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E-Commerce Predictions, 2016 – 2019

E-commerce is evolving from being a transaction based on a product catalog to an integral part of the customer experience. In companies’ quests to provide great customer experiences across multiple channels, they are having to look at e-commerce as part of the overall customer journey, rather than as a tacked-on payment gateway. E-commerce, after all, is not just digital: it is warehouses, click-to-collect, parcels, returns, packaging, trucks, ships, planes, delivery people, and so forth. As with so much of the customer experience, e-commerce is actually an area where the physical and digital worlds come together. Here are some of Digital Clarity Group’s key e-commerce predictions as 2015 draws to a close.

Mid-market companies will be inundated with e-commerce vendor love

For the world’s largest enterprises, the landscape of software vendors providing e-commerce platforms has settled largely around three companies: Oracle ATG, IBM WebSphere, and hybris. These vendors consolidated their position in the last decade, providing on-premise solutions that frequently required complex integrations with existing legacy systems and took a year or more to go live.

While these largest enterprises may also have the largest budgets for technology purchasing, there are only so many of them out there that are willing to make this investment in money and time. This means that these vendors need to look for new sources of growth, and midmarket companies are the next logical segment for them to target.

The challenge with targeting this segment is that there is a range of vendors already serving it. This field of vendors has seen success with cloud-based, quick to scale solutions, and the newest of them were started by former employees of the previous generation of platform vendors. These newer vendors therefore have deep familiarity with competitor platforms, having built, sold, or implemented them earlier in their careers.  Oracle, IBM, and hybris will thus be competing in the mid-market arena not just with the likes of Demandware, and Magento but also with-up-and-comers such as commercetoolsOro Inc., Unilog, and Ally Commerce. 

Asia will take center stage, especially for mobile commerce innovation

The most populous region in the world is also becoming the largest e-commerce market in the world: Asia now accounts for 52% of e-commerce sales (eMarketer).  China currently makes up the largest portion (40%) of any single country and grabs the most headlines, thanks in part to the PR machine that is Alibaba, the country’s predominant e-commerce company. However, other countries such as India, Indonesia, and Thailand are gathering steam as well, fueled by a combination of venture capital, a growing middle class, and improved shipping and logistics. Asia is also where mobile commerce leads over desktop, thanks to mobile being the predominant broadband connectivity type.

Being mobile first means that Asian technology and e-commerce companies have an incentive to try out innovative new m-commerce solutions, which may in turn filter back to the more mature e-commerce markets where mobile is still a small fraction of total online sales. In Thailand, for example, smartphone penetration is estimated to be between 35 to 40 percent, and there is a whole “shadow market” of social platforms being used informally for e-commerce.

Asia is also fueling growth in cross-border e-commerce. Both Alibaba and JD.com established offices in Silicon Valley in the last year, while Japan’s Rakuten, the country’s major marketplace provider, has been quietly building a portfolio of international companies across the e-commerce supply chain. SingPost has also embarked on an acquisition spree abroad as positions to be a gateway to Asia for the world’s leading brands, and Thailand-based start-up aCommerce is positioning to be the gateway to Southeast Asia.

Marketplaces will thrive, fueling cross-border sales and new business models

Online marketplaces have been a staple of e-commerce since its infancy as a platform for sellers without the means or will to build their own online stores. Marketplaces will continue to be the dominant platform in several countries and regions, offering more value added services such as payments and advertising. For sellers looking to enter new country markets, these marketplaces will continue to be the primary entry point.

However, in the next few years the marketplace model will also underpin additional new business models and market segments, including:

  • For vertical industries for B2B. Examples include ShipServ for the maritime industry and MFG.com for the manufacturing industry.
  • As a turnkey service for B2B and B2C. Examples include Mirakl, Farfetch, and Zalando; the latter two are B2C fashion retailers who will soon be offering their proprietary technology platforms as a white-label service.

Sustainability will become a critical concern for all e-commerce players

E-commerce purchasing volumes have passed the trillion-dollar mark, but they are still only a fraction (eMarketer estimates 6%) of total retail sales worldwide. As online buying reaches wider adoption, the energy, labor, and materials needed to sustain that adoption will need greater attention.

Online sales increases mean more people working in packing and shipping, increased energy usage to power all the parts of the supply chain, and more packaging to get goods from sellers to buyers. At the same time, customers have higher expectations than ever before, for free shipping and returns, next and same day delivery, and the ability to buy across physical and digital channels. The challenge for e-commerce providers will be how to meet customer expectations and also manage all aspects of their business in a more sustainable way.

Buyers will demand integration of commerce with content and other existing systems

At Digital Clarity Group, we have started to see the beginnings of the gap closing between the worlds of content and commerce. We’ve seen RFPs for technology selections which combine a content and commerce element, spoken with more content-focused service providers who have recently hired e-commerce executives, and heard about more implementations where CMS and e-commerce vendors have partnered together, like in this recent announcement from e-Spirit about its collaboration with Demandware for Urban Decay.

This is a positive development, as content will be the way for more brands to differentiate online against the likes of Amazon, and more vendor and service partnerships and mergers and acquisitions will undoubtedly follow in the years ahead to meet these needs. Yet content and commerce is just one type of integration that companies will need to consider as part of their customer experience strategy. As more B2B companies such as manufacturers invest in online selling, for example, they will need to be able to integrate commerce with their ERP systems. Furthermore, in order to track the entire customer journey and measure and forecast sales across different channels, customer data will need to be integrated with product, sales, and service data.  

Interested in reading more? Download the report E-Commerce Predictions 2016 – 2019: Digital Buying Comes of Age (registration required).

 

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