10 Emerging E-Commerce Trends Shaping Online Retail
Why Online Retailers Must Adapt to Crucial E-Commerce Trends
The e-commerce sector is expanding rapidly as the world shifts more and more toward a digital-first culture, driven by consumers’ rising need for convenience. Recent Statista reports support this upward growth trend, revealing that global e-commerce sales will reach US $6.3 trillion in 2023.
This increase creates a massive market for businesses that want to sell their products or services online. Traditional brick-and-mortar businesses are adapting quickly, building online stores for their products, while some retain their physical stores.
However, with the inrush of businesses online, it becomes more challenging to be found by customers. Innovative companies must therefore understand and adapt to critical trends in e-commerce and leverage them to maintain visibility and boost sales.
This article reviews the global e-commerce market, providing insight into the key e-commerce trends for 2023, and steps online retailers must take to adapt.
The State of Global E-Commerce
The global e-commerce market was valued at US $16.6 trillion in 2022, and the industry is expected to grow significantly in the coming years with no signs of slowing down. As a result, market specialists expect a compound annual growth rate (CAGR) of 27.43% from 2023 to 2028.
With increasing shoppers turning towards digital channels for their needs, vendors must continuously innovate and provide top-notch services to remain competitive as we advance into 2023 and beyond. According to data from Statista, global e-commerce sales reached US $5.2 trillion in 2021 and are expected to reach US $6.3 trillion in 2023. This figure represents a 21% increase in just two years.
The Asia-Pacific region is the largest e-commerce market in the world, accounting for more than half of global e-commerce sales in 2022. China is the dominant player in this region, with e-commerce sales of US $2.1 trillion in 2022, followed by the United States with US $1.5 trillion.
Online sales make up most of global e-commerce sales. The number will trend upward with the growing number of online marketplaces such as Amazon, Rakuten, and Alibaba. Direct-to-consumer brands are making the most of e-commerce stores and websites; however, there has been increased penetration of B2B brands. With almost every online business transaction, e-commerce is steadily becoming the go-to for business transactions.
Outside of technological advancement, mobile device penetration, and user buying behavior, the growth of e-commerce results from increased convenience, a more comprehensive product selection, improved shipping options, mobile commerce, social media, and the increased usage of digital payment methods. These factors have made it easier for consumers to shop online and have contributed to the rapid expansion of the e-commerce market.
Despite the outstanding success of e-commerce, it still introduces new challenges such as marketing, fraud prevention, returns and refunds, customer service, payment processing, shipping and fulfillment, and increasing competition.
Some businesses have overcome these challenges by understanding the growing trends in the e-commerce space and adapting to the changes, including digitization. In all, the future of e-commerce holds a lot of promise for businesses, especially those experiencing low sales and trying to reach a larger audience.
Crucial E-Commerce Trends Affecting Online Retailers
E-commerce has revolutionized the way people shop, offering customers convenience and access to products from around the world that would otherwise not be available. With its rapid growth, more companies are investing heavily in technology to ensure their businesses remain competitive and customers have a reliable experience.
Here are crucial e-commerce trends that will shape online retail and consumer behavior for years to come.
Customers nowadays gravitate to online experiences that are more immersive and personalized. Therefore, in 2023, the pressure will be on e-commerce companies to turn the customer journey into a memorable and engaging experience.
According to a recent study, augmented reality and personalized experiences are essential for Gen Z shoppers, with 93% of respondents interested in using AR for shopping.
To create an immersive experience for your e-commerce business, start by determining the purpose of the experience. Is the goal to increase brand awareness and drive sales, or is it something else? Having a clear objective can help guide the design process.
Next, create a story or theme for the immersive experience and choose elements like audio, video, and interactive features to bring it to life. It’s also important to consider both accessibility and user-friendliness. Make sure that the experience is easily accessible to shoppers on a variety of devices and browsers.
Additionally, ensure it is easy to navigate and use, with a clear call to action guiding shoppers through the experience. Finally, track and analyze the results of the immersive experience. Measuring performance and using the data to identify areas for improvement and optimize future experiences is critical.
Video content has fast become a powerful tool for businesses to reach and engage with a global audience. As a result, companies are incorporating video content into their e-commerce strategy, creating a new trend in e-commerce — video shopping.
This trend has steadily grown in recent years and is projected to become even more popular in 2023. With video shopping, customers get an immersive shopping experience from the comfort of their own homes.
Businesses can also increase customer engagement by encouraging user-generated content. As a result, video shopping offers several advantages for consumers and businesses.
Customers can view products in detail and make informed decisions before purchasing. It also allows customers to ask questions about the product and receive answers from knowledgeable sales associates.
Video shopping provides valuable insights into customer behavior, enabling businesses to tailor their offerings to meet customer needs. In addition, video shopping will become more advanced and feature-rich as technology advances in 2023.
Retailers will have access to sophisticated solutions that enable customers to explore products using augmented reality (AR) or virtual reality (VR) technology. These technologies allow shoppers to interact with products in an actual store, allowing them to see how products look and feel before making a purchase decision.
By relying more heavily on digital solutions like video shopping platforms, businesses can lower overhead costs while still providing customers with quality service and customer support from knowledgeable sales associates available 24/7 through chatbots or live chat features within the platform.
New Payment Options
New and emerging payment options will gain traction in 2023, with traditional payment methods giving way to digital solutions, causing the online payments industry to evolve. In addition, the e-commerce industry will also develop due to these new payment options, as customers can now make quicker and more manageable payments while shopping online.
This improved convenience is primarily due to the rise of mobile wallets such as Apple Pay, Google Pay, LINE Pay, and others, which allow customers to store their payment information securely and then use their devices to make payments.
According to Statista, in 2021, digital and mobile wallets accounted for roughly half of global e-commerce payment transactions, making the digital wallet the most popular online payment method worldwide. This share is expected to increase to over 53 percent in 2025. Credit cards ranked second with a 21 percent market share in 2021, a figure projected to decline in the coming years.
Furthermore, cryptocurrencies such as Bitcoin have become increasingly popular among shoppers who want an alternative way of paying for goods and services online that is not subject to government regulations or banking fees.
Another trend in e-commerce payments is the increased adoption of subscription-based models. Subscription services offer customers a convenient way of purchasing items repeatedly without manually inputting their payment details each time they place an order, making it easier for them to keep track of their spending.
Finally, artificial intelligence-driven personalization technologies are becoming increasingly popular among e-commerce stores looking to provide personalized customer experiences.
Businesses can tailor their offerings based on customer preferences and purchase histories to increase engagement rates and conversion results using AI-driven personalization algorithms.
Mobile shopping has also become increasingly popular in the past decade, and it is projected to continue its rapid growth for years to come. Mobile commerce made up 53% of e-commerce sales in 2021 and is expected to gain more ground in 2023. This increase represents a massive opportunity for businesses that can capitalize on the growing trend of mobile consumers.
For starters, businesses must ensure to optimize their websites for mobile use. Mobile optimization includes having a responsive design that adjusts itself depending on the device’s size and features like touch navigation, making it easier for users to navigate the site with their fingers. Additionally, businesses should be sure their website loads quickly, as this can significantly impact user experience and engagement.
Another critical factor in successful mobile shopping is providing secure payment options. Consumers want peace of mind when shopping online, so securing customer data through secure payment methods is necessary. Developing secure checkout processes that protect customer data while at the same time making it easy and convenient for consumers to complete purchases is essential.
Finally, leveraging personalization strategies can help businesses take advantage of the growing trend of mobile shoppers.
Online shoppers will increasingly hold e-commerce brands accountable for their carbon footprint and sustainability results in 2023. A new generation of consumers takes a no-compromise approach to saving the environment. It is willing to walk away from brands that ignore their carbon footprint and negatively impact the planet.
In 2023, online merchants won’t be able just to state, “We are eco-friendly.” Instead, they’ll have to show their actions to reduce their climate impact and demonstrate their effectiveness in working toward a greener economy. I believe there will be greater urgency on this issue in 2023 than ever before. If consumers are dissatisfied with a brand’s sustainability efforts, they will vote with their wallets and leave that brand.
There are several actions e-commerce brands can take in 2023 to shrink their carbon footprint. For instance, they can make the shipping process more sustainable by introducing recycled, sustainable packaging materials. They can also choose carbon-neutral shipping options.
In the US, for example, UPS offers retailers the option of paying a small fee to calculate and offset the climate impact of each package’s shipment. UPS offsets the emissions through supported projects.
E-commerce brands can also achieve sustainability by cutting down on returns. One way to do this is by providing detailed product descriptions and 3D product images that add clarity for customers. For example, highly immersive computer-generated imagery can allow shoppers to experience products from all different angles and real-life contexts.
The average e-commerce return rate hovers around 20-30% and 39% of consumers return an item because the product doesn’t match the images provided. Better product descriptions and photos can increase the odds that they’ll be happy with their selections and help minimize returns.
Social commerce is an increasingly popular trend, particularly in e-commerce, as it allows businesses to engage with their customers directly and personally while building an online presence. Rather than relying on traditional advertising and selling methods, such as paid search or content-driven marketing campaigns, social commerce offers a new way of engaging with customers.
Businesses can tap into the power of social media platforms like Twitter, Instagram, and Facebook to build relationships with potential buyers, leading to sales conversions. In addition, with the rise of mobile technology, businesses can connect with their customers in real-time on any device. This ability gives them greater flexibility when launching campaigns and promotions tailored to specific audiences.
Additionally, social commerce enables businesses to create highly personalized experiences for each customer based on their interests and preferences. Social commerce also helps companies gain insights into customer behavior, which can improve customer service and product offerings.
For instance, brands can create more effective campaigns that increase engagement by analyzing what content resonates best with customers across various social channels.
Some critical elements of successful social commerce strategies include leveraging influencers or partnerships with other brands, creating compelling visuals, providing exclusive offers, creating loyalty programs, offering timely discounts, incentivizing referrals, and utilizing interactive features.
Overall, by taking advantage of the opportunities presented by social media platforms, businesses can become better equipped to reach large numbers of potential customers quickly. Moreover, they can do this while increasing brand awareness exponentially within minutes, compared to traditional methods such as print ads or TV spots.
Inflation and Tight Budgets
Inflation and tight budgets are impacting e-commerce in 2023 significantly. As prices for goods increase, consumers may need help to afford certain items. As a result, smaller discretionary income could lead to fewer purchases, decreasing revenue for online retailers. Additionally, as people become more budget conscious, they may opt for cheaper alternatives which could cause competition among retailers and brands to increase.
Customers will also be more likely to look for deals, discounts, and other money-saving ways. However, this new-found frugality could also lead to more price-sensitive customers who are less willing to splurge on expensive items.
Similarly, the tight budgets of many people and businesses will mean fewer funds for luxury items and more focus on the basics. Reduced budgets could mean decreased sales for certain products and services, especially those already more expensive.
Companies will need to adjust their product offerings accordingly to meet the needs and budgets of their consumers. Additionally, companies must be strategic about marketing efforts to make sure their message reaches the right audience. All in all, the inflation and tight budgets of the times will undoubtedly affect e-commerce in 2023, and companies will need to plan accordingly.
Online retailers must be more efficient than ever in an inflationary environment where consumers pinch their pennies. Those that can reduce overhead and cut costs can pass those savings on to customers.
E-commerce companies can be more efficient by cutting expenses like printed catalogs and moving toward digital. They can also try negotiating with suppliers to work out advantageous arrangements, such as a discount for early payment or prepayment.
Additionally, they can add greater automation to their business. By using tools such as automation software, retailers can automate routine tasks such as data entry and order processing—freeing up time for employees to focus on more valuable activities.
Retailers can also improve efficiency by collecting and analyzing data on customer behavior and other key metrics, thus helping them make informed decisions about improving their operations.
As retailers adopt new digital technologies, training employees to use them effectively is critical. Training can help improve efficiency and ensure the new tools are used to their full potential.
Another task that online retailers can streamline through technology is the production of product images. E-commerce companies could consider leveraging technology to create computer-generated 3D images to produce high-quality visuals, as CGI can be more cost-effective than a traditional photo shoot.
In 2023, personalization will become one of the biggest e-commerce trends. Personalization gives customers tailored experiences based on their interests, needs, and preferences. Brands can offer personalization by using customer data to create unique experiences and build customer loyalty. For customers, it means they get more of what they want when they want it.
Online merchants can apply personalization in a variety of ways. For example, many brands use personalization to send customized emails and push notifications or create personalized product recommendations.
Personalization helps create a more tailored customer experience, which can help increase sales and customer satisfaction. Personalization also allows brands to build better customer relationships by understanding their needs and preferences.
AR, VR & the Metaverse
AR, VR, and the metaverse are becoming increasingly popular in e-commerce due to their potential to provide an engaging and immersive shopping experience. Augmented reality (AR) enhances the environment around us by overlaying digital content onto our physical world.
AR can provide shoppers with a vivid and interactive shopping experience that would otherwise not be possible in the real world. For example, customers could use AR to try on virtual clothes or view products in 3D before making a purchase. In addition, this enhanced functionality can reduce returns due to buyer’s remorse, as customers will have had an accurate preview of their chosen item before committing to buy it.
Virtual reality (VR) creates a digital environment that can simulate real-life experiences, such as visiting a store or trying on products from your home. By using VR headsets, shoppers can navigate around virtual stores and interact with items in a way impossible in traditional online shopping. Virtual reality allows customers to experience what it would be like if they were there physically and gives them more confidence when making purchasing decisions.
The metaverse is a vast digital universe in which people, objects, avatars, and applications exist in one virtual space. It allows users to explore 3D environments, communicate with others through avatar-based social media networks, and even transact within this shared digital space.
In e-commerce, the metaverse opens up new opportunities for companies to provide customers with an immersive shopping experience beyond what’s available in traditional brick-and-mortar stores or online websites. For example, customers can explore different product lines via virtual stores or attend live events hosted within the metaverse without ever leaving their homes.
These tools, powered by artificial intelligence, transform how users interact with e-commerce brands by providing shoppers with an enhanced level of immersion not found anywhere else. Using these technologies, companies can create unique customer experiences that blur the line between online and offline shopping while increasing customer engagement and boosting conversion rates.
As these technologies become more widely adopted, we will likely see more innovative uses of AR, VR, and the metaverse within e-commerce businesses in the coming years.
The Importance of Adapting to Emerging E-Commerce Trends
As the world becomes more connected and digital, e-commerce continues to grow at an unprecedented rate. In 2021, retail e-commerce sales amounted to approximately 5.2 trillion US dollars worldwide. This figure is forecast to grow by 56 percent over the following years, reaching about 8.1 trillion dollars by 2026.
In 2023 and beyond, we expect continued growth in social commerce, personalization, AR/VR, subscription services, and sustainable and ethical shopping practices.
With the ever-changing landscape of e-commerce, it’s vital to stay ahead of the curve and understand the latest e-commerce trends shaping the industry. Retailers who stay ahead of these trends and provide exceptional customer experiences will be well-positioned for success in the future. We are here to help!
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