As we welcome in a New Year, it’s the perfect time to take a moment to reflect on the changes in ecommerce during 2016 and the predictions for 2017.
Ecommerce in 2016
While we may be waving goodbye to 2016, we won’t be leaving behind some of the big changes made.
So, what did we see in 2016 and what is here to stay this year?
Online marketplaces have continued to disrupt ecommerce throughout 2016. While many have serious limitations with branding, customer loyalty and data collection, the ease of access to a global market remains tempting to growing retailers.
Amazon’s fulfilment service took marketplaces to the next level in 2016, providing retailers with the full use of their shipping service along with Amazon Prime status. Active sellers using the service rose more than 70% in 2016, with Amazon delivering 2 billion items for other sellers; more than double the previous year.
Although we expect continued growth in this area in 2017 as ecommerce retailers look to expand their reach, it’s likely our Amazon obsession will take a back seat. According to a Magento survey of 2,200 ecommerce retailers, while 42% plan to increase investment in marketplace advertising and listings, a massive 59% will instead be focusing on search engine marketing to compete with retailers outside of these saturated marketplaces.
Capturing data and better utilising current ecommerce data to create a more personalised experience was a big winner last year. Developments in technology made data-driven insights more accessible than ever before, with ecommerce retailers both big and small achieving a complete 360-degree picture of their customers. In 2016 we saw this reflected in changes such as Magento’s acquisition of RJMetrics and the subsequent release of the Magento Holiday Dashboard.
Personalisation has been linked to all sorts of metrics, from increased AOV to higher conversion rates and customer loyalty. Unsurprisingly, we can expect to see this trend continue in 2017. In the next year, retailers should look at the potential for personalisation at every stage of the customer journey, from product recommendations on the website to more targeted email marketing post purchase.
In 2016 we saw some big players focusing on improving their delivery, offering quicker and more flexible delivery options for customers. Delivery has long been a barrier to completing a sale, with customers choosing to abandon carts and go elsewhere based on delivery details or costs.
Unsurprisingly there was plenty of developments in logistics throughout 2016 in a bid to combat these issues. From strategic takeovers such as Sainsbury’s acquisition of Home Retail Group to more eccentric ideas such as drone technology, the fight for the best delivery service rages on. Amazon's same day delivery and 2-hour delivery times in key UK areas have pushed even more retailers to invest in next day delivery and, in some cases, their own same-day delivery offering.
Increasing availability of same and next day delivery services will continue to cement customer expectations for more flexible delivery in 2017, and we expect even more developments in this area over the next year.
Ecommerce in 2017
This year is set to be especially busy for ecommerce retailers, with even more initiatives on everyone’s agenda. Overall, merchants recently surveyed by Magento expect to see even more growth this year, with more than half expecting revenues to grow by at least 20%.
With that in mind, what are ecommerce retailers planning on doing to achieve that growth?
This year expect mobile to continue its upward trajectory as the main focus in ecommerce. Two-thirds of Magento merchants expect mobile revenue to exceed 40% in 2017, with 45% subsequently planning to increase investment in their mobile experience.
While the mobile experience isn’t a new obsession, 2017 looks set to be the year of the new mobile experience thanks in part to Progressive Web Apps (PWA’s). This emerging technology could introduce valuable changes to mobile browsers. PWA’s use modern web capabilities to enable browser mobile web apps to work offline, send push notifications, sit on the home screen and more, just like a native app.
With PWA’s offering the potential for seamless mobile browser experience, it’s no surprise that 12% of merchants are already using or planning a trial of them in 2017 and another third are intently watching the future developments of the technology.
For consumers, omnichannel order fulfilment is becoming a must have rather than a bonus, with 60% of consumers saying they would purchase from somewhere else if their preferred delivery option wasn’t available.
With some of the big players now offering advance omnichannel experiences, we expect most retailers to concentrate on streamlining their offerings over the coming year.
Almost half the omnichannel retailers surveyed by Magento already have shop-from-store and buy-online-pick-up-in-store programs in place. With only 53% of these agreeing their programs were ‘operationally mature’, 2017 will see most of these retailers utilising their online and offline resources to improve their programs and deliver the best possible customer experience. Additionally, most retailers will introduce store inventory visibility online, have a cross-channel return program and enable ship-to-store by the end of 2017.
Social media marketing
Of all marketing initiatives, social media has arguably been the most unsteady. Offering such promise to begin with, social media ROI remains a barrier for many, with only 13.2% of marketers from the CMO Survey believing they have quantitatively proved the impact of their social media efforts. However, 71% of consumers who have a good experience with a brand on social media are likely to recommend it to others, showing there are rewarding social opportunities available.
This makes social media an enticing challenge, one which ecommerce retailers are looking to take on in 2017. By investing in high quality, differentiated product content and distributing via social media, merchants hope to drive interest and interaction at the top of the funnel.
This trend is driven in part by social commerce platforms such as Pinterest refining and improving their offering to merchants. Magento shows 19% plan to invest in a trial compared to just 7% that already are advertising via these social channels, and a further 39% who are actively watching. Overall, 38% of merchants are planning on increasing their investment in paid social in 2017.
Growth in general, and international growth in particular is a recurring ecommerce challenge. This year, however, we expect concern for international growth to reach an all-time high thanks to shifts in both ecommerce and the wider economy.
BREXIT poses potential problems for those already operating in European markets as well as those with plans to do so. Additional costs from tariffs and overall ease of access may dampen ecommerce expansion into the EU and some merchants may look to enter EU markets sooner than expected to avoid potential future barriers. Additionally, EU GDPR laws and the proposed changes will still apply in a post-BREXIT UK. Merchants should still expect to review and amend the way they handle data to protect EU nationals in line with GDPR.
This trend may be further accelerated by the continued growth of online marketplaces, with eBay and Amazon becoming both more attractive and more competitive. More ecommerce merchants could be drawn in by the appeal of a global market that could otherwise be hard to reach.
With increasing international growth concerns, it’s unsurprising 31% cited the ability to scale in international markets as key obstacles for 2017.
Overall 2017 is shaping up to be a busy year for ecommerce retailers. Whether it’s delivering the perfect mobile experience or a seamless delivery experience, this year is about utilising existing technologies to differentiate and exceed customer expectations. New emerging technologies such as mobile payments will garner some attention in 2017, but three-quarters of merchants stated no interest in 3D printing, AR/VR or voice search initiatives.
We expect mobile experiences to dominate 2017, with multichannel integration taking centre stage for omnichannel retailers.
If you want to know more about how to make the most of the emerging trends in 2017 and how to make this year the most successful yet, contact one of our team today.