Retail e-commerce: Trends, challenges, and its possible future!

April 13, 2022 by
Frank Calviño
Photo by Anantachai Saothong on Unsplash

The future of retail e-commerce will surely define the future of global commerce: selling online is fast becoming the natural way - sometimes the only way - to offer products and services globally. 

Today we want to review the numbers behind retail e-commerce, using Shopify's play-by-play report on retail e-commerce: the upcoming trends and the challenges online entrepreneurs are facing. Let us begin!  

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The current state of global retail

The democratization of internet access, as well as the rise of “no-code solutions” - services that enable anyone to create an e-commerce website without any coding or programming language skills - has spurred a massive growth of both marketplaces and brand-owned e-commerce. 

The e-commerce market is expected to grow by almost $11 trillion between 2021 and 2025, according to the numbers presented by Shopify in their The Future of Ecommerce Report. A growth that is predicted to keep on rising at an amazing rate, even in the midst of the current complex global economy. 

In the U.S. alone, retail e-commerce sales over 2021 amounted to approximately 4.9 trillion U.S. dollars. This figure is forecast to grow by 50 percent over the next four years, reaching about 7.4 trillion dollars by 2025.

And this is further confirmed by the rising numbers of online stores: it is estimated by Digital Interhound that daily, an estimated 12–24 million e-commerce sites are created across the globe. This means more brands competing for customers. As a result, digital advertising is becoming more costly and less lucrative than ever before.

Under this scenario, three things will surely define the future of online retail. 

The more the merrier? Rising costs due to competition 

The biggest issue for any e-commerce to be successful in 2022, perhaps until 2025 if we follow the forecasts to the letter - will be the rising acquisition and marketing costs derived from an increase in online competition. 

The cost per click for paid search ads increased by 15% between the second and third quarters of 2021 alone

According to a report presented by Datareportal, We Are Social and Hootsuite, competition is the biggest problem for any e-commerce to grow in 2022. 

The social networks data meltdown 

Another key reason behind the increase in acquisition costs is the new privacy laws that limit marketers’ ability to target ads and consumers who are better at blocking ad interruptions, it’s becoming tougher to get a decent return on advertising spend. 

The GDPR of the EU, the California Consumer Privacy Act and its Vermont equivalents well as the India Personal Data Bill Protection and the Brazilian General Data Protection Law - just to mention a few - countries all over the world have updated or enforced laws and legislation that diminish the capacity of marketers to customize ads to targets specific demographics. 

Another key complication derived from these new legislations is the preemptive actions taken by some of the biggest global names in the world of technology, like Apple to prevent their products and services from being charged with legal actions for not complying with the current legislation. 

Shopify The Future of Ecommerce Reports quotes Kepios CEO and founder, Simon Kemp, on this matter: “Our July 2021 report showed a 15–20% drop in the advertising reach of Instagram in Europe. That’s huge. Tens of millions of impressions disappeared because of certain kinds of laws and changes in Apple’s policies.”

No more cookies for you 

The final part of this increase in the operational costs of running an online retail store is also derived from the new privacy data legislations Death of third-party cookies forces brands to rethink personalization: the disappearing of third-party cookies. 

For example, when in November 2021, China’s Personal Information Protection Law came into effect, Apple, Firefox, and Brave already automatically blocked third-party cookies. Google Chrome, representing over 60% of the search engine market share, announced also in July 2021 that it will delay third-party cookie blocking until late 2023. 

The disappearance of cookies weighs heavily on the capacity of many marketing agencies and services to personalize email campaigns and other retargeting marketing services. 

Supply Chain: Keep tabs on your packages!  

One key lesson of modern online retail is that supply chains are vulnerable. We had our fill of dread during the so-called Shipping Container Crisis when it seemed like all global supply lines were stuck in the mud. And even when things have improved, the costs of shipping remain high and the vulnerability remains there.   

Experts predict that shipping and supply systems won’t return to their normal levels until 2023 at the earliest. Even when they do, the pandemic has exposed global logistic network vulnerabilities to future political instability, natural disasters, and regulatory changes. The effects of COVID-19 were not an exception to the rule: Supply chain disruptions are happening with increasing frequency and severity. McKinsey reports that significant disruptions to manufacturing production now occur every 3.7 years on average.

Omnichannel and Customer Care is the key to the future

Another key ingredient for the future of retail stores is to keep track of their omnichannel capabilities: Retailers must integrate in-store and online experiences or risk extinction. 

In our post-covid scenario shoppers are returning to stores, and the lines between buying online and in-person have blurred. 

According to the Shopify report, 54% percent of consumers surveyed say that, over the next year, they’re likely to look at a product online and buy it in-store, and 53% are likely to look at a product in-store and buy it online.

The same report insists that consumer packaged goods and retail companies say sales from their physical retail stores and sales from their e-commerce website are nearly equal, with physical retail generating 18% of revenue and e-commerce generating 19%.

Providing a mix of digital and physical shopping experiences will make the difference between successful brands and those brands that will become irrelevant. 

Precisely to help you with this new phygital trend, we have prepared an article with some amazing examples of successful phygital strategies!

Finally, one of the things online retailers and brands must keep focusing on is Customer Care. With an increase in costs at all levels - online marketing costs, shipping costs, and acquisition costs due to the increase in global e-commerce competition - keeping your customers happy and coming back, is fundamental. 

To do so, the best and most cost-efficient way is to keep an effective Customer Care policy. Catering to mobile channels like WhatsApp - which had an increase of over +370% in the last year - and providing localized customer care is fundamental. 

A recent report by Common Sense Advisory claims that over 40% will never buy from websites in other languages. The report is aptly named Can’t Read, Won’t Buy.

To help you navigate the complex universe of Customer Care, and give your company the cutting edge in this key factor, we want to share with you the Customer Care Playbook created by our partners at Salesupply 

All in all, retail e-commerce faces a challenging yet potentially super-profitable near future, as every day it is more and more clear that e-commerce is the global preferred way to buy and sell. So, keep on improving your e-commerce business and keep your eyes on the prize!

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