Facing an economic downturn and reduced spending, 2022 was arguably one of the toughest year’s retail has ever faced. As the cost-of-living crisis continues, thoughts are now turning to what 2023 will have in store and how e-commerce merchants will respond to the challenges ahead.
We spoke to a range of industry experts to get their predictions on the e-commerce trends that every retailer should know about over the next 12 months.
According to many retail experts, the top priority for retail next year should be customer retention.
That makes sense when you consider that the chance of selling to an existing customer is 60 percent to 70 percent, but the chance of selling to a new prospect is typically just 5 percent to 20 percent.
“The amount and style of shopping options have multiplied tremendously if you include social shopping, video shopping, in-game shopping and, of course, metaverse/Web 3.0,” said Christine Russo, a prolific content creator and writer for Deloitte.
“How do you gain and keep customers when their options seem endless? The answer is loyalty. It’s as old fashioned as it comes, but treating people nicely keeps them coming back.”
Russo is correct. If a shopper’s experience is poor — including errors, delays or lack of communication — retention is far less likely. Seventy-seven percent of one-star reviews on Trustpilot are a direct result of a poor post-purchase experience.
In 2023, we expect more brands to invest in rewarding customers for loyalty as a way to show appreciation for their ongoing support.
There’s a number of ways to do this, including loyalty and referral programs, free gifts, and personalized discounts. If you’re worried about the impacts of discounts on your bottom line, a simple, prompt thank-you email or even a personalized note can go a long way.
Related story: 4 Reasons Budding Online Businesses Should Start Multichannel Selling
Eighty-nine percent of retailers have experienced an increase in costs over the past six months. These cost increases have eaten heavily into retailers’ margins and our experts argue these pressures will only intensify over the next 12 months, and must be addressed.
“I expect brands and retailers to continue to face cost and inventory pressures as a result of inflation and ongoing supply chain issues," said Russo. "Consumer behavior will remain uncertain as a result of the economic backdrop and this will impact both e-commerce and physical stores alike.”
According to a recent survey by Inventory Planner, almost half (45 percent) of retailers have surplus goods they're desperate to offload — accounting for almost 24 percent of their entire stock holding.
Two-thirds of brands now admit there will be "dangerous" impact on cash flow if they can’t move that stock onwards in the new year.
Excess stock is a major issue because products start to decrease in value over time. Among other things, goods can start to deteriorate and perish, go out of fashion, become redundant, and more. With tough times ahead in 2023, cutting stock will be seen as a crucial strategic move that all brands will need to take to ensure their cash flow remains healthy. Optimizing inventory, moving on dead [excess] stock, and releasing cash to offset cost pressures will be top of mind for retailers.
Sustainability has been a hot topic in retail for a long time, but in 2023 our experts believe consumers — especially younger shoppers — will be more informed and aware than ever before and opt to spend more of their money with truly sustainable brands.
“E-commerce brands should expect that their customers will become ever more aware of environmental issues and seek out those for whom they feel their values are aligned,” explains IBM Futurist Andrew Busby.
“This will mean even greater transparency with regards to things such as manufacture, sourcing, provenance, workforce, materials and so forth.”
Modern customers are becoming increasingly aware of the sustainability aspect of the product they're consuming. Sustainability will play a crucial role in the market, and with more consumers embracing green commerce, brands must follow by making it a strategic priority in 2023.
Online shoppers have already grown accustomed to livestream shopping, with companies like Wishtrend and Nike building up huge businesses based on this business model.
Our experts predict that livestream shopping will continue to grow in prominence in 2023, with livestreaming platforms such as TalkShopLive and Brandlive reporting skyrocketing sales. The biggest e-commerce players of all — Amazon.com and Facebook — have also invested heavily to roll out live selling features.
It’s a trend that's set to shape the future of selling online. “There’s no doubt that livestream commerce is gaining traction, whether it’s broadcasting to a wide audience or connecting a single customer to a sales assistant for personal support,” said Cate Trotter from Insider Trends.
“Increasingly, we’re seeing brands putting livestream capabilities into their stores — as with Beautycounter in the U.S. Not only does this add a sense of theater to the physical retail experience, it’s also a way to make better use of staff in quiet periods.”
In 2013, merchants lost on average of $9 for every new customer acquired. Today, merchants lose $29, a 222 percent rise in the last nine years because digital advertising costs have risen so highly.
Some brands are seeing advertising costs increase by as much as 60 percent to drive the same amount of traffic. This trend will only continue; U.S. digital ad spending is expected to grow by nearly 50 percent in the next four years.
So, what’s the answer for 2023? Our experts predict that a focus on diversified ad spend and new channels will be key.
“Rather than being awesome at just one marketing channel, to be super successful brands are going to need to have a mixture of different types of marketing running — some free, some paid, and some automated to appeal to both the new customer and the repeat customer,” noted Chloe Thomas, author and host of the popular podcast E-Commerce Masterplan.
“Those different marketing channels will need to work together, so getting the message, brand, story, empathy and creative right across all the channels is going to be important, too.”
https://www.mytotalretail.com/article/a-new-threat-for-retailers-the-rise-of-the-synthetic-shopper/#ne=671ca3ff7a99a5a92b9992586adcf1c0&utm_source=total-retail-report&utm_medium=newsletter&utm_campaign=2023-01-21