eCommerce: A decade in review
We’re beginning a new decade! The last ten years were a transformative period for the retail industry, with the takeoff of eCommerce, shifting consumer expectations, and technological change driving new ways to connect with customers.
In this blog, we take a look back over the last ten years, and how far eCommerce has come.
In 2010, eCommerce accounted for 7.2% of the total retail sales in the U.S. ( Up from 1% in 2000.) By the end of 2018, it had nearly doubled to 14.3% of total retail sales. We don’t have the results for 2019 yet, but eCommerce is on pace to account for 16% of total U.S. retail sales; more than double what it was at the beginning of the decade.
eCommerce’s year-over-year growth rate in the U.S significantly outpaced retail’s overall growth rate. As the retail market steadily grew, and the eCommerce portion became a more and more significant chunk of it, total eCommerce sales between 2010 and 2018 increased 313% in the decade.
Worldwide, eCommerce sales were $572 billion in 2010; they will hit $3.46 trillion in 2019, with China as the largest market.
Holidays also became critical in eCommerce. On Black Friday 2010, U.S. shoppers spent $648 million online. On Black Friday 2019, U.S. shoppers spent $7.4 billion online. That’s an increase of 1,042%. In the U.K., Barclaycard found that transaction value was up 16.5% compared with last year, with the volume of transactions up 7.2% overall.
The growth isn’t slowing down either: according to a study by Retail Economics for the law firm Womble Bond Dickinson, within the next decade, the Internet will account for 53% of sales, up from about 20% today, driven by convenience and by today’s digital natives becoming more than half of the population.
Customer Expectations and the power shift:
Customer expectations continue to rise, with there being a distinct power shift occurring in this decade towards the consumer. The Internet has changed the way we work, the way we socialise, and the explosion of eCommerce has changed the way we shop. The ‘Amazon effect’ results in consumers expecting retailers to ‘be where they are’, make it relevant and personal, with no delivery fees, frictionless checkout and seamless returns.
The top four online retailers own 61.5% of eCommerce sales in the U.S. as of March 2019 (Amazon, 47%; eBay, 6.1%; Walmart, 4.6%; Apple, 3.8%.) The market may be top-heavy, but there is still lots of room for new players, local businesses and reinvented retailers — particularly those resonating on value and personalisation.
The advent of review sites and integrated reviews over the decade has deepened this power shift, and many retailers have failed to meet customers along their new journey, offering innovative, fresh products, and interacting on their own terms. Payments have changed too- the advent of Klarna and Afterpay, alongside the explosion of Paypal, Apple Pay and Google Wallet has meant retailers have had to act fast, again, to offer this variety to customers.
For the retailers getting it right, there are rewards to be had. Offering customers a transaction + something else, be it an experience, a brand affinity driven by values, or a creative way to sell (subscription boxes and DTC have boomed in this decade) — the market is there. According to a study by Publicis.Sapient, 45% of customers indicated that they are more likely to buy from a brand or retailer that donates a portion of purchase proceeds to charity.
Retailers need to remember that in this new decade shopping is more than the product they ordered and the price that they paid- the values, the community, and the service they receive is paramount to avoid being squeezed by marketplaces.
The internet and smartphone boom has led to greater choice for consumers and more markets for retailers. A joint report by the Business of Fashion and McKinsey said: “We are entering a new phase of globalisation, driven by digital connectivity and the flow of data, and this will lead to much greater global connectedness”. Shoppers value local businesses, but the local hero will not be able to get away with an average value proposition in the era of hyper-connectivity and global social media.
At Kooomo, we strongly believe in the power of global expansion for retailers. Although conquering your local market might seem a challenge in itself, the beauty of online retailing is that it opens brands up to an international audience — given the correct approach, along with the right eCommerce platform driving these activities.
When going global, retailers and brands need to localise their marketing and understand what attracts customers in different territories. Methods that work in the U.K. might not always work in every country.
Delivery processes and payment methods will be different by country. For instance, German consumers often pay for goods on delivery, and invoicing is a popular way to pay.
Many of the eCommerce platforms are US-based, and not used to or equipped to deal with the complexities of trading in Europe across multi-currency, tax rate and payment solutions. They also often have offshore development and customer support teams, whereas at Kooomo we’re based right with you in Europe. The right eCommerce platform will not only be experienced in the complexities of multi-national trading but will also have a network of partners to support and offer advice as you go global but think local.
Mobile shopping crept up gradually, and then exploded around 2017. To put it in perspective, the smartphone with the largest market share in the U.S. in 2010 was BlackBerry, at over 30%.
For retailers, providing seamless mobile experiences to shoppers is no longer just a possibility — it’s an imperative. In fact, 36% of consumers use a retailer’s mobile app when researching products, and 32% use an app to buy products from an online retailer.
Mobile’s impact on digital has been well documented-it accounts for 60% of all traffic and 92% of eCommerce order growth. However, mobile’s influence is even more pronounced in physical stores, where 83% of shoppers aged 18–44 are using their phones. Phones have become the cradle of convenience for shoppers, eliminating friction and enabling shopping to happen anywhere.
To successfully lead with mobile, retailers must carefully review where mobile shoppers are encountering friction — from tiny search bars to lengthy checkout processes-both in-store and online.
The last decade has seen an enormous rise in the number of channels for retailers to engage with their customers and build their brand, and also to drive sales at any point in the journey. While email continues to dominate, this was the decade where being a ‘social media influencer’ became a recognised thing.
Twitter, Facebook and Instagram all launched various versions of purchasing buttons, and a survey found more than half of Instagram users had made a purchase right after they saw a product on Instagram-and 87% had taken some kind of action after seeing a product, like researching it or recommending it.
However, this seeming match made in heaven struggled — the data privacy issues that plagued Facebook alongside its decision to kill organic reach meant that the marriage of organic social media reach and eCommerce never quite came together over the decade like it seemed they would. Social advertising is effective and not going anywhere. Still, we’re expecting to see more shifts in the coming decade, alongside retailers getting to grips with the multiple channels to create single views of their customers, and experimenting with new methods such as A.I., voice, A.R. & V.R. — especially as 5G comes into force.
Online vs In-Store:
Despite the news, in-store isn’t going away. In fact, in the U.S., it still accounts for over 80% of transactions — and that’s with removing groceries and petrol sales. For all the talk of brick-and-mortar’s demise, it still maintains the lion’s share of retail spending.
Some of the big players took an ‘if you can’t beat them, join them’ approach. Amazon, the top name in U.S. eCommerce, opened its first physical store in November 2015 after two decades of operating exclusively online.
Online players are going in-store, or creating experiential pop-ups, globally. D2C brand Glossier opened an experiential, millennial pink pop-up store in London over Christmas 2019, and it was hugely successful. In-store is excellent for building relationships with customers, driving the brand through experiences, and having a lasting impact on social media. It’s also great for offering ‘Click-and-Collect’ delivery options, which is lucrative: Nearly three-quarters of customers who use click-and-collect make additional purchases once they’re in the store.
In conclusion, it’s been a monumental decade for eCommerce, and we’re expecting to see that growth continue to rise. Retailers need to be thinking now about their plans for the next decade — can your website stand up to the challenge?
Creative retailers are optimistic about the future — there are significant opportunities in globalisation, offering something beyond a product transaction, and creating 1–2–1 relationships with customers at scale.
Mobile-first UX is critical, as is the option for multi-language and multi-currency — even if you don’t have multiple countries now. Security is paramount, as is access to data for your digital marketing teams to test the weird and wonderful things coming out in the next decade as we cement in 5G. Don’t neglect the basics — brand, email, great products and a great value proposition that resonates with customers.
To discuss your plans for the next decade, talk to Kooomo today.
Originally published at https://blog.kooomo.com on January 8, 2020.