July 2015 was a big anniversary for ecommerce—retail giant Amazon celebrated its 21st birthday. If you looked back to the early days, when the company was a toddler, or even a teenager, you’d hardly recognize it. To see how far it’s come, take a look at how Amazon.com looked when it originally launched as a seller of books—without menus, without navigation bars, and definitely without search algorithms. New and emerging technologies have reshaped Amazon, along with ecommerce sites around the globe.
So, No More Changes, Right?
You hit 21 and you think you’ve got it all figured out. Well, you don’t—in fact, you have a long, long way to go. Through 2015, that watershed year for Amazon, ecommerce represented just 7% of all retail sales—that’s twice what it was 5 years earlier, but still just a sliver of total sales. So, you have an industry with relatively low market share coupled with dramatic growth. That translates into unprecedented opportunities—and challenges—for ecommerce entrepreneurs and innovators.
How Ecommerce Is Changing: 2017 and Some Key Inflection Points
The best evidence that ecommerce is still in its infancy comes from the thousands of retailers who continue to come up with innovative growth initiatives and new ways to engage and influence an expanding market every day. Writing for Shopify, Ritika Puri, marketing consultant and entrepreneur, explores some of the top 2017 trends which represent inflection points in the history of ecommerce. Here are three of the most important:
1. The Shrinking Middle
The ecommerce market is more fragmented than ever. Consumers have more choices, and marketers have more channels—from the web to mobile, social media, radio, TV and print—to leverage. Within this expanding network of choices and marketing options, consumers are increasingly fragmented, moving to the high and low ends of the market, with the middle increasingly being squeezed out.
K.B. Sriram, a partner at Strategy&, describes the phenomenon:
“…what we call the great fragmentation is manifested in consumer behavior and market response. In both developed and emerging markets, there is a wider variety among consumers now than at any time in the recent past. Growth is evident both at the top of the market (where more consumers are spending for higher-quality food and other packaged goods) and at the lower end (where an increasing number of consumers are concentrating on value). But the traditional middle of the market is shrinking.”
Companies which understand the new, bifurcated market and launch carefully coordinated media campaigns will be the big winners. Research from RJMetrics shows this is already happening: top-performing ecommerce companies, for example, are grabbing up new customers at 3.5 times the rate of average performers.
2. Content Marketing Continues Its Ascendancy
More than 78% of chief marketing officers view custom content as the future of marketing, and with good reason: companies that rely on content marketing save an average of $14 for each new customer they acquire, and businesses that blog regularly are 13 times more likely to generate a positive ROI, according to Hubspot.
What that also means is that there’s a lot of competition to post the most engaging content, and that competition is driving innovation. Increasingly, marketers at the top of the food chain are creating ecommerce content targeted to more granular segments of their markets. They’re also focusing more on the content that most engages those market segments, things like how-to-videos, photo-heavy social media posts, and rich content which includes calculators, quizzes and assessments.
3. Going Global
More than 1.4 billion people around the globe will join the ranks of the middle class by 2020, according to research from McKinsey, about 85% of them in Asia and the Pacific region. That represents a huge, untapped pool for ecommerce marketers, one which enterprise ecommerce leaders will no doubt want to exploit, but that globalization opportunity comes with a significant challenge.
Each new international market has its own constraints, market preferences and security challenges, not to mention the cultural norms which marketers don’t dare offend (think of Coke’s ill-fated entrée into the Chinese market, where “Coca-Cola” was translated as “bite the wax tadpole”). Smart ecommerce companies will find reliable, regional partners to help them successfully meet those challenges. For example, an increasing number of U.S. and U.K. ecommerce companies (including J. Crew, Abercrombie & Fitch and Ralph Lauren) are working with Mall for Africa, a partner which helps them reduce the fraud risks and ensure the accessibility of their products in remote areas.
The history of ecommerce is still being written, every day by forward-leaning companies which are quick to recognize the emerging trends which are reshaping online sales. Fortunately, there are businesses with deep experience and knowledge in ecommerce best practices which can help navigate the churning waters of a continually-shifting market.
Onestop Internet is an end-to-end ecommerce solutions provider, using market and competitive research on behalf of our clients to anticipate and lead through changing ecommerce landscapes. Contact us to see how we can help your ecommerce business grow.