The world of e-commerce has always been a shifting landscape, with trends coming and going. How consumers buy and what they expect pivots with every new technology. Old-school advertising and modern data analytics have merged with mobile devices and the growth of a global fulfillment network. New e-commerce trends emerge each year, and some change the industry drastically.
One trend that persists is the continued growth of online shoppers. In 2021, there were an estimated 2.14 billion digital buyers worldwide, growing 29% since 2017. And the value of global e-commerce sales was $4.9 trillion in 2021, with projected growth to $7.4 trillion by 2025. Companies developing new products must take note.
In this article, we’ll examine nine trends vital to companies engaged in new product development. We’ll also offer suggestions on how to understand and respond to these trends to your benefit.
Whether you’re adding to an existing brand or looking to disrupt your industry with a new product offering, these trends will help you plan your journey. They affect e-commerce businesses that run online stores with Shopify, sell through Amazon, or have a hybrid approach that sells online and at retailers like Target and Walmart. But you can pull ahead of the competition if you understand that what worked last year may not work this year.
Before we begin, we need to acknowledge the ball-shaped spikey elephant in the room regarding the future of e-commerce — COVID-19. The pandemic was a shock to a quickly evolving but fairly predictable industry. The double whammy of a crippled supply chain and being forced to shop from home caused more of a revolution in e-commerce than an evolution. Some of the trends listed are new aspects of changes already taking place, and some directly result from the disruption caused by the pandemic and its aftermath.
9 E-Commerce Trends Impacting Product Development
Our list comprises e-commerce trends that directly impact those doing e-commerce product development. We discuss why they’re important to your business and what you can do to take advantage of them. But consider these only as a starting point for further research and discussion with your team.
1. Decline in U.S. E-Commerce, Growth Overseas
What goes up must come down. And that is true of e-commerce sales in the U.S. The pandemic and people shopping from home ushered in a significant increase in people buying goods from online retailers. But as people return to buying more from brick-and-mortar stores or spending their money on experiences and services, online sales are dropping. The days of being successful with only a “me too” product online are over, and you have to earn your customers with better products.
Because of different economic conditions, many overseas online retailers are still seeing growth. Those economies suffered more from COVID-19 restrictions, or they simply didn’t have as much e-commerce before the pandemic showed a wide range of consumers how attractive online shipping is.
A decrease in overall sales is only a problem if you have not designed a product that delivers excellent customer value. A downturn in e-commerce is a time to double down on delivering a product or products that excite customers, generate great customer reviews, and lead to referrals and additional sales. Keep your profits moving along by focusing on your margins. And now may be the time to explore overseas markets that are still growing.
2. The Dollar Is Stronger, and So Is Inflation
Things are getting more crowded with a second elephant in the room: Inflation has been significant across industries and around the world. On top of that, the U.S. dollar is stronger against other currencies than it has been for over a generation, which can cause problems for product companies. We used to be able to count on a fairly stable inflation rate and minor currency fluctuations — not in 2022. And, what policymakers do to combat inflation and a strong dollar makes the whole thing even more unpredictable.
As a product development company, you need to do what you can to hedge against inflation and currency fluctuations, along with working hard to reduce the costs of your products. You don’t have much say in the price of raw materials or logistics, but you can change your design and iterate for manufacturing to control costs.
3. Consumers Want a Flexible Shopping and Buying Experience
The good news is that far more people now understand the convenience of online shopping. The bad news is they now want everything online retailers delivered during the pandemic, plus the power and convenience of brick-and-mortar stores. Oh, and they want more shipping options. New buzzwords like showrooming (shop at a physical showroom, buy online) and webrooming (shop online, but buy and pick up in a physical store) are born of the desire to have products shipped to their front door but returned at a local store. This type of hybrid selling is sometimes called omnichannel retail or multi-channel selling.
The cost of providing these new options can add up fast, so start small and test different scenarios. Track data to see which new shopping and buying options deliver more sales, and then invest in what works best.
4. You Can’t Take Supply Chain for Granted
The global manufacturing market accomplished an amazing thing once trade barriers came down and supply chain digitization started connecting everyone: An incredibly efficient manufacturing and distribution system emerged that worked so well that most people simply took it for granted. Then politics and COVID-19 came, and the highly optimized system just sort of fell apart.
The reorientation taking place now will not end in 2022 or 2023. The supply chain is no longer broken, but it’s certainly not something we can take for granted again. This reorientation includes shifts in overseas manufacturing in and outside China, nearshoring to places like Mexico, and reassessing how to leverage international freight shipping.
Since e-commerce brands are so dependent on global manufacturing and the supply chain that supports it, your team needs to work on increasing the efficiency and flexibility of your supply chain.
5. Amazon Aggregators Are Here to Stay
Along with all the geopolitics and technology, one market-driven e-commerce trend significantly impacts how e-commerce stores grow — Amazon aggregators. These well-funded companies buy up small but successful private-label brands selling on Amazon. They consolidate the brands and share resources for gathering and using customer data, improving the customer experience, and utilizing some of the newer technologies driving other trends.
How Amazon aggregators impact your business depends on if they buy your competitors and if you plan to be acquired by one. Either way, they’re not going away anytime soon, and they will continue to drive the valuation of e-commerce companies up in the coming year.
6. Internet Video Has the Attention of Consumers
The age-old challenge in product marketing is getting your potential customers to see your messaging. To meet this challenge, you need to put information about your product in front of consumers. Sources predict that 82% of online traffic in 2022 will be video content — not just on TikTok or other social media platforms but also on streaming services and search engines.
Given their undeniable clout, you need to find a way to leverage videos or video distribution platforms to share your messaging. On social media, engage influencers or brand ambassadors. If digital advertising works for your brand, make sure your channel leans heavily towards smart placement amongst all that video content along with your standard pay per click and traditional advertising.
It’s easy to spend a lot of money on marketing, and because video content is so varied, it’s hard to decide where to allocate dollars. Do your research and capture and analyze data from small experiments before upping your budget and production.
7. Customers Want to Be Part of Something
This trend is hard to pin down but concerns the isolation of the pandemic and the uncertainty caused by economic and geopolitical disruptions. It continues even as people do and don’t return to the office. It’s an emerging e-commerce trend because brands can help create community that a more distributed customer base seeks.
E-commerce brands can connect people across vast distances and make them part of something bigger. And don’t just assign this to Gen Z or Millennials. People in every demographic have been through a lot and are looking for something that pulls people together.
To leverage this e-commerce trend, incorporate community into your brand and product before detailed product design begins. Make it part of your brainstorming and the industrial design phase of the product development process, then make it part of your business model.
8. Fintech Is Changing E-Commerce
Fintech, financial services that apply technology to provide new or improved features, has been a buzzword for some time. And beyond the initial disruption of payment methods like PayPal, Apple Pay, and Google Pay, they have not changed too much in the e-commerce industry — until now. More payment options are available for consumers beyond credit cards and the early online options, including some from mainstream banks. There are also easy-credit solutions that offer buy now, pay later (BNPL) options with a single mouse click at checkout.
And on the business side, newer fast and flexible credit options are popping up and allowing companies to secure funding at the speed of e-commerce. Cryptocurrency is still trying to find its way into the mainstream of e-commerce — that particular fintech trend may be about how crypto use shrinks in the coming year.
As an e-commerce company, you want to keep good customer relationships by offering flexibility and ease of use to your customers when it comes time to how they pay. Experiment with different options and track how they respond.
9. Advanced Tech Is Transitioning From Hype to Reality
Our final trend impacts the customer journey the most — implementing advanced technology on e-commerce sites. This is a big category with its own trends and timelines. Here are a few technologies that were hype a few years ago and are now changing how people shop and buy and how e-commerce brands sell:
- Chatbots enhanced with artificial intelligence for a better and less expensive user experience
- Machine learning for optimization of cross-selling and upselling
- Augmented reality and virtual reality to deliver an online showroom experience
- Voice search in e-commerce sites and for search engines
- Mobile devices that block tracking, like Apple’s IOS 14.5
- New, smarter product recommendation services and review platforms
- Greater automation of data collection, reporting, and other frontend and backend website functionality
Other technological advances bear on e-commerce, but without influencing click-through and conversion rates like the above list. These trends emphasize how important your choice of e-commerce platforms is to the success of your business model. Make sure you choose a provider that keeps up with these trends and makes them readily available to your team.
Build the Right Team to Take Advantage of E-Commerce Trends
That is a lot, we know. And the world just keeps putting new elephants in the room. So what is a company developing a new product to do? The same thing successful product companies have done time and again: Focus on designing and manufacturing products that customers want, optimize your manufacturing and supply chain, and pay attention to trends and adapt. Most importantly, continue to deliver value to your customers.
And when new trends come along, learn about them, and work with your team to ensure you don’t just play defense but maximize the opportunity. And, since we’ve been talking about elephants in the room, remember the old saying: “How do you eat an elephant? One bite at a time.”
If you need help with your elephant eating, reach out to Gembah. We understand the entire process, from ideation to growing your e-commerce platform options. No matter where you are on your journey or how these trends might impact you, reach out to Gembah’s experts and let’s travel down that path together.