E-Commerce Market Outlook & Retail Trends in 2023

With advancements in technology, changes in consumer habits, reduction in international trade barriers, and the maturity of various platforms and channels, it is very likely that e-commerce will appear in our lives in a completely different form in just a short span of 10 years. The main aspects include:

Innovation in the last mile

Focus on last-mile solutions like 3PL (third-party logistics), delivery platforms, real-time demand forecasting, and drones have been thriving in recent years. Technologies such as third-party logistics and delivery platforms have gradually entered different product categories and are increasingly used by consumers. Demand forecasting (and real-time supply) is gradually being tested by large enterprises. For example, Amazon, which applied for the Anticipatory Shipping patent in 2014, has started to use it during peak holiday periods. In the drone field, land drones have already appeared in many cities, and many startups are thriving in this field. Despite many challenges such as regulatory norms, fault tolerance, and many tests and optimization processes, drone delivery (Air & Road) will inevitably enter e-commerce operations and consumers’ lives.

Maturing technology for e-commerce buying experience

Many technologies surrounding the consumer experience on e-commerce have been thriving in recent years. For example, the 2.5D website experience allows consumers to understand products in a more intuitive way. Augmented reality (AR) and virtual reality (VR) that have been discussed by many businesses in recent years provide a more immersive experience. Brands like Gucci, Louis Vuitton, and Coca-Cola are actively providing new experiences in the metaverse, while H&M has integrated payment features to provide a complete Metaverse e-commerce experience. With the further maturity of virtual reality technology, the development and usability of third-party metaverse platforms, infrastructure, devices, and consumer usage popularization, the potential of the metaverse is immense and is very likely to change the face of e-commerce. Many experience technologies focused on various fields continue to develop. For example, many cosmetic brands have incorporated virtual makeup technology, allowing consumers to try products without going to physical stores. Similar applications also occur in clothing, jewelry, etc.

The rise of social commerce (and Everywhere Commerce)

Today’s online consumption generally occurs on e-commerce websites or apps, whether self-operated or third-party platforms. However, the vast majority of consumers usually only go to e-commerce websites when they have a purchase intention, and most of the online time is spent on social media, games, and other media. As consumers used to see advertisements on Instagram or Facebook and click to enter the brand e-commerce website to make purchases, social platforms are now actively promoting consumers to complete purchases on the platform itself. It integrates various existing services of social platforms, allowing users to consume more intuitively (and also more easily) on social platforms. Although social commerce is popular in the Chinese market, its development in other countries is also gradually accelerating. For example, Bain Consulting pointed out that social commerce in the Indian market will grow at a rate of 50-60% (CAGR) during FY2020-2025. In the United States, the world’s largest terminal market, social commerce is gradually entering consumers’ lives. However, such developments are not limited to social platforms. As we said before, consumers’ time is not only spent on e-commerce but also on social media, games, and other apps and websites.

Product Personalization

A study by Deloitte pointed out that as many as 36% of consumers are very eager to purchase customized products, and one in five consumers is willing to pay an extra 20% for personalized products. With the robust development of technologies such as additive manufacturing, the Internet of Things, and industrial automation that support mass customization, e-commerce is going to completely change its face. For consumer goods, many companies like Nike, Apple, etc., already provide personalized services for their products on e-commerce websites. In the future, with the reduction in cost, companies will further provide deeper personalization, such as scanning consumer’s feet through an App, and making a pair of shoes that best fit their size and shape based on the data. In packaged foods, especially those that prioritize health, more and more companies are investing in developing foods that are completely customized to the consumer’s physical condition. With the prevalence of health data sharing, further maturation of automation technology, and more research and testing of personalized diets, this trend will change the face of food e-commerce.

Subscription Economy and the Popularity of Online Shopping

The application of the subscription-based consumption model in the e-commerce field is not a new concept. Ordering magazines through the internet or the Dollar Shave Club began to implement corresponding measures very early and achieved great success. However, even more than a decade later, we hardly subscribe for goods that consumers generally buy regularly and in fixed quantities, like toilet paper. The main reason behind this is that consumers lack sufficient motivation to adopt subscriptions. This is due to the prevalence of retail, the convenience provided by e-commerce itself, and many consumers enjoying so-called freedom of choice. But this situation is changing. With the continuous development of product personalization, membership systems, and the integration of brands and consumer life, subscriptions will become a norm in many consumer goods categories.

Internet of Things

The combination of brands with more consumer life, as mentioned before, is very obvious in the Internet of Things. For example, HP Instant Ink’s ink subscription is a benchmark case in the industry that combines IoT and subscription. Like ink, many consumables, when combined with IoT applications and direct ordering through mobile apps, can support consumers to have a better usage and after-sales experience.

AI Will Participate More in E-commerce Operations

With the threshold of AI applications getting lower and lower, coupled with the maturity of artificial intelligence technology at all levels of e-commerce. Such as back-end supply-demand matching, warehouse automation, inventory management, optimal logistics route determination, supply chain management, and demand forecasting; as well as front-end AI-based product recommendation mechanisms, pricing, chatbots, personalized marketing, personalized experience, and analysis of customer journeys to mine insights, etc. The application of AI technology in the field of e-commerce is not only optimizing the existing foundation but also changing the entire operation model of e-commerce, enabling the development of new business models.