What does the future hold for ecommerce in 2023-2024?

Shopify has published its annual report on the trends that are set to shape global commerce between now and 2023.

The report highlights the fact that change has become the norm, particularly due to the pandemic, which has accelerated innovation and adoption of digital commerce. As a result, brands need to be more flexible in their growth plans and policies. Shopify also highlights the importance of human interaction in commerce, both online and in-store. The report also suggests that growth in commerce is slowing down and that companies need to prepare for a sluggish economy, while expectations of brands are rising against a backdrop of changing consumer behavior.

• Online purchases increased by 77% year-on-year in the months following the onset of the pandemic, accelerating innovation and adoption of digital commerce by five years.
• Total retail sales in 2022 were up 15% on 2020, and are forecast to reach over $31 trillion by 2025.
• Worldwide retail sales fell by 2.9% in 2020, before rising by 9.7% in 2021. Growth will slow from 5% in 2022 to 4.1% by 2025.
• Business leaders are concerned about rising costs, with 83% very worried about the risk posed by inflation to business growth, 82% saying that high inflation is forcing them to cut costs, 81% planning to increase product prices due to inflation, and 71% preparing for a recession next year.
• The average person is 102% more concerned about inflation than about the coronavirus, which has plummeted down the list of global concerns, leaving inflation at the top.

Read the article on Ecommerce trends in 2023

1. The impact of the unexpected on commerce in 2023: The pandemic accelerated innovation and adoption of digital commerce, with a 77% year-on-year increase in online purchases in the months following the onset of the pandemic. However, 64% of the world's businesses have yet to fully recover from the impact of the pandemic.

2. Economic outlook and retail growth forecasts: Total retail sales are expected to reach over $31 trillion by 2025, but growth is set to slow, with a 5% decline in 2022 and 4.1% growth forecast by 2025.

3. Inflation and its effects on business: 83% of companies are very concerned about the risk posed by inflation to business growth, 82% say that high inflation is forcing them to cut costs, 81% plan to increase product prices due to inflation, and 71% say they are preparing for a recession next year.

4. Changing consumer behavior and brand expectations: 90% of consumers believe that personalization is important to them, 72% say they are more likely to buy a product recommended by someone they know, and 61% of consumers are willing to pay more for brands that support social or environmental causes.

5. The importance of the in-store experience for brands: 91% of consumers still prefer to shop in-store rather than online, and 87% of consumers are willing to pay more for out-of-the-ordinary in-store experiences.

How is the supply chain crisis forcing brands to accelerate their long-term growth plans?

According to some studies, supply chain disruptions can result in a financial loss of up to 62%. The effects of supply chain crises on businesses vary considerably, but brands need to be aware of the vulnerability of their own supply chains and prepare for uncertainty. 60% of consumers worldwide expect delivery on the same day or within two days.

To cope with these difficulties, business leaders are questioning their reliance on exclusive sourcing and the volume of stock they hold. Brands are also digitizing more of the supply chain to identify disruptions as soon as they occur, and even anticipate them.

How can brands cut costs and build customer loyalty in times of inflation?

• Global trade reached a record $28.5 trillion in 2021, up around 13% on the pre-pandemic period, but growth slowed in 2022.
• The war in Ukraine has contributed to rising oil and gasoline prices, resulting in increased costs and delivery times worldwide.
• Excessive investment in recruitment has led to redundancies for some direct-to-consumer brands.
• Fears of a recession will put a strain on 73% of brands planning to turn to outside investors this year.
• Brands and consumers are looking for ways to reduce their spending in the face of inflation.
• Brands planning to raise their prices need to emphasize what differentiates them to retain customers.
• Some brands are introducing new products at a higher price rather than increasing the prices of existing products.
• Others focus on long-term loyalty by freezing prices or introducing more affordable product ranges.
• The wisest brands choose to invest in their customer base now, in the hope of reaping the rewards when the upturn comes.

How are brands dealing with market instability and tougher privacy regulations to attract new customers?

During the pandemic, 75% of consumers tried a new brand, product or shopping method, and 41% became unfaithful to their usual brands once the confines were lifted and the borders opened. However, customer acquisition costs are rising against a backdrop of falling returns on advertising spend, and brands are finding it increasingly difficult to use third-party data to reach out to those most likely to make purchases.

To compensate for this lack of third-party data, brands are opting for collaborations with non-competing brands to jointly create products or experiences to share with their respective audiences. What's more, collaboration with online influencers will also benefit brands in 2023 and beyond, as over 70% of companies believe that online influencers will become even more important in the future.

How is social e-commerce evolving to meet consumer expectations?

According to one survey, nine out of ten people buy products from brands they follow on social media. Brands use five main customer acquisition and retention strategies, with the use of social channels for promotional and marketing purposes playing the biggest role. Brands are also using innovative tools to connect with consumers across all channels. What's more, social e-commerce is developing in the metaverse, a virtual, augmented space that will become the largest social commerce space ever created. Forward-looking e-commerce brands are already thinking about how they will meet customers in tomorrow's Internet.

How can physical retail brands attract and retain employees in a changing job market?

According to one study, 59% of brands attribute their difficulties in retaining staff to human resources. What's more, 40% of workers worldwide say they may leave their jobs in the near future. Although half of these workers admit that a pay rise could convince them to stay, brands are currently more inclined to cut spending, making redundancies more likely than pay rises.

However, stores need teams ready to serve a clientele now accustomed to combining all sales channels. Customer expectations are also changing the role of retail employees and the role of retail stores.

Brands are diversifying and differentiating their in-store experiences, transforming visits into a sensory experience that can't be replicated on the web. Store owners need to understand customers at a local level to maximize lifetime value for themselves and their customers.

Ultimately, to survive and grow, brands need to adapt in real time to stay relevant.

In conclusion:

Shopify's annual report on global commerce trends in 2023 points out that the pandemic has accelerated the adoption of digital commerce, driving online sales up by 77% year-on-year. Brands need to be more flexible in their growth plans and policies, while maintaining the importance of human interactions in-store and online. The report predicts a decrease in trade growth, but an increase in consumer expectations. Costs and inflation are also major concerns for business leaders. Brands will also have to deal with the supply chain crisis and prepare for uncertainty.