In 2003, 83% of consumers felt frustrated by online shopping; today 72% actually consider themselves ‘expert’ e-shoppers (Corra). With global e-commerce sales reaching €740 billion (eMarketer) last year – 1500% higher than a decade ago – several seismic changes have transformed the sector.
The emergence of broadband saw internet use soar and convinced investors that the second dotcom boom was durable. Web pages could accommodate higher resolution images, while the launch in 2004 of Facebook ushered in the era of user-generated content and personalised advertising, and the 2005 launch of YouTube presaged product videos.
Economies of scale were failing to insulate the big players from upstarts; sales growth in 2006’s Internet Retailer Top 500 was fastest among start-ups (55%).
In 2011 Amazon enlarged its search field and buttons and reduced clutter to accommodate touch-screen devices. The smartphone user’s needs have driven the simplification of checkout processes, resulting in fewer fields, social and guest logins, and simpler payment options like PayPal.
The era of big data has dawned. Certona’s Resonance®, which targets customers with personalised content based on buying patterns, increased items-per-order by around 30%.
Free shipping has become more important to shoppers, with ComScore’s chairman Gian Flugoni observing that most consumers “abandon shopping carts” at checkout “if free shipping isn’t included.”
Sophisticated real-time traffic data enabled logistics companies to optimize delivery routes. Track-and-trace services also improved.
Selling more items per order, retailers have better absorbed the costs of free returns, which can boost customer spending by up to 357% (Amanda Bower, James Maxham: Return Shipping Policies of Online Retailers). Innovations that help customers better understand products before purchase, meanwhile, reduce return volumes. US Fashion discounter Rue La La, for example, gives customers access to their own purchasing history and customer sizing data. And packaging optimization – driven by shipping partners – has also cut shipping costs, better reflecting products’ fragility, shape and brand identity.
Cross-border trade accounts for a much higher proportion of e-commerce sales than 10 years ago – partly thanks to the agreements between local logistics operators with the scale and expertise to manage fulfillment needs. Quoted in PayPal’s Spice Routes Report, Chinese dotcom entrepreneur Wu Hongbo said: “Online overseas trading and payments have brought more opportunities than we ever imagined.”
The next decade
Several digital trends are likely to fuel each other. The evolution of big data into smart data and sentiment analysis is already allowing companies to personalise the service they offer to customers. An individual complaining on Facebook that he’s “often abroad and struggles to return items within 14 days” could be offered extended return periods. A consumer with a penchant for 1960s fashions and Beatles memorabilia might have a home page personalised with retro fonts, 1960s clothes and customised descriptions like “Paul McCartney wore this shirt in Yellow Submarine”.
Still in their infancy, digital try-on services like eyewear retailer Warby Parker’s, which allows customers to impose glasses on personal photos, will reduce return volumes.
The next decade will likely be as innovative as the last. With global mobile traffic growing 80% last year (Akamai, State of the Internet) and by anticipating change, we will help you exploit untapped markets as they mature.