Ecommerce is a multi-trillion dollar industry, and with exponential growth predicted in the next three to five years, we are not expecting it to slow down any time soon. In 2021 there were believed to be 12-24 million online stores in the digital space, and as digital sales grow, more shop owners are migrating their business online. Whilst this is positive for consumers who now have a multitude of products and services at their fingertips, many businesses are seeing the challenges associated with a growth in online competition.
As ecommerce evolves there are a few key elements that must be considered. Shopify recently released an in-depth “Future of Commerce” report which gives detailed insight into how they see the future of commerce based on relevant research into current trends and predicted statistics.
With the positive rise in ecommerce, there are certain complications which new businesses trying to break into the marketplace may come across. We’ve broken down these concerns and provided insight into how we can better navigate this crowded digital marketplace.
Customer Acquisition Costs Are Cause For Concern
The cost of customer acquisition is on the up. Ecommerce is not slowing down, and as such there is growing concern about the effect that this is having on gaining new customers, as well as retaining existing ones. There are currently an estimated 24 million online businesses and up to 11 available spaces on page one of Google. This means that the competition is undoubtedly increasing, making it difficult for companies to be found, especially newer or smaller businesses competing with larger, more established enterprises.
Previously businesses have had marketing budgets to put into PPC campaigns which could help greatly with customer acquisition. Though still an extremely valuable tool, and important for companies to implement in terms of visibility, the cost of PPC campaigns is increasing. Digital advertising platforms have increased their cost-per-click by 15% ultimately meaning that businesses will utilise more budget, and see less in terms of results. How can we combat this issue? Though not a quick fix, investing in your own brand is one of the best ways to tackle an increase in acquisition costs.
Reputable companies can help to increase customer lifetime value and boost conversion rates. Having a recognisable, respected brand is an essential sales tool in today’s society. Though an increase in online sales sees customers prefer a digital journey, that is not to say that they do not expect to see a customer focused and personable brand that they can resonate with. 80% of online shoppers conduct thorough research before placing any order. So make your brand memorable. Investing money in your branding, and having key statements online about what your brand stands for will help your online shop stay front and centre in a customer’s mind.
Further to acquisition, investing in branding will help to encourage customer retention. Customers are 70% more likely to re-purchase from a brand that they like and in turn become brand advocates; the power of people is a marketer’s best friend. Customers are 4x more likely to purchase from a brand when they have been referred there by a friend.
Third-Party Cookies Phase-out Creates Challenges For Marketers
Though inevitably the future is online, customers still want the personal experience that they had within brick and mortar stores. However, as third-party cookies are phased out this is creating challenges for marketers to create personalised websites, and it is predicted that 80% of marketers will abandon all personalisation efforts by 2025. However, 72% of customers will only interact with marketing that is personalised and tailored to their interests.
It is important to know that Google has only announced the phase out of third-party cookies which means that all important first-party cookies will remain. This is a breath of fresh air for marketers as they still have an insight into what their customers are doing on their site. However the loss of third-party cookies means that they will not have any additional information regarding their browsing habits, or likes and dislikes taken from other websites.
Though the new changes around cookies can be problematic there are other ways in which you can interact with your customers to create a personalised experience for them. 58% of customers are willing to share information with brands that they trust in order to have a personalised online experience. Therefore, implementing surveys and preference centres can help businesses gauge insight into customer wants and needs, enabling marketers to create the personal experience that customers want, without the use of invasive third-party cookies.
A Growing Appetite For Social Commerce
Social media has evolved beyond the original use of a networking platform and has become an all-encompassing marketing and sales tool. 58.4% of people use social media globally and 54% of its users have stated that they now use social media as a tool to discover and purchase products from online retailers. 36% of customers have purchased directly through social media platforms, showing that social commerce is the future.
Since 2020 video social media has reached new heights and opened doors to an influx of social media influencers. Additionally, the introduction of social sales tools has meant that businesses have yet more sales tools at their fingertips. With the rise in TikTok, traditional style sales techniques which we would be used to seeing on television shopping channels have once again become more popular. 1 in 10 people have used the new TikTok shop feature to purchase products. But is this due to the nature of the sales platform, or the individual sellers?
Influencer marketing is a pivotal element which should be added to your marketing strategy. Collaborating with social media content creators and influencers helps to build trust and rapport with customers. 89% of YouTube viewers trust the recommendations that creators give and in turn are more likely to purchase from brands that work with their favourite social media creators.
Breaking into the social selling space can be difficult, but ensuring as a brand that you are providing the content that your customers are looking for, and creating brand partnerships with well known influencers can help to accelerate you in an otherwise competitive space.
What Are The Key Takeaways?
- The report highlights some interesting changes, and marketers should look to amend their strategies based on how we envisage the future of commerce, but what are the key takeaways from this report and what can we do now?
- An increased number of online shops and competitors makes it increasingly difficult and more costly to acquire new customers. BUT, you can combat these through varied approaches.
- Distribute marketing budgets to include an increased focus on creating a recognisable and reputable brand. Customers trust well known and well-respected brands, and as such creating a brand which is instantly recognisable and trustworthy will encourage existing customers to become brand advocates.
- The uncertainty of the future of cookies will mean that marketers will need to rely on alternative techniques for collecting information about their customers.
- Additions like preference centres and surveys can help you to gauge an understanding of what types of marketing your customers would be receptive to.
- The growth of social media means that the future of commerce is most certainly growing in correlation with the growth of video platforms.
- Get creative with your social media tactics, invest in influencer marketing and dive into live shopping platforms.
Don’t get left behind. Speak to our experts for help and advice on how you can increase your online presence and sales.