eCommerce Trends to Watch in 2017
From the explosion in growth of online grocery, to the prominence of mega-shopping days, to Walmart’s acquisition of Jet, 2016 was certainly an interesting year in world of retail. We expect 2017 to be even more disruptive as channels continue to merge into omnichannel, fulfilment options expand and become more complex, and the global marketplace (particularly in China) continues to expand. Here are the ecommerce trends we’re watching for 2017.
Omnichannel Gets Real
There is nothing new about the notion of omnichannel – the term is used and abused by retailers and suppliers alike. The fact is that consumers already switch seamlessly between channels–both online and in-store–as they navigate the path to purchase. However, despite the realities of this new retail experience, many retailers and brands have not adopted a more holistic approach and still design customer experiences with a single-channel mindset.
Amazon put the cat among the pigeons in December with the launch of Amazon Go, which could be viewed as retail’s first true omnichannel experience. This disruption, led by Amazon, is likely to spur some true innovation from its rivals as they move to defend their territories. For example, the Walmart’s acquisition of Jet will likely spur some creative retail innovations as well.
Some of the most challenging aspects of omnichannel are the increasingly complex supply chain and fulfillment demands. However, as infrastructure and retail experiences begin to match the rhetoric, shopper experiences will become more seamless. Shoppers have come to expect continuity between online and in-store experiences, and the onus is on retailers to construct physical experiences that mimic shopping patterns found online, as well as online experiences that increase value of in-store shopping.
Hyper Convenience: Click and Collect, Same-Day Delivery, Free Shipping
When consumers are surveyed about why they use online shopping services, convenience is almost always at the top of the list of reasons. Click and collect, same day delivery, and free shipping are just some of the ecommerce trends that online retailers will put more resources behind in 2017 to meet this key demand.
Click and collect, in-store pickup, and curbside pickup emerged as growing phenomena in the US during 2016 and is only likely to grow further in 2017. The fulfilment model includes pickup from regular store locations, from kiosks or lockers, and from designated ‘drive through’ pickup locations. This trend is growing in popularity because it enables consumers to better manage their time. Rather than waiting for a delivery, the consumer can select their purchases online or on a mobile app and pick them up from a convenient location as part of their commute or errand-running. As click and collect infrastructure continues to grow and spread, look for substantial growth in click and collect options in the US, driven in particular by mobile purchases.
There has been a locus of innovation around providing free shipping in recent years, which favours large players in the sector because the economics of free shipping favours scale. Greater business volumes provide larger online retailers with leverage over shipping providers, which in turn leads to more options for free shipping innovation. Delivery cost is obviously a significant issue for retailers as they struggle to make ecommerce profitable, and but after convenience the next issue in consumers’ minds is the cost of delivery. Shoppers can choose free shipping over fast shipping which can provide them significant savings overall.
Different retailers are taking slightly different approaches to providing free delivery, with most of revolving around loyalty programs – such as Amazon Prime or Walmart ShippingPass – or order-size-based programs – such as Amazon Pantry or Jet. But watch this space as general ecommerce growth should allow more online retailer compete with free or low-cost shipping options.
Same-Day delivery is the other side of the spectrum from free shipping (shoppers pay for the privilege of instant gratification) but advantages in scale and infrastructure accrue value to both. The introduction of Amazon same-day shipping in the UK has caused Sainsbury’s to develop this capacity, promising same-day shipping from 30 stores by Christmas if its trial goes well. In the US more online retailers are working with third parties to provide same-day delivery, for example, Walmart is working with Uber and Lyft, and Postmates is seeking another $100M funding round.
Digital Payment Technology Advances to Drive Mobile Purchases
The relatively low adoption of digital payments systems, such as Apple Pay, Chase Pay, Mastercard’s Masterpass, and Paypal has meant that mobile commerce has been slower to develop in the US than it has in other markets. Digital payments systems provide online shoppers with a one-click method of paying for goods and services online without having to enter credit or debit card information, a reduction in friction which is ideal for use on mobile devices.
Now in the US, where digital payment systems are not well adopted, and as a result mobile makes up only around 30% of ecommerce transactions. But in places with a high adoption of digital payment systems, such as Japan and China, mobile accounts for much higher portions of ecommerce, for example, 70% in China and 50% in Japan.
As digital payments become more accepted in the US, it will significantly increase the percentage of ecommerce that mobile represents and should expand ecommerce’s slice of overall purchases. As digital payments may also be accepted in-store, they also represent a key tool for designing omnichannel shopping experiences.
A further development in mobile will be around content. Unilever has been pushing a standard for delivering images and content that works better on mobile devices. Led by Oli Bradley, Unilever’s Global eCommerce Experience Design Director, the CPG giant has put its so called mobile hero image specifications into the public domain in a bit to persuade other CPGs to follow suit.
More eCommerce Trends: Ratings and Reviews, Voice Search, and Global Marketplace Disruption
The battle for confidence in online product reviews will continue. We can expect major churn in the market in the next year as Amazon rewrites the rules of what is or is not accepted for a quality and credible review. Additionally, voice generated search will surely be a major disruption now that Google, Apple and Microsoft are in the game.
Lastly, ecommerce marketplace disruption from overseas taking place in three forms. First, continued battles against bad players on third-party marketplaces. Amazon and Walmart will have to do more to crack down and build confidence and clarity in both the shopping experience and in the sellers themselves, reducing fraud and bad product.
Next, will be cross-border trade, which has a major impact in Europe where product intended for one market is turning up three countries away, or is cross-docked by Amazon (or other retailers) operating in multiple countries. Related to both cross border trade and cross docking, is China’s Jack Ma’s vision for one global marketplace. We can expect to see something disruptive on a global scale in 2017.