Complete retail sales (this includes both in-store purchases and Internet orders) surpassed $22 trillion last year, which, according to a recent eMarketer study, is a 5.6% increase from the year before.
The total amount spent on eCommerce was roughly $1.7 trillion and in the next three years, that number is expected to jump to $3.6 trillion. By looking at those numbers, you can clearly see that the eCommerce market is growing faster than ever before.
However, according to the latest US Census data, the online shopping still represents only a fraction of total shopping dollars – just around 8%. Until recently, eCommerce had only limited penetration, but retailers are starting to expand existing and new markets like grocery, apparel and personal care.
The fact is, eCommerce is still in its infancy, but this just means that there are huge opportunities ahead for online retailers. And this includes small online merchants, not just huge enterprises like Amazon.
Department Stores are Dying Out
As we’ve established in the opening paragraph, Internet retail is simply booming, while traditional brick-and-mortar stores, in particularly department stores are slowly but surely dying out. And while it is true that many department stores across the country have an online presence, and they are working hard to grow that aspect of their business – they are still struggling online.
In fact, Macy’s Chief Financial Officer admitted in May that the company’s digital sales are growing “less rapidly than anticipated.”
Experts predict that in the next few years, we’ll see a sharp shift in eCommerce toward smaller mom-and-pop stores and specialty boutiques. This is because Millennials and Generation Z-ers don’t have the same reservations against online shopping like their parents did.
In the past, one of the main drivers of consumers to Amazon was a firm belief that they wouldn’t get ripped off or have their credit card data stolen. These fears dissipated over time, and today, it’s practically non-existent.
Social Media as a Key Driver
One third of the world’s population now has at least one social media account. According to Smart Insight’s Digital Marketing Trends, Facebook alone has almost 1.6 billion active users, and social media usage is up for 10% compared to 2015.
With such a significant amount of time online devoted to social media platforms, there is a huge potential for advertising, marketing and monetizing users via social commerce. In 2015, some of the biggest social media sites like YouTube, Twitter and Instagram even started introducing commerce options – acting as the middle man between shoppers and businesses.
Furthermore, online shoppers have now become more “brand aware” through social media usage, and according to GWI research, many of them are using their social media accounts to research various services and products. And while social media conversion rates are still considerably lower than those of email and organic search results, these platforms have become powerful tools that encourage brand loyalty, and are a great way to promote the values of your brand.
But small retailers have to move quickly to capitalize on social media, because in the future, it’s going to be a lot harder to stand out.
Shopping Online While Messaging
Another trend we are going to see blossoming in the next couple of years is the integration of eCommerce into messaging applications such as the Facebook’s Messenger. The integration has already started in China, where messaging platforms like WeChat and Line have already introduced a number of eCommerce features. Many believe that this revenue opportunity is the true reason begin Facebook’s initiative to focus on messaging more aggressively.
After all, the company paid over $22 billion for WhatsApp two years ago, even though the startup only had a revenue of $10 million the year before.
Once again, the emerging Asian market shows the way forward in this situation. The aforementioned WeChat and Line have pushed beyond simple messaging apps to integrate a wide range of new features, eCommerce options and opportunities for monetization, clearly inspiring Facebook’s recent decision to make their Messenger a separate app and develop it as a platform of its own.
All of these recent developments clearly mean that social commerce has a bright future. And as AI continues to develop, we are probably seeing the beginning of an ear of deep personalization in the commerce space.
Online Retail in Developing Countries
When we are talking about global eCommerce, what most people fail to realize is that the emerging economies are starting a crucial role in the market. Two years ago, eCommerce sales in Asia-Pacific (more than $585 billion) overtook North America (around $482 billion). What’s more, Forrester predicts that the eCommerce market in this region will reach $1.4 trillion by the end of the decade – with the Chinese online market reaching $1.1 trillion alone.
However, large US retailers, have been slow to capitalize on the overseas market.
While companies like Macy’s and Urban Outfitters are slowly expanding their business, it seems like a good number of small eCommerce retailers is trying their luck in the emerging markets. Around 25% of international consumers have shopped at a US-based retailer in the past year, and this isn’t just a trend that is bringing profit to the large retailers. On the contrary!
Free eCommerce platforms such as WooCommerce have enabled even smaller online merchants to ensure a safe and seamless shopping experience, and now you can even offer your customers to pay in their own currency, and through their preferred methods. The latest Alternative Payment WooCommerce plugin even helps vendors to offer local support and customized checkout process, along with the all aforementioned features.
Monitoring Market Trends
With the marketing growing at incredible speed, eCommerce retailers are coming up with new and innovative ways to meet the needs of their customers. However, retailers also have to be aware that the shopping habits of their customers are also going to continue to change.
This means that in order to remain competitive in today’s market, online retailers have to constantly monitor trends and change their offering accordingly.
Whether this means optimizing their sites for mobile consumers or entering new, foreign markets in hopes of captivating shoppers overseas, it’s crucial for eCommerce retailers to pay attention what consumers want and stay one step ahead of the competition.