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3 March 2020

5 trends that will continue to shape e-commerce in 2020

There are literally hundreds of trends in e-commerce, from new ways to host your e-commerce platform to delivering goods with automated drones.

In this short article, I’ll be putting the spotlight on trends that are directly impacting the customer experience, as not only is it core to the success of e-commerce, but also broad enough to address a variety of trends that are shaping the e-commerce industry today.

5 trends that will shape e-commerce in 2020

1. Artificial intelligence 

Let’s first get the elephant out of the room by mentioning AI. Some people are annoyed every time someone starts talking about it, but because of the importance of automation I’ll take the risk. Technologies such as recommender systems, optimized pricing, enhanced search (like photo search) and marketing automation will continue to find their way into the e-commerce market, providing a more personalized experience. From a business point of view, automation will continue to increase margins. For example, by automatically cancelling high risk orders, optimizing inventory and increasing conversion rates.

2. New business model 

Another trend that is expected to grow in the coming years is the experimentation with new business models.

The first example is the subscription model (almost everything can be made into a subscription model). The clear advantage for the business is, of course, recurring revenue, which is a big trend in itself. The consumer is starting to see the benefits of subscription models too, such as the possibility of discovering new clothing brands (Stitch Fix), movies (Netflix), wines (Our Daily Bottle), recipes (Hello Fresh), toys tailored to children’s age (Hoppi Box) – you name it.

The second booming business model is all about keeping up with the constant change in customer demand and making every effort to differentiate while expanding margins. We will continue to see a strong emergence of private label products slowly eating away at the revenues of the big multinationals. Successful examples are Peak Design (a bags brand), Dr. Axe (a natural health brand) or Amazon’s Belei Skincare (a beauty brand). Creating your own private label is becoming increasingly easy.

Finally, there is still a large interest in drop shipping. In this model, the store owner does not have any products in stock; instead, all orders are directly sent to a third party that ships it to the customer. Most of the time, customers don’t even realize this method is being used. It’s one of the most popular business models for small companies that are just starting out in e-commerce, because here is little risk involved, depending of course on the third party. 

3. Sustainability 

A third trend that is conquering the e-commerce landscape is sustainability. At last, we are starting to realise in large numbers that we are destroying the planet and we would like to leave a habitable environment for our children, grandchildren and generations to come. This is influencing everything from product selection and packaging to innovation and eco-friendly supply chains. According to 70% of millennials, sustainability is an important variable when it comes to buying decisions. Since this generation will dwarf our spending online, it will have a big impact on the e-commerce landscape. Be ready to be bombarded with sustainability commercials.

4. AR/VR/Conversational

A fourth trend well worth a mention is the growing usage of technologies that are changing the way we buy. VR and AR are extremely powerful ways to display products and will continue to gain importance as a touch point in the customer journey. My guess is that, in the not so distant future, consumers will spend an ever increasing amount of time in the 4th dimension, the virtual world.

Conversational interfaces such as Alexa & Google home will also become an increasingly important new channel to manage for marketers. A great example of this is, of course, this movie.

5. Offline stores 

The final trend to mention in this article is the growing number of online brands testing the waters offline. This can be in the format of offline pop-up stores experimenting with completely different experiences to generate more customer insights or just to test whether offline stores actually increase online sales. Maybe this trend could be part of the solution for the increasing vacancy rates in cities.

Vacancy rates in Belgium

To conclude, we can say that value creation combined with changing customer behaviour and expectations are key drivers behind these trends. The main question for companies is where to focus. There are many options to choose from and we recommend that you don’t start creating robots just yet.

At The House of Marketing, we can help to remain at the forefront of e-commerce. Want to find out more about the topic?