4 Forecasts For The Future Of The eCommerce Sector
Prior to 2020, the eCommerce industry was on a steady incline globally, and even dominating marketplaces in developed economies. The spread of the pandemic however created unprecedented growth globally, with even non-online companies scrambling to pivot their operations to cater to an online, home-bound customer.
Statistics show that US eCommerce sales grew to a monumental $839.02 billion by the end of 2020, which is a 40.3% increase from the previous year. Online purchases accounted for 21% of total retail purchases, compared to the previous year, which stood at 15%. And experts claim that the growth will not stop there. In fact, it is expected that over the next decade, eCommerce will grow to become one of the most prevalent industries globally. So, we thought we would take a look at what will drive growth, and be a result of this growth.
Growth Will Take Place in Unexpected Markets
Currently, the largest eCommerce markets in the world include China, the US, the UK, Japan and Germany. While none of these are particularly surprising, what is is the fact that emerging economies have been experiencing more and more growth in eCommerce over the last year.
eCommerce goliaths, China leaves quite a prominent gap between themselves and the rest of the world, making even the fourth-largest Japan marketplace seem to dwindle in comparison. It is a prime marketplace for growth over the next five years. Of the 129 million-strong population, 119 million are active internet users, with a whopping 80% of them actively making online purchases.
Emerging markets similarly have untapped pockets of growth. India, Brazil, South Africa and Russia are steadily growing in usage and consumers. South Africa’s eCommerce penetration is expected to leap from 2% in the last two years to almost 10% in the next two. With the expansion of digital capabilities and mobile use, almost 30 billion new customers are expected to enter the markets from these territories.
Shipping Methods Will Evolve and Expand
Shipping and fulfillment have historically been one of the slowest developing aspects of eCommerce. But rapid expansion and innovation in fulfillment have come with the leap in eCommerce sales. Start-ups with small budgets do not have the capacity for warehousing, supply chain and last mile, and this is where fulfillment alternatives have flourished.
Dropshipping has been quickly picked up by eCommerce stores that do not have warehousing capabilities, yet can act as the middleman between supplier and customer. This, together with services like Amazon Business, has provided small enterprises the ability to reach and service a customer base that they were not able to before. Amazon provides storage as well as last-mile services to companies who are not able to do it themselves, which is kicking off a plethora of similar offerings.
The Rise of Private Label
Private label businesses provide small businesses the ability to market and distribute products that are sourced from wholesale manufacturers. They are able to brand the items themselves and market them in their unique way.
This is a rapidly growing enterprise as it benefits both retailers and manufacturers. e-Tailers are able to kick off their businesses with very little capital if they can source the products from large manufacturers. These products can be effectively branded to increase the value to sell to the customer.
This business model works particularly well with niche industries and products. the pandemic has also been a catalyst for more and more consumers to opt for private-label goods in comparison to higher-end, expensive products. Price, together with the availability of branded products are the two dominant forces that seem to be driving consumers to opt for smaller, local products.
Omni-Channel Will Be a Necessity
Not only do clients want on-demand services and products, they want choices. They want choices in products and they want choices in how they acquire the products. While some customers are still hesitant to even shop online, others have primarily moved into digital shopping.
Giving customers the option of how they can make purchases will secure companies in the future. Regular customers might prefer shopping and making payments through an app, while others might happen across online stores on a social platform and want to make a purchase from there.
Omni-channel not only reaches more customers and increases conversions but also creates a sense of trust for customers. A wide, online presence, with reputable reviews and feedback, is going to be an absolute necessity going forward.
While customers are going to want more and more options to choose from, companies are having to rapidly evolve to cater to these needs. With tech and digital tools growing at the rate that they are, the future of eCommerce certainly is bright.
Dave is a serial entrepreneur who co-founded Shortlist in 2018, a marketing un-agency that serves as an outsourced dedicated marketing team. He has also co-founded Less.churn, a churn reduction app, prior to selling it in 2018. In 2012, he quit his job to travel the world, and has visited over 65 countries.