By Hassan Mikail, Head of Shipa Ecommerce
A Changing Growth Dynamic
- China decelerates
China’s e-commerce sector is experiencing a slowdown in growth as the market matures and policymakers shift their focus to the rural economy. Over the next five years, e-commerce is expected to grow 23.6% from 2020 levels. That’s still healthy, but nowhere near the 70.6% growth rate for the previous five years.
Slowing growth rates are already apparent. Alibaba sales for 2021 Singles Day, the mammoth annual shopping event, were $84.5 billion – a record and up 8.5% from 2020 – but the smallest increase in growth since the start of the festival in 2009.
- 10 Years of Growth in 3 Months in the U.S., but …
At the outset of the pandemic, the United States witnessed a decade’s worth of growth in e-commerce penetration in just three months’ time, according to McKinsey. Consumers continue trying new stores, websites, brands and types of shopping experiences.
Globally, though, the 2021 e-commerce growth rate is unlikely to match the pace set in 2020. Oberlo forecasts a 17% increase in global e-commerce sales for 2021 vs. nearly 26% in 2020.
- Emerging markets outpace others
“India, Brazil, Russia, and Argentina are all projected to post at least 26% growth in retail ecommerce sales this year,” says eMarketer.
The Brookings Institution says the “latent demand for e-commerce in emerging markets remains large.”
Changes in the Warehouse
- Smarter robots
Gartner predicts that warehouse automation and digital transformation will reduce inventory carrying costs by 30% in North America and Europe by 2024. Driving much of that reduction will be the arrival of upskilled, multi-skilled or dual-purpose robots to replace robots that specialize in a single task. The next generation of machines will be able to perform more than one job. Imagine a smart machine that could conduct warehouse inventory, replenish the shelves — and clean the floors.
- AI-led warehouse configuration
Amazon’s new fulfillment center in Sydney, Australia will use artificial intelligence to store 50% more per square meter, accelerating shipping times and allowing for greater product selection.
- More micro-fulfillment
Retailers everywhere are experimenting more with micro-fulfillment centers – small, on-premise spaces devoted to processing online orders intended for pickup by customers or third-party delivery specialists. Walmart is among the many companies expanding the use of micro-fulfillment, which typically allows shoppers to drive up and scan codes to receive their orders.
Investment in businesses such as Fabric, a U.S.-based company that provides automated micro-fulfillment technology for grocers and general merchandise retailers, is surging along with growth in the same-day delivery market.
Look for more retail lockers – known in the business as Forward Deployment Fulfillment Centers (FDFCs) — in supermarkets, malls, office buildings, and other public places.
Changes in Delivery
- Low-emissions and no-emissions delivery
B-Line Urban Delivery in Portland, Oregon, has two revenue streams. One is its last-mile logistics delivery business, which delivers using large custom cargo bikes mounted with boxy containers that carry parcels. The other stream comes from selling advertising on the visually striking containers. B-Line and others are meeting the desire of cities and businesses to find ways to cut emissions and vehicle congestion.
- Creative sell-deliverer partnerships
Bed, Bath & Beyond is going to Uber Eats to launch a baby and kids vertical that will sell and perform same-day delivery of diapers, wipes, baby food and other items to new parents. Products from 750 Bed Bath & Beyond stores are available for on-demand delivery through the Uber and Uber Eats apps.
Changes in Customer Experience
- Increased use of voice search
E-commerce sellers need to optimize their sites for mobile voice search, which has grown in use as voice assistants on mobile phones and smart devices have improved. The number of voice shoppers is expected to grow 55% in 2022, according to Entrepreneur.
So sellers need to make sure that voice search makes commonly requested information – web address, physical address, contact number and business hours – easily accessible via voice. Entrepreneur recommends online sellers adopt strategies that identify and rank keywords and phrases most likely to be used in voice searches.
- Augmented reality (AR) to “see” what you’re buying
Up until now, AR has been of greatest interest to apparel brands because it allows consumers to virtually try on garments they are considering for purchase. But Oracle Netsuite urges companies with other types of businesses to take note of the rapid advance of AR technology.
Consumers doing home remodeling, for instance, will want to use AR to “see” what that new room will look like before they agree to remodel. AR can show them the flooring, wall colors, furniture, artwork and more.
- Personalization on steroids
Online sellers are relying more on artificial intelligence and machine learning to predict individual shopping habits based on their customers’ browsing and shopping histories. At the same time, Deloitte says, consumers are increasingly willing to share their personal data in return for the prospect of customized or personalized products and services. “Mass personalization” is how Deloitte describes it.
One example: Enfamil, which asks expectant mothers for their babies’ due dates and sends them personalized information throughout their pregnancies.
In one study, retailers that were able to scale personalization boosted revenue by 25%, according to Big Commerce.
On the Back End
- Open source e-commerce
Open source software systems have been popular with smaller e-commerce players, but larger companies have tended to favor proprietary solutions. That’s changing, particularly when it comes to user interface features (marketing, product catalogs, cart & checkout, order status, chat and support, account management) and a smaller set of APIs.
McKinsey says open source software typically provides more speed and flexibility, and that large e-tailers have overcome most of their doubts about scalability, security, and support requirements.
“Open source for e-commerce is an increasingly viable option for large companies, especially for those that have the requisite engineering talent and regard e-commerce as an important strategic consideration,” McKinsey says.