Covid-19 was a tidal wave for e-commerce stores. When retail shuttered and travel halted, the e-commerce machine came in to fill the gap.
However, after the tidal wave there will be some slowing in the industry even if the long-term trends are intact. Here are five challenges ahead.
1) Slowing growth
In 2020, global e-commerce growth hit its largest single-year gain ever at 28 percent.
The expansion will continue, although it will be hard to replicate the same growth results of 2020, as well as predict the growth.
2) Less online time
Americans have been slow to fully return to normal activities.
When the whole population returns to normality, online shopping will likely suffer in favor of traveling, offline/retail shopping, and so on.
3) Facebook is getting harder for marketers
The period from March to May 2020 was golden.
Facebook still had its targeting power and CPMs reached the bottom, leading to good ROIs for marketers who were able to take advantage.
There’s a giant incentive to solve Facebook’s new problem, and marketers are still figuring that out.
4) Competition among existing companies
In 2020, Adidas unveiled a new five-year strategy to shift the focus to a DTC-first model.
Adidas’ goal is to double its revenue.
Unilever opened an online store for Ben & Jerry’s.
Nestlé launched an online shop called KitKat Chocolatory.
This is not the end of the game, but it’s certainly getting tougher.
5) Competition from new entrants
Every 30 seconds a new entrepreneur makes their first sale on Shopify.
Not every new entrepreneur will survive the e-commerce tempest, yet each one of them will gnaw at your margins.
Despite painting quite a scary scenario, it still makes a lot of sense to still be bullish on the future of e-commerce.
Facebook’s report on emerging shopper behavior
This is what Facebook said when announcing their report on emerging shopper behavior.
This might have been a bold claim 10 years ago, but we’re now in 2022.
Here are some interesting statistics from the report:
People are doing more research online before buying offline
66 percent of shoppers across markets use online resources to do research before visiting a physical store.
Social media is a huge e-commerce discovery channel
A whopping 84 percent of shoppers across markets made an in-store purchase after seeing an item on social media.
Your payment options matter
63 percent of shoppers say paying via messaging apps (like WhatsApp) encourages them to revisit a store.
It’s all about convenience: Facebook’s report statistics seem to support this.
People want to reduce the risk of making a bad purchase by reading reviews.
And they want to buy things via channels they’re already familiar with (like a messaging app that they already use).
On the topic of customer reviews
Customers find a mix of positive and negative reviews more trustworthy.
This is not our claim. This is a sentence that Google just added to their Business Profile on getting more reviews.
This is something many of us already knew, but it’s nice to see a company like Google acknowledge it as well.
Would you be more likely to trust a product’s reviews if it had:
- Nothing but 5-star reviews
- A mix of positive and negative reviews?
Naturally, the mix of positive and negative seems more genuine.
What this means for you
If you offer an incentive for people to leave a review, simply ask for their honest feedback instead of a positive review. It’s a win-win-win.
Customers won’t feel pressured, potential customers will trust your reviews more, and you’ll feel better knowing that customers told you what they really thought.
Success will heavily depend on the quality of your product, your marketing, ability to interpret data, and re-sell to your customers over and over again.
That’s why many e-commerce businesses are turning to subscription models.