The future of eCommerce is expected to be even more revolutionary than it is today. In 2023 advances in technology and changing consumer behavior will see eCommerce sales grow 10.4% and the U.S market is expected to reach over $1.1 trillion in sales.
As eCommerce continues to grow in popularity, the competition among retailers is expected to intensify, with those who can adapt quickly to changing trends and consumer needs coming out on top.
Within the last 6 months, no less than 79% of individuals who own a smartphone have completed an online purchase using their mobile device.
In addition, it has been estimated that during the 2022 U.S holiday season, over 50% of all eCommerce transactions were carried out through a smartphone. As of now, eCommerce sales make up 15% of total retail revenue.
5 Trends shaping the future of eCommerce
There are several trends that are currently shaping the future of eCommerce, including:
- Mobile commerce: With the rise of smartphones and mobile devices, more and more consumers are making purchases through mobile apps and mobile-optimised websites. This trend is expected to continue, and retailers will need to ensure that their eCommerce platforms are optimised for mobile.
- Personalisation: Consumers are demanding more personalised experiences when shopping online. This can include personalised recommendations, personalised product pages, and personalised marketing messages.
- Voice commerce: Voice assistants like Amazon’s Alexa and Google Assistant are becoming increasingly popular, and many consumers are using them to make purchases. As this technology improves, we can expect to see more and more consumers using voice commerce to make purchases.
- Social commerce: Social media platforms like Instagram and Facebook are becoming popular eCommerce channels, with consumers able to browse and purchase products directly from these platforms. Retailers will need to ensure that they have a strong presence on social media and that they are able to sell their products through these channels.
- Artificial intelligence and machine learning: These technologies are becoming increasingly important in eCommerce, as they can be used to improve search and recommendation algorithms, automate customer service, and optimize pricing strategies.
These technologies have the potential to transform the way consumers shop, allowing them to experience products in immersive ways before making a purchase. Retailers are already experimenting with these technologies, and they are expected to become more widely adopted in the coming years.
The COVID-19 pandemic had a significant impact on ecommerce sales, which reached approximately $870 billion in 2021, reflecting a 50.5% surge from 2019 in the United States.
The pandemic caused a sudden shift in consumer behavior, prompting shoppers to adopt online grocery shopping and compelling businesses to improve their ecommerce strategies or launch them for the first time.
With ongoing disruptions caused by the pandemic, such as supply chain issues and shipping delays due to illnesses at distribution centers, online businesses must remain adaptable.
Despite the record number of customers shopping online, they are gradually returning to physical stores. Therefore, experts suggest that omnichannel sales, which provide a seamless shopping experience across various channels such as in-store, online, mobile apps, and phone, are the future of ecommerce.
The History of eCommerce
Although the origins of ecommerce date back to the 1970s, it was not until the mid-1990s that online trading of goods and services, as we currently know it, began with the launch of Amazon and Ebay’s websites.
Today, after nearly three decades, the global retail ecommerce sales have skyrocketed to a remarkable $5.2 trillion in 2021 and are expected to grow by 56 percent in the next five years, according to research conducted by Statista.
Why eCommerce continues to grow
The juggernaut that is ecommerce shows no signs of slowing down, fueled by several compelling reasons. Foremost among them is the unparalleled convenience it offers.
By breaking free from the constraints of brick-and-mortar stores, online shoppers can indulge in retail therapy whenever the mood strikes them.
Ecommerce is growing for several reasons, with convenience being a significant factor that drives its growth. Unlike physical stores, online shopping is not bound by time restrictions since the internet is accessible 24/7. This allows customers to shop whenever they desire.
Additionally, incentives like free shipping and membership programs such as Amazon Prime make online shopping more appealing. It’s likely that ecommerce will become the dominant sales channel in the future, with an estimated 31 percent of all US sales being made online by 2026.
The Future of eCommerce In Australia
Fashion is currently the most significant segment of the eCommerce market in Australia and is predicted to generate revenue of up to AU$15.51 billion in 2023.
eCommerce in Australia is continuously evolving as more people incorporate online shopping into their daily routines. Businesses are striving to improve customer experience and logistics through innovation to distinguish themselves from their competitors.
Technology remains the driving force behind the growth of ecommerce in Australia. Mobile devices provide customers with immediate access to relevant information, which helps them make purchase decisions.
Additionally, innovative technologies like augmented reality (AR) are being implemented by leading brands to enhance the shopping experience. IKEA, for example, uses AR to show customers how furniture would look in their homes.
Moreover, Australia Post is experimenting with parcel delivery via drones, which could change how ecommerce businesses operate in the future.
Social media is also expected to play a significant role in the future of Australian ecommerce. Social commerce, according to PayPal, is the next frontier for ecommerce.
To better understand this concept, Australian businesses are examining foreign markets like China, where the WeChat app integrates shopping for its 500 million users. This underscores why social commerce is on the radar of Australian ecommerce businesses.
2022 – The year without lockdowns – How did Australia do?
It’s evident that Australians’ affection for eCommerce is still going strong, with a staggering 9.4 million households shopping online in 2022.
November was the most popular month, with a remarkable 6 million households making online purchases. Even outside of sales periods, household engagement with eCommerce remained robust in 2022, with an average of 5.6 million households making online purchases every month.
The stability brought about by the reopening of physical stores resulted in a decrease in the growth rate of online purchases by 2.6% year-over-year after double-digit growth in 2021.
However, when compared to 2020, the purchase frequency has improved.
This was a positive development for online retailers, with almost 60% of households making 12 or more online purchases in 2022, which is a 3 percentage point increase from 2020.
2023 forecast for the eCommerce market in Australia
According to projections, the largest revenue segment is expected to be Fashion, with an estimated growth to AU$15.51 billion.
Its projected that 76% of the Australian population will utilise eCommerce services in 2023, with an expected increase to 77.6% by 2027. Additionally, the average revenue per user (ARPU) is projected to be around $215,000 for the year.
As eCommerce continues to dominate the retail landscape, experts predict that it will become an increasingly crowded market, with new brands and retailers entering the fray. However, established players like Woolworths, Myers, Coles, and Kogan are expected to maintain their strong presence and invest heavily in digital transformation and warehouse automation.
Despite this positive outlook, the eCommerce boom has not been without its challenges. With increased demand comes the need for enhanced cybersecurity measures to protect both consumers and retailers from cyber threats.
Additionally, supply chain disruptions and shipping delays have caused significant headaches for retailers, leading to concerns about the industry’s long-term sustainability.
Revenue – Australia
Subscription-based e-commerce services
The subscription revolution is taking over the eCommerce industry, and in 2023, it shows no signs of slowing down. With consumers seeking ease, value, and tailored product suggestions, subscription-based e-commerce services have become the go-to for many.
From personalised fashion subscriptions to doorstep meal deliveries and luxurious beauty products, retailers are stepping up their game to cater to this growing demand.
The year looms large with a plethora of trends that are set to shake the industry to its very core. Social commerce, personalisation, AR/VR, subscription services, and sustainable and ethical shopping practices will emerge as the holy grail of eCommerce, separating the winners from the losers.
Only those who can adeptly navigate these treacherous waters and stay ahead of the curve will emerge victorious. The stakes are high, as the prize of success is nothing less than the very survival of their businesses. The game is on, and the race is fierce, as retailers engage in an all-out war to capture the hearts and wallets of customers.
In this do-or-die scenario, retailers must focus on providing exceptional customer experiences that leave an indelible mark on their minds. The ones who can forge strong emotional connections with their customers, anticipate their needs, and offer personalised solutions will emerge as the frontrunners in the race to the top.
As the clock ticks away, the world watches with bated breath to see who will emerge victorious in this high-stakes game of eCommerce. Will it be the ones who boldly embrace the trends of the future, or those who cling to the past? Only time will tell.
Pricing Pressure in the open eCommerce world
In the cutthroat world of eCommerce, customers have the power to compare prices with just a few clicks. This puts immense pressure on businesses to differentiate themselves from competitors, particularly on crowded platforms such as Amazon.
In this fast-paced environment, pricing can change in the blink of an eye, making it crucial to find innovative ways to set your products apart. For those who succeed, the rewards can be great, with value-based pricing often outperforming traditional marketing strategies.
Australia’s eCommerce landscape – 2022 Study
A 2022 study of Australia’s eCommerce landscape showed that:
- 52.7% of internet users purchased goods or services online;
- 20.9% of users bought groceries in an online store;
- 19.2% of customers consulted a price comparison website before making a purchase;
- 13.2% used a buy now pay later service for their online transactions;
- 13.1% of Aussies bought a second-hand item via an online marketplace;
Free Delivery services are the primary driver for eCommerce purchases among 60.93% of internet users between 16 to 64. Other effective sales drivers include:
- Discount and cashback coupons: 36.5%
- Hassle-free return service: 35.8%
- Loyalty rewards and points: 34.1
- Positive customer reviews: 32.6%
Which Australian States Spend the Most in eCommerce?
According to a 2022 survey on online shopping in Australia, New South Wales (NSW) and the Australian Capital Territory (ACT) have shown the highest and consistent eCommerce growth since 2019.
In 2021, NSW reported a staggering 76.1% increase in eCommerce sales, accompanied by a 14.1% YoY growth in purchases.
The top buying suburbs in terms of purchase volume in 2022 were:
- Point Cook, VIC
- Liverpool, NSW
- Hoppers Crossing, VIC
Global E-commerce sales are expected to grow 10.4% in 2023
Since 20.8% of retail purchases are expected to take place online in 2023, it’s no surprise that e-commerce sales are supposed to increase as well. With more customers now shopping online, businesses can also sell more and earn more as a result.
In the tumultuous terrain of the eCommerce landscape, a fierce competition rages on as retailers brace themselves for the intense battle ahead in 2023.
