4 E-Commerce Trends You Need to Know
Even if you’re a brick-and-mortar business, being familiar with top e-commerce trends is no longer optional. Almost all businesses are selling online. Remaining competitive means keeping up with new advances and constantly fine tuning your e-commerce experience for your customers.
So, we’ve done some of the research for you. Here are four e-commerce trends that you should keep an eye on.
Rising costs of acquisition
Fewer barriers to entry have caused a surge in the number of online retailers. According to a recent industry report on Statista, e-commerce is projected to account for 20.4% of global retail sales by the end of 2022. Five years ago, it only accounted 10%.
According to a recent Shopify report, new challenges have arisen because of the rising competition. Costs for advertising have increased and campaigns are often seeing lower return on ads spent (ROAS). According to Shopify, the cost per click for search ads rose a full 15% in just a single quarter of 2021, while at the same time the reach of those ads across Europe dropped by about the same percentage.
With a growing number of companies penetrating the e-commerce market, gaining, or retaining customers attention has become more complex, and businesses must constantly build and improve their brand.
Death of third-party cookies
Privacy laws and customer preferences have complicated personalization efforts for businesses. Apple’s iOS 14.5 update included a change to privacy settings that gave users an option to opt out of cross-app data sharing. Without the power personalization afforded by third-party cookies, Facebook and Instagram ads are becoming less effective.
This means businesses will have to branch out and explore other channels such as TikTok. Many e-commerce businesses will also benefit from ramping up customer retention efforts to maximize customer lifetime value which will help maintain profitable margins.
More e-commerce businesses are going global
Businesses will eventually reach their growth limits operating locally. The next step, logically, would be to expanding across provinces, countries and perhaps eventually, globally. But this also comes with challenges including resource availability, increased costs, laws and regulations, local pricing, language challenges, cultural sensitivities, and competitor presence.
For those unable to go international, there are still other ways to grow your business domestically. Shift your company’s focus towards improving your current products and increasing market share within your designated market. This will later help pave new paths for globalization in the future.
Conventional financing methods take a backseat
Alternative financing has started to grow in popularity among many e-commerce companies. Instead of a traditional loan and financing methods, recent entrepreneurs are exploring revenue-based financing as a means of funding their e-commerce businesses.
According to Forbes, many business owners found that applying for loans was a time-consuming process. Some found that they did not have eligible assets to pledge as collateral, and fixed loan repayments would put pressure on the company’s cashflow down the line.
Over the past decade a broad range of financial instruments tailored to the needs of new age businesses have become more prominent. For instance, revenue-based financing grants investors a regular ongoing percentage of the company’s income. This method enables the company to successfully raise the required capital without sacrificing part of their equity or assets for collateral. However, revenue-based financing can be tricky as your business must already have a recurring revenue to be eligible.
Another notable trend, as mentioned by Nate Ginsburg (owner of Centurica), is the rise of eCommerce aggregators that have popped up looking to make acquisitions. A few leading examples are SUMA brands, Society Brands and OpenStore. So, if you can persevere through the eCom challenges there can be a very exciting outcome for you down the road.
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Opinions expressed here by contributors are their own.
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