Facing an economic downturn and reduced spending, it has arguably been 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 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 this New Year — and over the next 12 months.
Loyalty will be key
According to many retail experts, the top priority for retail next year should be customer retention. We know that brands which prioritize customer retention are officially more successful. In fact, increasing retention rates by just 5% can increase your profits by 95%, according to research.
“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.”
Christine is correct, the likelihood of retaining a customer is directly linked to the experience they have after hitting the ‘buy’ button. If their experience is good – including prompt dispatch, good comms, fast delivery – retention is a safe bet. If their experience is bad – including errors, delays or lack of comms – retention is far less likely; 77% of 1-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 custom.
There’s a number of ways to do this, including loyalty and referral programs, free gifts and personalized discounts. A retail operating system can help you easily segment your customers based on a number of factors; for example: biggest spenders, seasonal shoppers and customers that have been coming back year after year. Orders from these customers can then be automatically flagged so that you can add a free gift or another form of ‘thank you’.
Inventory pressures must be addressed
According to a recent survey by Inventory Planner, almost half (45%) 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 (59%) there’ll be ‘dangerous’ impact on cash flow if they can’t move that stock onwards in the New Year.
Mark Hook, a spokesperson for Brightpearl expands on the problem: “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.”
Livestream shopping to grow in prominence
Online shoppers have already grown accustomed to Livestream shopping, with companies like Wishtrend and Nike building up huge businesses based on this business model.
According to a recent study by Brightpearl, 1 in 5 US shoppers have watched or participated in a Livestream shopping event in the past 12 months and 86% would like to see more retailers offering livestream shopping.
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 and Facebook – have also invested heavily to roll out live selling features.
It’s a trend that is 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.
The traffic mix is back
In 2013, merchants lost on average $9 for every new customer acquired, but today merchants lose $29, a 222% rise in the last eight years because digital advertising costs have risen so highly.
Some brands are seeing advertising costs increase by as much as 60% to drive the same amount of traffic. This trend will only continue; US digital ad spending is expected to grow by nearly 50% in the next four years.
Brands that fail to keep up with rising costs, could find themselves with less reach amongst their target audience and lower conversion rates. However, the idea of simply spending even more on acquisition is unsustainable for the majority of e-commerce companies. So, what’s the answer for 2023? Our experts predict that a focus on diversified as 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,” says 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.”