The rise of e-commerce during the pandemic was unprecedented, with every sector of retail and hospitality focusing on their digital presence to stay afloat. Organisations had to adapt fast, upping their game to compete with the seamless experiences offered by online giants – from slick checkouts to next-day deliveries and free returns, streamlined online shopping is something consumers have come to expect.
E-commerce now accounts for more than a quarter of all retail sales in the UK. And with online shopping showing no signs of slowing down, 2022 promises to be another lucrative year. With this in mind, we took a look at four of the biggest trends we predict will influence the e-commerce space within the next 12 months.
1: The rise of the online automotive industry
A handful of industries have emerged as new players in the digital shopping arena – industries that have historically been in-person only. Automotive is the most significant of these, with online car buying behaviour taking a dramatic swing during the pandemic.
While traditional showrooms were forced to close their doors, online vehicle sales soared and ‘digital disruptors’ began reaping the rewards. Carwow reported its highest performance in March 2021, GForces saw a 1228% increase in cars purchased through its online platform in 2020, and Cazoo saw revenues up by 267% in Q3 2021.
This shift reveals that consumer trust levels in making expensive online purchases are on the rise, and research suggests that many are keen to adopt this change – a study by CarGuru found that there is an increasing demand for online car shopping. Specifically, 60% of their respondents say they’d prefer to do more of the car-buying process at home.
The question is, are traditional car dealerships and manufacturers ready to embrace e-commerce? In order to succeed, we believe they have to be. Some manufacturers are already on board: Volvo, for example, has announced that their EV (electric vehicle) sales will be exclusively online – and they’re aiming for a solely EV range by 2030.
Adding more impetus for change, faith in traditional dealerships is waning – 56% of millennials said they’d rather clean their home than negotiate with a car dealer. This leaves dealerships with three options: transform the salesroom experience; enter the digital marketplace; or do both. We believe that the latter will become the new norm.
We predict that 2022 will see the rise of a brick and click industry, with online and offline sales channels working together. While some consumers are happy to buy a car entirely online, others will still favour a degree of in-person contact – at the very least, they’ll be equipped with information and be at the point of sale by the time they enter the showroom.
What is clear is that consumers are calling for the traditional retail model to change. Automotive companies need to act now and invest in online – the brands that are agile enough to embrace this digital shift are the ones that will thrive.
2: The potential of zero-party data
But cookies are on the way out. Safari and Firefox have been blocking them since 2020, and Google will phase them out on Chrome in 2023. Many say that this is no surprise – consumers have grown wise to unsolicited cookie tracking causing an invasion of privacy, and they’re fed up of being bombarded with ads.
This comes at a time when consumers’ online expectations have never been higher. Today’s customers expect a personalised shopping experience, and studies reveal that consumers are likely to spend more if they’ve received such an experience.
How then, in a cookieless world, can online sellers live up to this expectation and gather the insights needed for tailored marketing and product recommendations? We predict that zero-party data is the solution that companies will, and should, be turning to.
What is Zero-party data?
Zero-party data (ZPD) is information that a consumer proactively shares. Customers do so in anticipation that they’ll receive more relevant product recommendations. For example, if I was looking to buy a dog basket, I’d willingly share information about my dog’s breed if I thought it would help me find the best basket for Benji.
Not only can zero-party data help companies to offer more appropriate products and services, the rich insights gathered by ZPD can be used to power ongoing interactions, from genuinely personalised ads to tailored live chat conversations.
A superior option
We believe that this intelligent approach to gathering customer information is more than a mere alternative to third-party data. Even without the phasing out of cookies, it’s likely that ZPD would emerge as a superior way forward.
Companies with their finger on the pulse are already embracing zero-party data, and others need to follow suit in 2022 or risk being left behind. Implemented correctly, an effective ZPD strategy will allow online retailers to behave more like in-store agents, by treating their customers as individuals.
3. A new era for drone deliveries
The use of drones in the e-commerce delivery space has, historically, been stop-start – not surprising, given the pioneering nature of drone technology, the gauntlet of regulations and the high cost of research and development. However, we believe that 2022 will see the wheels set in motion for change – a change which has been spurred by the pandemic.
Covid-19 accelerated the development of drone solutions, particularly in healthcare – Zipline launched the delivery of Covid-19 vaccines to remote areas in Ghana, while the first US Covid vaccinations were delivered in August 2021 by UPS Flight Forward. Retail also experienced a boost in activity, with drones sweeping in to meet increased delivery demands – Tesco, for example, launched a successful home delivery trial in Ireland.
All this activity prompted research firm MarkesandMarkets to increase their estimation of 2022 drone delivery revenues from a pre-Covid prediction of $1.6billion to $2.2billion. It also opened up new conversions about the potential for drones within e-commerce.
Prepare for the shift
While we’re unlikely to see the skies and streets buzzing with drones in 2022, we foresee that the next 12 months will lay the foundations for a new era of drone delivery infrastructure. Several companies are already preparing for this shift:
Verizon are collaborating with UPS Flight Forward and Skyward (Verizon’s drone operations subsidiary) to deliver retail products with 5G-powered drones; Tesco are expanding their home delivery trial; and DHL are teaming up with drone developer Dronamics to launch up to 4,000 Black Swan drones – these unmanned aircraft can reach 125mph and carry 350kg of cargo for around 1,553 miles.
Drones have huge potential to meet a host of e-commerce targets, from same-day deliveries and personalised services, to reduced carbon emissions and greater reliability. We think this one to watch for 2022.
4. The challenge of one-time buyers
More brands than ever before are selling online, and sales remain high, despite the reopening of the high street. While this is good news for e-commerce businesses, it means that competition is fierce, as companies big and small vie for consumer attention.
Many consumers are keen to support independent businesses, but these sellers have to compete with larger online marketplaces that offer multiple products, often with streamlined checkout services and next-day delivery.
Gaining the attention of prospective customers is one challenge; retaining customers is another. According to industry benchmarks, 75% of a brands’ customers never purchase again, meaning most e-commerce businesses have just a 25% return customer rate. So how can you transform these one-time buyers into loyal customers?
Bringing customers back
Marketers need to get creative in 2022, finding new ways to bring customers back for more. One way to tackle this is to deliver highly targeted experiences. Customer insights will play a huge part in this by helping to deliver personalised experiences and driving targeted campaigns.
This is where zero-party data comes in again. By using ZPD to deliver personalised experiences with tailored product recommendations, smaller companies and independents can build better brand loyalty – 56% of shoppers are more likely to return to a website that offers product recommendations.
Zero-party data data can also be used to retarget customers through personalised marketing campaigns, while the process of gathering ZPD through direct online dialogues creates an emotional tie with each prospect – something that is key in building brand loyalty.
The secrets to success in 2022
The pandemic has been a catalyst for change, bringing about new norms of behaviour that are here to stay.
In order to thrive, all industries must become laser-focused on their digital presence, whether entering the online market for the first time, or refining their approach to meet new customer expectations. And as e-commerce sales continue to grow throughout 2022, organisations need to offer a superior experience to attract and retain, while also looking to the future for logistics models that meet the demands of modern society.
Zero-party data is fast becoming the preferred solution to many e-commerce challenges, with its ability to understand and appeal to consumer needs through meaningful online interactions – interactions that, here at 15gifts, we see as the golden nugget to online success.