By Dave Keighron, Head of Innovation and Professor of Marketing, Strategy and Entrepreneurship at University Canada West
The last two years have seen incredible growth for e-commerce, thanks in large part to the COVID-19 pandemic. As we enter the last quarter of the year, let’s look back at the trends we saw in 2021 and what we can expect to see in 2022.
Last year, e-commerce giant Shopify published a report outlining the five key trends e-commerce businesses should act on for 2021. Many other organizations and associations also identified similar trends within the e-commerce space.
Some of these key trends included:
Increased online competition due to COVID-19
Over the past couple of years, we have seen unprecedented growth in the digital marketplace. We have heard e-commerce success stories of businesses that flourished as customers could not access physical stores. But we have also seen complete devastation for some, such as resellers unable to access products to sell through online platforms such as Amazon.
As businesses scramble to meet the growing online demand and respond quickly to changes, we are starting to see cracks in business models that weren’t equipped to service customers in multiple places. This has opened the door for relatively unknown direct-to-consumer business models to seriously compete with long-established brick-and-mortar businesses that didn’t move quickly enough to meet their customers’ needs in an omni-channel world.
In 2022, businesses need to start or continue, to respond and be responsive to their customers’ needs no matter where they are through a multiple channel approach. Customers are using different ways to interact and engage with retailers, and retailers need to adapt and build a multiple channel approach to meet customers’ needs.
New consumer behaviours encourage retailers to make changes
As more customers move towards online shopping, retailers need to adapt their businesses to improve the customer experience and increase engagement.
Jamie Ritchie, Head of UX and Design at the Digital Marketing Institute, recently talked about how the growth in online shopping has changed consumer behaviour, which means retailers need to adapt to meet the needs of these new customers.
“As digital marketing becomes more and more sophisticated, customers expect more from your brand,” Ritchie said. “The rise of e-commerce means purchase transactions are happening on your website every minute of the day and with that, customers expect to be able to connect with your brand at any point of their journey.”
However, for many businesses offering 24-hour support is a challenge. This is where conversational marketing tools, like Drift, and chatbots, like Intercom, can help fill that role and have subsequently grown in popularity in 2021.
“Being transparent that the customer is speaking with a ‘bot’ is important, and it won’t have a negative effect as long as the customer’s needs are being met with well thought out conversation flows that are engaging and meaningful,” Ritchie said.
Businesses also need to apply new technologies, such as augmented reality (AR), 3D images and virtual reality (VR), to create a similar experience to what a customer would have in a physical store. Retailers can use VR technology to create a virtual changeroom, 3D imagery to allow customers to see all dimensions of a product or leverage AR to show how furniture will fit into a customer’s space.
Leveraging these new technologies will not only improve the customer experience but will also lead to further engagement with customers, providing organizations with more data to help personalize the consumer experience and retain customers.
New demands to get products faster has made fulfillment a competitive advantage
As technology advances, customers are becoming more demanding – not only do they want more convenient options to access products or services, but they also want it sooner.
Most customers surveyed today expect a minimum of a two-day turnaround in receiving their products or services. However, more and more customers expect to have their product delivered on the same or next day. This demand has led to more organizations looking at ways to improve and speed up their logistics processes. And more of these organizations are leveraging this potential into a competitive advantage over the competitors. Many large organizations, such as Amazon, Walmart and Best Buy, have diversified their business models to create new opportunities to provide logistical support to smaller retailers.
As more businesses move online, we need to start defining core competencies and how to best serve customers. It is next to impossible for small businesses to meet all the needs of customers. However, they can look to find strategic partners to help achieve these outcomes.
A customized experience and personalization are quickly becoming key components of building a brand
For several years, marketers have focused on building an organization’s brand strategy through brand awareness, brand equity (brand name, logo, etc.), and brand sentiment (the underlying emotion expressed in a mention of a brand). All these practices are still relevant when it comes to branding, but there is now a new approach to customizing and personalizing a customer’s experience with a brand.
Marketers need to work closely with consumers to personalize the customer experience through leveraging key internal and external data to better align the brand personality with the personalities of individual customers. For example, Tesla allows customers to design their own vehicle, Nike and Adidas allow customers to design their own shoes and many fashion companies allow consumers to design and customize clothes.
Increasing costs and new regulations around privacy prompt shift to focus on retention
From launching new reward or loyalty programs to engaging customers with new products and services, businesses will need to get creative and find ways to continuously engage with customers and encourage them to participate to build long-term brand loyalty.