Top eCommerce trends for 2023
Facing an economic downturn and reduced spending, 2022 was arguably one of the toughest years retail has ever faced. As the cost-of-living crisis continues, thoughts are now turning to what 2023 will have in store and how ecommerce will respond to the challenges ahead.
Retail operating specialist Brightpearl spoke to a range of industry experts to get their predictions on the ecommerce trends that every retailer should know about this New Year — and over the next 12 months.
1.Loyalty will be key
According to many retail experts, the top priority for retail in 2023 should be customer retention. Brands that prioritise customer retention are officially more successful. In fact, increasing retention rates by just 5% can increase your profits by 95%, according to research. That makes sense when you consider that the chance of selling to an existing customer is 60-70%, but the chance of selling to a new prospect is typically just 5-20%.
“The amount and style of shopping options have multiplied tremendously if you include social shopping, video shopping, in-game shopping and of course, Metaverse/Web 3.0,” said Christine Russo, a content creator and writer for Deloitte. “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.”
Andrew Busby, a Top 20 global retail influencer & IBM Futurist, says retailers need to prioritize Customer Lifetime Value (LTV) as the most important metric to measure over the coming year: “Consumers will become increasingly less tolerant, meaning that brand loyalty will become virtually extinct and customer lifetime value will assume even greater significance. Price, value and service wrapped in great customer experience will be what consumers will continue to look for – without it, they will quickly move on.”
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 several ways to do this, including loyalty and referral programs, free gifts and personalized discounts.
2. Cost and inventory pressures must be addressed
From rent to sales and marketing, freight, stock, fuel and wages – 89% of retailers have experienced an increase in costs over the past 6 months. These cost increases have eaten heavily into retailers’ margins, adding strain to the already-slim, high-growth and low-profit models many operate under. Experts argue these pressures will only intensify over the next 12 months and 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 a ’dangerous’ impact on cash flow if they can’t move that stock onwards in the New Year.
“Merchants who come out ahead in 2023 will be the ones who are most responsive to rapidly shifting customer demand”, added Jill Liliedahl, a spokesperson for Inventory Planner.
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.”
3. Strategic sustainability will be a top priority
Sustainability has been a hot topic in retail for a long time, but in 2023 Brightpearl experts believe consumers – especially younger shoppers – will be more informed, educated and aware than ever before and opt to spend more of their money with truly sustainable brands.
“E-commerce brands should expect that their customers will become ever more aware of environmental issues and seek out those for whom they feel their values are aligned,” explains Andrew Busby.
“This will mean even greater transparency with regards to things such as manufacture, sourcing, provenance, workforce, materials and so forth.”
Modern customers are becoming increasingly aware of the sustainability aspect of the product they are consuming. Sustainability will play a crucial role in the market, and with more consumers embracing green commerce, brands must follow, making it a strategic priority in 2023.
4. VR’s Time to shine
The metaverse may have become a buzzword, but virtual retail environments are on the rise. Modern consumers prefer shopping online, but still want to be entertained and inspired. VR can help make this happen, and offering virtual experiences is now more affordable for brands, especially compared to the costs of opening and running a physical store.
Cate Trotter, Head of Trends at Insider Trends predicts VR to kick off in 2023: “Retailers will go beyond just rebuilding a digital copy of the store for customers to explore virtually, either through VR or on a screen.
“Instead, the focus will be on new ways for brands to express what they’re doing – outside the restrictions of what we think of as the ‘store’.
“We don’t yet know what these digital experiences might look like – they could be anything from seeing your favourite fashion designer at work in their studio to going inside the latest smartphone – but they will act as the next phase of e-commerce by allowing customers to buy products within the experience.
5. 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.
Brightpearl 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 ecommerce 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.
“Increasingly, we’re seeing brands putting livestream capabilities into their stores – as with Beautycounter in the US. Not only does this add a sense of theater to the physical retail experience, it’s also a way to make better use of staff in quiet periods.
“We see livestream commerce sparking a wider shift in what retailers look for when recruiting store staff. Presentation skills and the ability to engage comfortably in front of the camera are going to be highly sought after skills in the future.”
6. 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? Brightpearl experts predict that a focus on diversified ad 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.”
Chloe also stresses the importance of gaining even deeper customer insight to maximize marketing investment. Chloe explains: “To drive maximum returns and get those messages spot on, brands will need a much clearer understanding of their customers’ whys and wants and use that to create a clear set of messages or content strategies that will attract the right customers no matter the channel.
“It also means we’re going to need much closer collaboration within marketing teams, and with outsourced resources too. Whilst none of this is easy, it’s going to be the most effective way to cut through the higher levels of competition we’re seeing in order to persuade cash-poor consumers to spend their money with you.”
