#43-Trends that will shape the Future of E-commerce (Part-1)
Ecommerce market places as a business will experience natural tailwinds for a long period of time (10–20 years) till the offline retail gets marginalize (or shifts to new/hybrid retail).
The number of internet users has reached ~390 to 400+ million in the ASEAN region.
COVID resulted in increased adoption even in physical shoppers. The lockdowns ensured people who otherwise would have spent a lot of time outside used the internet for entertainment, education, and work.
Some of the digital acceleration shifts might be irreversible changes in customer behavior, as they have first hand experienced the convenience of digital journeys
As per Google’s report, ASEAN’s internet economy has already crossed ~100 billion USD in GMV in 2020 and will triple itself by the year 2025 to 300 billion USD. Pure e-commerce category (excluding online media, travel, and food delivery) will form more than 50% of the total internet GMV (gross merchandise value)
In this write-up, I will talk about the first 9 trends that e-commerce companies must adapt to survive future disruption and competition.
What are the trends that will determine the success and scale of e-commerce companies?
- Group Buying
- Voice-based ordering/shopping
- Virtual Trials, and shopping tours
- Expert advice on shopping (AI bots in long term)
- Fake goods detection with feedback loops and AI systems
- Specialist & Curated Marketplaces
- Influencer streaming & social commerce
- Personalized views and recommendations
- Subscription models and premium memberships with additional benefits
Let’s go a level deep if I have your attention
Group buying- Pinduoduo is the classic example of a group buying model in e-commerce. Pinduoduo is the largest social e-commerce pla6orm in China and the biggest online marketplace for agricultural product sales. Launched in September 2015, the company has grown at an exponentially fast speed as consumers embraced its pioneering team purchase model and interactive e-commerce.
As of Q1 2020, Pinduoduo is an online marketplace with 628.1 million annual active buyers, who come to the platform for entertainment and its wide range of value-for-money goods
Voice-based ordering- Amazon Alexa is already offering the voice shopping and there are many other e-commerce companies that are trying the model. Accuracy in voice recognition and personal mobile assistants will get better by the year 2023–25 (expected maturity)
Virtual Trials, and shopping tours- AR/VR tech and Hardware is going to evolve further that redefines the shopping experience for e-commerce users.
Alibaba is already working on the VR tech for shopping (Buy + ).
Facebook is aggressively stepping up the developers platform -Spark AR studio and Oculus hardware will evolve further beyond the gaming opportunity as a critical technology for e-commerce and social commerce.
Expert advice on shopping (AI bots in long term) — One pain point in e-commerce shopping is the lack of personalized advice. Reviews are helpful but they cannot replace the personalized and human touch of store salesman. This is where virtual bots will come in handy. Walmart is testing its virtual store VR tech.
Imagine a Sophia kind AI bot (always available for shopping-related conversations). It can advise millions of users at the same time (Watch the movie HER to understand what I mean)
Fake goods detection with feedback loops and AI systems- An AI-algorithm based summation of all user experience, genuine seller quality tests, randomized checking, and reviews summary should flash a genuine/counterfeit probability score on the site. Eventually, the seller with a counterfeit reputation must be delisted from the platform.
IBM Crypto Anchor Verifier empowers businesses to verify the authenticity of goods in the field or before they leave production facilities.
Data weave is another company that provides Counterfeit Products Detection solutions. It enables consumer brands to discover and curb the presence of counterfeit products on e-commerce websites using AI-powered image and text analytics.
Specialist & Curated Marketplaces- Generic marketplaces will continue to exists and prosper. However, the users will continue to look for niche categories- curated fashion, from farm to table kind models.
Influencer streaming & social commerce — According to FBIC, China’s social commerce market is estimated to reach 547.4 billion yuan in 2018 and increase to 2,419.4 billion yuan in 2022. Billions of users log into social platforms every day and they are looking for new and innovative ways to shop.
Viya (China’s top social influencer) $49.7 million (353 million yuan) on Singles’ Day in 2019. Likewise, Kim sold $2 million dollars’ worth of her new shapewear in minutes. Both Viya and Kim have a massive fan base- Viya has approx ~10 million fans on Weibo, and Kim has almost ~200 million — on Instagram.
Livestreaming used cases in shopping are on the rise across social platforms. Social platforms have realized that in addition to directing the traffic to e-commerce and D2C platforms as part of digital marketing business, it can directly help to execute the transactions on the platforms themselves.
Personalized views and recommendations — The e-commerce home page must be customized for the consumer’s shopping history, wishlist, and online persona.
Ecommerce companies collect enough data via search queries, viewing history, past purchases, wish list or items placed in the shopping cart, products you’ve recommended on social media, location, CTR, hover time, customer segments/buyer personas to mobilize AI for personalization
On-demand delivery, Drone and autonomous: Prime air is already delivering products in less than 30 minutes. In the next 5–10 years windows as the security systems and digital IDs/scanner tech gets better, we will see increasing adoption of drone delivery tech across developed countries first. In Emerging markets like India, Africa, Latam, SEA (sans SG, Malaysia) the adoption may take a few years longer.
Prime Air development centers exist around the world.
Alphabet (Google) subsidiary Wing has already received a patent for drone/navigation systems for delivery of small packages across US.
Amazon also won the patent for ‘surveillance as a service’ tech. The purpose is security, but applications could be extended to its core e-commerce business.
Subscription models and premium memberships with additional benefits: Amazon prime also offers its members content services, along with preferential shopping and ‘expedited/free delivery’ service. In e-commerce companies, same-day delivery will be the ultimate normal, and that is when retail will start getting cannibalized in an exponential manner.
Ecommerce companies will need loyalty and rewards play too, to retain the customers. In the long run, loyalty and user-stickiness matters for both online and offline business.
This is part one of the Ecommerce series (Part-2 coming soon)
Regards,
Sidhartha Sharma
Platform economy and Digital Ecosystem expert
(views are personal)
