other factors. But while this was predominantly manual, technology has resulted in new advancements to the dynamic pricing process, making it both easier and faster.
Intelligent pricing is one such advancement. Intelligent pricing leverages artificial intelligence to continuously analyzes market conditions and generate optimal prices. These data points include customer demand, competitor pricing, and even shipping costs. This allows you to make strategic pricing decisions instantly.
Assortment Optimization and Lifecycle Intelligence
Retailers are also turning to advancements in technology for managing their product catalogs. Like intelligent pricing, computer-assisted assortment planning leverages historical data and current market trends to measure the competitiveness of different products. This lets you identify products to add, remove, or keep based on changes in demand and sales performance.
AI has the potential to drive automated real-time assortment planning decisions. Known as assortment intelligence, these tools can analyze product performance data from you and your competitors in order to optimize your catalog. This can lead to a much smaller inventory, but a larger revenue stream resulting from higher stock turnover and reduced costs. For example, while Costco only carried 5,000 products in their online store in 2012, it turned over its inventory 14.1 times and generated an average of $27.7 million in sales per SKU.
Equally important to current market trends are historical trends. Identifying trends can provide insight into how well a product is performing, how sales change based on trends in the market, and which factors influence the effectiveness of a marketing campaign. In addition to helping managers drive the direction of the business, the information gathered from this process can also feed into the automated pricing intelligence and assortment planning processes.
Success in the eCommerce industry doesn’t just mean staying ahead of your competitors but also making sure you’re compliant. Minimum Advertised Price (MAP) monitoring ensures that the price of a product doesn’t fall below a certain price set by the product’s supplier. Various software tools can perform automatic MAP monitoring of not just your inventory, but also your competitor’s.
There’s a chance that MAP monitoring may become irrelevant. With prices changing constantly due to intelligent pricing strategies, it’s becoming increasingly difficult to detect MAP violations. One customer may be presented with a different price than another. eCommerce retailers also frequently use promotions and strategies such as in-cart pricing to mask the true price of an item until later in the transaction.
eCommerce is a rapidly transforming industry. 80% of Americans with Internet access have made an online purchase in the month of December alone, and sales are expected to reach nearly $2.8 trillion for 2018. Adopting these trends will allow retailers to make better decisions faster than their competitors while offering a better experience to their users.