Updated: Sep 24, 2019
Fueled by mobile, eCommerce in North America grew by 16% in 2018 to over $500 billion.
E-Commerce will soon account for 15% of all specialty retail sales in North America (in China, E-Commerce is 23% of all retail) and digital influences nearly 60% of all retail sales. Fueled by mobile, which saw sales increase 55% in a year, eCommerce in North America grew by 16% in 2018 to over $500 billion.
How we interact, discover and purchase goods (as well as return them) is now a 24/7 cycle. And not just in retail, but in B2B as well, where eCommerce integration has become priority #1.
Customer journeys now merge online and in-store. The notion that eCommerce is a distinct store or activity is disappearing; digital and in-person are now intricately linked, creating the symbiotic commercial ecosystem we call omnichannel – or, quite simply, business. New effects are emerging, such as that of returns, which have skyrocketed to nearly half a trillion dollars.
As one of North America’s leading eCommerce agencies with retail and B2B clients such as Fujifilm, Structube, Bench, BMR, Stokes, Garneau, La Vie en Rose, Birks and SAIL – to name just a few – Absolunet has a front row seat when it comes to eCommerce trends. Here are 10 eCommerce trends to watch for in 2019—important developments that companies need to consider to ensure the growth of their online and in-store sales growth.
1. Activist Consumers: The Rise of Ethical eCommerce
Consumer awareness of the environmental and ethical footprint of their purchases is on the rise, including digital purchases and the “real or hidden” impacts and cost of eCommerce – and consumerism in general. From sustainability to excessive packaging, consumers are rewarding merchants who resonate with their value system.
Did they really need to use such a big box? How far has this been shipped? How and where is this product made? Is this brand socially responsible?
Brands and merchants, big and small are using digital to appeal to consumers’ values – and consumers are increasingly guided by their values and ethics when making purchasing decisions.
Societal and environmental impact is exerting an increasing influence on consumer choice, and digitally-savvy brands are leveraging eCommerce to create the visibility and the transparency customers are seeking.
Everlane, a direct-to-consumer fashion label, was among the first eCommerce retailers to go “transparent”, providing a cost breakdown of materials for every product it sells. Sales are rumored to be growing in double-to-triple digits annually, despite Everlane’s absence of advertising. Word of mouth, site and social fuel their growth.
Reformation, a D2C sustainable women’s clothing and accessories brand shares “the true cost of fashion—not just the price tag.” in their newsletter, The Sustainability Report. They disclose their environmental footprint in terms of water, carbon dioxide, and waste, covering everything from growing the raw materials, dyeing, manufacturing, packaging, shipping, and even garment care.
Canadian sporting goods retailer Sportium devotes a portion of its marketing and merchandizing to its ecofriendly collection, where “conscious brands and products” are a category of their own.
2. The End of Free Returns?
Retail’s $400 Billion a year elephant in the room to hit tipping point
Return rates from eCommerce sales are 2 to 4 times greater than in brick-and-mortar retail, and customer expectations of generous return policies is bringing retailers to an expensive tipping point.
Returns hit $400 billion in 2017 (the equivalent of roughly 1 month of all U.S. retail sales), up 53% since 2015. Generous return policies have long been used to increase conversions by reducing consumer uncertainty. But eCommerce growth, free shipping and free returns have created a dangerous side-effect: the cost of managing returns. 44% of retailers say margins are strongly impacted by returns handling and packaging.
“Your returns can and will be used against you.”
In 2018, Amazon announced it would institute a lifetime-ban for “serial returners”, shoppers who have a habit of returning most of their purchases. 61% of retailers said they would do the same if they had the means to better track returns and “serial returners”.
2019 will see a multitude of retail initiatives to deter returns, ranging from more complex or conditional return policies to incentives to pick up items in store, in order the curb the unsustainable pace at which returns are growing.
In Canada, H&M no longer accepts returns in store from online purchases, forcing consumers to use and pay for postage.
Shopify acquired Return Magic in order to develop a native capacity to manage and optimize returns. Return Magic also enables Shopify merchants to use the data from returns to create a better shopping experience … and reduce return rates.
AMAZON GOES BRICK AND MORTAR
Amazon shipped over 5 billion packages in 2017 with Prime alone and now has over 600 brick and mortar locations where customers can return merchandise, a means to reduce the “returns tax”.
3. Sales Taxes: The Tax-Free Party is Over for Consumers and Merchants
The tax-free party is over for both merchants and consumers, who will have to deal with regional sales taxes in 2019, no matter where the merchant has a physical presence.
In the months following “South Dakota vs. Wayfair”, more than half of states in the US have enacted an online sales tax or will do so in 2019. Merchants and solution providers will be fast-forwarding discussions and initiatives around eCommerce taxation and reporting.
69% of retailers said collecting online sales tax would have a “very negative” effect on their business 36% of US internet users said they would shop less online if they had to pay sales tax
Merchants, both B2C and B2B, will have to determine which tax applies to which clients, regions, products and more, and then to calculate and charge state-specific (and product/price specific) sales tax on their online sales, and remit those taxes to a multitude of states and agencies … on time.
Tax rates will vary across the different states and jurisdictions, with variable eligibility and applicability criteria. Tax rates will depend on what is being sold (products AND services) and possibly the jurisdiction where consumers reside.
Amazon already collects sales tax in every state on the products it sells directly (+/- half of all units sold on its site), and may encourage merchants to sell through Amazon to avoid complexities brought on by sales tax laws.
4. Mobile Faster As PWAs Blur Lines Between Sites and Apps
It’s a site, it’s an app – no, it’s both.” PWAs are changing how eCommerce and mobile coexist. Brands and retailers will begin moving from sites and apps to a new standard; the Progressive Web App – a hybrid between sites and apps which combine the upsides of each and does away with the limitations.
Load 2 to 10 times faster than mobile sites
Have offline capability
Can be added to a home screen without ever requiring updating
Allow push notifications
West Elm’s PWA provides a near-instant browsing experience. The furniture and home decor brand saw a 15% increase in time spent on site and a 9% lift in revenue per visit.
5. Social Media Gets Transactional
Not satisfied with simply selling leads and traffic, social media platforms are looking to bridge the eCommerce gap by becoming transactional; users will be able to complete purchases without leaving the platform.
Social buying is already standard in China, where 55% of social app users reported buying goods or services directly on a social app.
Private messaging services, which are exploding in popularity, are also expected to become transactional. WhatsApp, Snapchat and Facebook Messenger are showing engagement numbers running into the billions.
Instagram is rumored to be working on a fully-shoppable app and has introduced shopping features on its main platform, providing an image, product description, and price information – along with a direct link to the merchant’s website where they can finalize the purchase (instead of search, browse, add to cart, checkout). A native payments feature was subtly added to its app for some users, who can now start buying without ever leaving Instagram.
KYLIE COSMETICS X SNAPCHAT
Kylie Cosmetics is one of about 20 brands to be featured on Snapchat’s “Shop and Cop” section, where users can browse merchandise and buy directly in the app without being directed to a separate website.