E-commerce is one of the world’s fastest-changing sectors. Every e-commerce business that wants to stay ahead has to know where things are heading. So what’s coming in 2020?
We’re all busy, so here’s the short version:
First, instant shopping will get big. Really big. Retailers will have to focus on conversions and returns profitability. More online retailers will integrate a pay later option so consumers can try before they buy. More shoppers will choose brands which help them feel they belong to something meaningful. And brands will continue figuring out how to make the most of their digital and physical channels.
Now let’s take a look at each trend in turn.
1. Instant shopping anywhere
The faster consumers can buy after they’ve found a product on your website (or Instagram feed, or wherever), the better. In 2020 an online purchase shouldn’t take more than a few seconds on any device, from any location.
If they see something they want to buy on a blog or YouTube channel, customers should be able to click a ‘Buy Now’ button and complete their purchase in a few seconds. The payment provider should guarantee the seller gets paid (and the customer gets their stuff), no matter what.
It’s that simple. And make no mistake: the technology is here, now. So if you don’t make the most of it, your competitors will.
2. Making returns profitable
Online selling means dealing with returns. After all, you’re asking people to buy stuff they haven’t been able to see, touch or try on. But what does it mean for your business?
“Many businesses just don’t know what impact returns have on their bottom line,” says Victor Halvarsson, founder of online jewellery store Vanbruun.
He predicts an increased focus on the connection between returns and profitability in 2020.
Many businesses, think returns simply as a profit diminisher; a necessary evil. But for others, they’re an opportunity to get to know your customers and serve them better. You can read more about that in our article ‘4 reasons why customer returns are great for your business’).
“Returns are an opportunity to build a long-term relationship,” says Victor Halvarsson. His company offers a generous returns policy: customers can return wedding rings and get their money back, even if they have had their name engraved on the product.
This policy, which many would regard as commercial madness, has contributed to extremely high review ratings. But smart people know great reviews are great for business. Especially online.
“A returned ring can cost us as much as 40% of the original price. But it’s better to swallow that, move on, and focus time and energy on sales. Otherwise we risk 1-star reviews,” Victor explained in a Klarna interview in 2018.
To check whether you’re using returns in a positive way, here are the questions to ask:
What does your business do to reduce unnecessary returns (caused by bad product descriptions, damaged goods and avoidable mistakes), and do you leverage returns to increase revenue and profits?
3. Flexible payment methods
Think back to the last time you bought clothing at a physical store. Did they demand money before you could try anything on? Of course not. But too many online stores still do just that: they tell you to pay for goods you may not want, and then wait for a refund if you don’t like them or they don’t fit.
In 2020 more stores will allow consumers to get goods sent to them before they pay anything. They’ll have a competitive advantage over stores who still do things the old-fashioned way. This matters most in the fashion and footwear industries, where consumers often order 6-7 items to try, sending back anything they don’t want to keep.
Pay later makes this affordable to more shoppers, which means bigger baskets and more sales. It also includes solutions allowing consumers to try more products without the commitment of a large upfront cost.
In Sweden, consumers can add purchases to their Klarna account instead of paying right away. Purchases are added together into a single monthly bill, which works a lot like a credit card but without the high interest and fees. Klarna takes all the risk, so merchants always get paid and consumers never lose out.
This easy shopping payment solution is spreading to many more countries. In the UK and US, for example, customers have access to a solution called ‘Slice It’, where they can divide the cost of their purchases into a few monthly instalments, with no fees or interest if they pay on time. Payments are matched to the rhythm of the consumer’s next paycheck to reduce the risk of default, as you can read in our article ‘Millennials are ditching credit cards – what merchants need to know’).
4. Shopping with a deeper purpose
In 2020, even more consumers will align themselves with brands offering a deeper, more meaningful connection.
“Everything will be focused on inspiring consumers to be a part of your world: a world where they feel they truly belong,” predicts Elin Alemdar, founder of fashion brand Stylein.
Fredrik Palm, CEO of Desenio, a company selling wall art online, predicts a wave of new e-commerce companies which will combine sustainability and hyper-niched positioning:
“Many people have environmental anxiety, but they don’t know how they personally can make a difference. Choosing responsible, activist brands means they can consume, while at the same time feeling they are helping make a difference.”
5. Omni-channel experiments
Traditional retailers have been advancing in the digital space for years now. But we’ve also seen online businesses like Amazon establish physical stores.
Online and offline channels can definitely support each other – but very few brands have figured out exactly how they can create a truly seamless brand experience across the digital divide.
It’s a tough challenge. “The wave of profit warnings and the sheer number of stores closing down are clear indications of how difficult it is for retailers to adapt to the world of e-commerce and globalisation,” says Johan Lidenmark, Chief Digital Officer at sports retailer Intersport. “I believe boardrooms struggle with the question of where their focus should be. It’s important that the executive board is aligned – and everyone knows where their path is leading them.
“At Intersport, digital is the engine driving visitors to every channel. This is a shift in the reality for retailers like ours, and it means a mind-shift and competence shift need to take place at the same time. It’s absolutely fundamental.”
One of the trailblazers in optimising the omni-channel experience is beauty brand Sephora. It has been experimenting with its studio and Beauty TIP workshops for a couple of years. Visitors get experiences they won’t forget, such as a free 15-minute express service or a full 60-90 minute consultation and makeover.
“We make sure our customers know they can get a full consultation from skincare all the way through makeup with one of our specialist beauty advisors,” said Deborah Yeh, SVP of marketing and brand at Sephora, speaking to Retail Dive.
In other cases, retailers are trying new ways to combine physical experiences with convenience. Visitors to the XXL sports store in Stockholm, for example, can now try products on the spot, then have any variation of that product – such as their preferred size – delivered to their home an hour later. They can even choose to pay for it many days later if they want, using Klarna.