What web merchants will face in the near future?
E-commerce is all about growth. This fact does not necessarily mean something positive for online retailers. Having seen both sides of the coin, in addition to more money in their accounts, merchants are already noticing the challenges that come with it. Shopify’s latest creation, the The Future of Commerce. Trend Report 2022 makes it clear that there is something to fear, but for every disease there is a cure, or rather, for most. Are the future ills of e-commerce likely to heal?
The appetite grows with the food!
With increased earnings comes increased competition, and this will directly impact the higher cost of acquiring customers. We’re talking about competitive resources invested in marketing, logistics, personnel, tools and their service. We are talking about the development of the platform in terms of ux, artificial intelligence or blockchain architecture. Online customers are growing by the day, but the current market situation favors larger and more experienced brands, especially when looking at the next problem.
The word of the future, or scarcity!
Pandemic has caused an increase in online buying, yes. However, it has contributed to the breaking of supply chains between entities and countries. Communication routes are no longer the way they used to be, resulting in the current crisis. Huge companies that have control over customer travel data, such as Amazon, are in a much better position. As thedrum notes.com, smaller markets cannot compete with such a giant, which encourages stagnant store development. These corporations can also negotiate much better supply terms with suppliers and have better back-up in the face of unforeseen situations, which puts them on a market pedestal.
The report also details that resources and staff will shrink significantly over the next few years, which will not have a positive impact with estimated increases in demand. Transportation costs will also rise, due to limited access to containers, blocked ports and rising fossil fuel prices. The average cost of a shipping container is now more than $10,000, compared to four times less in 2016. Customer data will also be in short supply. Laws mandating an end to cookie collection will reduce profitability and ad revenue. It is estimated that 80% of marketers will abandon this mode of information retrieval and switch to another model. Unfortunately, current models don’t meet marketers’ expectations. The report states that Harvard Business Review tested the accuracy of digital profile sales by data brokers who relied on audience segmentation. – Age level was correct in only 23 percent of cases, and gender was correctly identified in well under half of cases – reads.
Trust is the main currency in commerce
Trust has always been at the core of any properly functioning relationship. At the level of business partner with business partner, husband with wife, parent with child, buyer with seller or students and teachers. Trust is also an institutional currency, when given entities invest in others, a bank gives someone a loan or the society elects rulers in the hope of improving the socio-economic situation. Finally, trust is at the heart of the constructs of society: as in money, law, or religion.
Unsurprisingly, trust will continue to be at the core of the e-commerce-customer relationship, but trust must be earned. Customer relationships will be had by those brands that create and nurture it, although the word nurture has much more justification here. The customer must feel a connection with the brand. This is the only way brands will be able to survive tougher times.
How to build your brand?
Branding is such a vast topic that it can’t be covered in one article. With a focus on prospects, companies need to invest in long-term marketing, in opposition to the current performance marketing activities designed to ensure immediate conversions. Teams will have to restructure their thinking and focus on creating a powerful strategy in which the key is to dialogue with consumers in the language not only of their benefits, but of their values and creativity. Committing to sustainability or supporting community initiatives can yield great results. Sponsoring campaigns of interest to our target group or organizing academies to broaden skills and engagement, which can serve as great onboarding for the future. There may be many strategies and ideas. Social media and community building are proving to be key. The basis for such actions must be openness and creativity, and the catalyst must be courage, determination and knowledge. Anything that customers can get beyond the product – a smile, wisdom or even emotion – is an added value for the brand, which activates its fans more readily for communication, building their loyalty and engagement.
Brands don’t speak to everyone
A very important element is to keep the message consistent, but above all authentic. Companies without a mission should create such a mission and function on the market according to its principles. A phrase repeated over and over again in public relations courses is the one that reminds us that brands that speak to everyone don’t really speak to anyone. There is indeed something in this. Lack of values, a clear stance or proper communication makes a brand transparent and a bystander to customers. Vegans are more likely to buy clothes from stores that honor their views. Many customers also praised Apple for getting rid of chargers from kits, ostensibly for an eco-friendly reason. If brands stand in solidarity with social groups, it is a clear sign that they are engaging with society, and this will be reflected in popularity and likeability.
The report points to a 60/40 split of marketing spend, where the bulk should be devoted to brand building and 40 to performance marketing. Performance is not all bad and this channel should be nurtured with care, but it cannot account for the majority of our revenue, as it could quickly become a cause of bankruptcy in the coming years. It requires marketers to think beyond traditional channels and meet customers even before they begin their consumer journey.
The Drum also describes the experience of BuzzFeed, which says that the customer expects recommendations from the store. Today’s shoppers know what they’re looking for, but have trouble choosing. They are intentional, often need additional research, advice, certifications, opinions, and often follow a given offer, comparing it with dozens of others at the same time. BuzzFeed says consumer habits favor shopping on social media and mobile channel. – BuzzFeed notes 71% CTP on computers versus 66% CTP on mobile devices in a search results post, but while 66% of mobile web users click an affiliate link, only 26% of desktop users do the same – reads the article.
Full Shopify Report
Major challenges ahead for e-commerce. Retailers should be building their competitive advantages now and thinking about future strategies. Shopify discussed a number of issues in its report that every retailer, no matter if wholesale or retail, should see. The report is available here: The Future of Commerce. Trend Report 2022.