Optimism was in short supply this time last year. Inflation had reached
levels not seen for a generation. The war in Ukraine had been raging
for almost a year with no end in sight. Supply-chain bottlenecks were
fracturing delivery and harming profits. Central banks were raising the
cost of borrowing just when eCommerce businesses needed to invest
in new technologies.
Business adapted as it always does. In Europe, eCommerce revenues
recovered from the post-Covid dip of 2022 and are forecast to grow to
€716 billion next year, finally overtaking the highs reached during the
periods of lockdown.
Is this how we look forward to 2024 – as another period of
consolidation, rather than game-changing growth?
No.
We believe that the world economy – and eCommerce in particular
– is on the verge of a technological revolution as profound as the
emergence of digital itself, one that will play out over many years, if
not decades: the breakthrough of generative AI.
To call it a trend is to wildly underestimate its relevance, but there
it is: AI is our top trend for 2024. We analyse what we know AI can
do already – and that’s a lot. But what makes the science of AI and
Machine Learning so exciting is what we don’t yet know that it can
do. It’ll be disruptive. There will be casualties as there were in the
first waves of digitalization. But more than that, AI is a Big Bang of
opportunity and wealth creation.
One aspect of Artificial Intelligence that is seldom pointed out is just
how cheap it is. An IT leader from the Canadian media group La Presse
asked his audience at a presentation on the future of digital news to
guess how much it cost his business to recommend a personalized
news article or feature to its 200,000 subscribers. Answer? Eight
Canadian dollars, or €5.50 – after a modest initial outlay. No one in the
audience realized this figure could be anywhere as low as this.
Astonishing.
The other main trend is sustainability, which is fast changing the
eCommerce landscape, not only by what it sells and how it packages,
but also through the types of business models coming to fore, such as
D2C and Q-Commerce, two other picks for 2024.
We end on a lighter note with a game of “buzzword bingo” where we
demystify some of the most common terms and phrases in today’s
eCommerce.
When Steven Spielberg’s A.I. Artificial
Intelligence came out in 2001, it prophesied
an imminent world of automation and insight.
In the event we had to wait more than two
decades before AI – the dots have gone –
reached critical momentum. The public “face”
of this breakthrough is ChatGPT, which hit like
a bombshell. Immediately, you could see how
Natural Language Processing would speed up
the creation of eCommerce marketing content –
for better or for worse.
However, the main benefits of AI in eCommerce
will play out along the following lines:
The "Q" in “Q-Commerce” stands for “quick”
– and that can mean the following day, in the
next few hours, or even – for grocery items, or
alcoholic drinks – in half an hour’s time. The
craze for ever-faster fulfillment is driven by
B2C consumers who want their pillowcases or
protein shakes now, and not by B2B for which
timely and accurate delivery really is businesscritical. The impatience of the B2C customer is
one of the ironies of the eCommerce revolution.
But what the consumer wants the consumer
gets and there is no doubt that the B2C segment
wants Q-Commerce. It is a competitive must.
Almost half of shoppers say that same-day
delivery makes them more likely to shop online,
and this market is forecast to be worth $15 billion next year.
The local fulfillment infrastructure required for
Q-Commerce adds a layer of complexity – not
a good thing. However, as the deliveries are
often made by bicycle, electric or traditional,
it supports the sustainability objective of your
business – and that is a big plus.
Amazon UK announced it is preparing a fleet
of drones to drop the ordered pillowcases or
protein shakes in their customers’ gardens.
While this may be more gimmick than trend, at
least in the short term, it shows that delivery
(and returns) will continue to be one of the
principal battlegrounds in eCommerce.
We saw in our opening section that AI is able
to mine your data for next-level insight into
customer needs and preferences. And the more
data you have, the more accurately you can
forecast future trends.
Manufacturers and wholesalers often operate
at arm’s length from their end customers –
and almost totally so for the products that
they sell on marketplaces. Like omnichannel,
marketplaces are no longer a trend but a fact of
life in eCommerce – and for most businesses,
the marketplace is part of their mix of sales
channels.
While you can make a sale on a marketplace,
“ownership” of the customer and his data
belongs to the platform. It is no accident
that Amazon is always a step ahead of the
competition; it knows more about its retail and
B2B customers than any other business in the
world.
The advantage of bypassing the marketplace
and other middlemen by selling directly to the
end customer – the D2C business model – is
that you own that relationship and the data it
generates. Of course, you also increase your
margins but that may prove of secondary
importance in the long run.
D2C allows you to get up close and personal
with your customers while making a huge
statement about sustainability because direct
selling absorbs fewer resources.
Covid gave a huge boost to the D2C model.
Businesses built richer infrastructures of
delivery and returns while consumers had no
choice but to grow increasingly relaxed about
ordering online.
In recent years the number of D2C businesses
has exploded, particularly in the health and
beauty, and fitness spaces. Perhaps the most
well-known fitness D2C is Peleton and there
is hardly a sport or fitness activity that is not
following in its footsteps. The Peleton for boxing
is FightCamp; J-Zay and Novak Djokovic have
partnered with CLMBR, the Peleton for rockclimbing; and there’s a Peleton for rowing,
Hydrow.
In the Netherlands, the D2C space is dominated
by beauty brands. Some of the most well-known
are UC Natural (ecologically and locally sourced
ingredients), Shampoo Bars (no plastics),
and Kaerel Skincare (“crap free” products for
men). The D2C model allows these innovative
Dutch businesses to craft niche messages and
campaigns, dominated by themes of authenticity
and sustainability.
This market is moving fast, with surprising
product categories such as breast pumps and
power tools entering the fray. We expect this
trend to accelerate in 2024 as more established
businesses find a way to leverage the benefits of
D2C.
Sustainability is no longer an adjunct to your brand but core to your mission, a deal-breaker for
customers who care passionately about the environment – and for governments getting serious about
green regulation.
The most far-reaching and onerous of the new compliance measure is the EU Packaging and Packaging
Waste Directive, which obliges all Member States to have so-called Extended Producer Responsibility
(EPR) schemes in place. The UK is imposing its own EPR legislation.
What EPR does is make producers financially and operationally responsible for what happens to their
products after they’ve been used – “the post-consumer stage” as the legislation puts it.
The regulation gives Brussels the policy tools to meet national or EU waste management objectives.
Targets vary considerably across Member States, but a lot of smart businesses are a step ahead of the
law and repackaging themselves as “sustainability-first” brands.
Italy and Italian brands are ahead of the curve. One in two Italians bought or sold second-hand items
in the last 12 months, and almost half of Italians shoppers (46%) say eCommerce has helped in their
choice to buy more sustainable products, a figure well above the European average (37%). And that
icon of Italian chic, Gucci, has replaced its “luxury” glossy shopping bags with elegant and sustainable
dyed paper.
All over Europe, diverse businesses are coming together to create ecosystems of sustainability. In
the Netherlands, Deloitte has joined forces with PostNL, the Dutch postal service; bol.com, its largest
marketplace; Mollie, the Amsterdam-based payment provider; Ikea; and Google Cloud to pilot,
accelerate, and scale up sustainable eCommerce solutions.
The impulse behind this collaboration is innovative, however uninspired its name, Econnections. The
initiative has contributed to several pilot projects; we can only highlight a few here.
There is a lot of this kind of creative activity at the intersection of eCommerce and sustainability which
means environmental concerns are not a brake on activity but a driver of it.
Alongside AI, sustainability and green commerce will be the major “trendsetters” of 2024.
It is second nature for millennials and Gen
Z to orchestrate their social, financial, and
professional lives through apps. The reflex of
this demographic is to research and purchase
products and services on a mobile device, and
this puts voice and visual search at the heart of
eCommerce. The shift from text to voice/visual
is a demographic given as the generations of
“digital natives” grow up and assume leadership
positions.
It is conceivable that the ultimate effect of ChatGPT will be the near-demise of written text for
eCommerce content marketing – it is too early to tell. Consumers want authentic and compelling
experiences which a blog “written” in under 10 seconds by AI does not (yet) give you.
What is without doubt is that consumers are more attracted to video, which has emerged as by far the
most popular medium on the internet. It is estimated that in 2022 video content made up 82.5% of all
worldwide internet traffic – an astonishing statistic.
Of course these are not all B2C or B2B marketing videos. But if we mediate the world through video,
eCommerce has to adapt.
Video content is not always a form of advertising, which makes it especially relevant for B2B. A tutorial
video of how to install or repair a product is much more intuitive than a manual. It is all about making
the experience of your website – and the touchpoints in all your channels – customer-centric.
Social media is an indispensable part of brand
building and product marketing. Two clever
examples from the Netherlands are a thriller
on the WhatsApp account of the Dutch national
railways which unfolded as a mini-series in 210
texts, photos, and videos, and the Instagram
posts of ING, which doesn’t sing the praises of
capitalism but instead highlights issues of social
injustice.
Here, social media is just one ingredient of a
marketing mix designed to get the consumer to
engage with the brands on their website or app.
Social selling is different. In social selling,
consumers buy directly from the social media
app, bypassing the eCommerce shopfront of
the business. Social selling is an appealing
marketing strategy because it removes the
many steps (and therefore potential pain points)
of on-site purchase where cart abandonment is
rife, especially on mobile.
Social selling streamlines and speeds up the
purchasing process and removes the friction of
the eCommerce site. For however expertly you
have crafted the customer journey the mere fact
that there is such a journey is fraught with peril.
Much better to cut to the chase and clinch the
deal on Instagram or TikTok, where consumers
are more likely to buy on impulse.
The biggest platform for social selling is
Instagram which has more than 1 billion active
users. 70% of shoppers say they use Instagram
for product discovery, so if you present them
with the right product and a simple way to
purchase it directly, you optimize your chances
of conversion.
All you need to set up Instagram Shopping is
a Facebook business profile, which links your
Facebook Shop to Instagram. Then, you can
upload a product catalogue and begin creating
product tags for each item. This will allow you
to create shoppable posts and streamline
purchases directly from the platform.
TikTok is also a great vehicle for social selling,
not only for “agile” start-ups or niche brands.
An early adopter was Walmart which started
livestreaming shopping events in the run-up
to Christmas 2020, when Covid made people
reluctant to go to the stores.
TikTok has recently changed its business model
to leverage the immense opportunities of social
selling. It closed its Storefront feature which
enabled eCommerce platforms to sync product
catalogues with TikTok. Now, if you want to sell
directly through the TikTok platform you have
to sign up to its marketplace TikTok Shop which
has gone live for the US and UK markets, and
throughout Asia.
The Netherlands has 5.66 million TikTok users
over 18 – a third of its population – so it cannot
be long before TikTok rolls out its shop feature
across the EU.
Businesses have to go where their customers
are – and increasingly that is on social media.
Millennial and Gen Z shoppers don’t like
websites; they want to be and stay where the
action is on Instagram and TikTok.
A huge trend for 2024.
Yesterday’s buzzwords are today’s must-haves, or the innovations that we left behind. eCommerce
professionals should be aware of the buzz but not be deafened by it. The trick is to separate “noise”
from substantive change – not always easy.
When the term “omnichannel” was introduced around a decade ago, it seemed like an expression
from a 1970s sci-fi classic, not an eCommerce strategy. We know better now and as we have already
remarked “omnichannel” has gone from buzz to queen bee, really a make-or-break part of your
eCommerce strategy.
To conclude our exploration of what we think will be top-of-mind in 2024 for eCommerce leaders,
we are fessing up to using the following words perhaps too readily, without always grasping how
important or irrelevant they are to our industry.
Let’s get buzzing!
A development approach of selecting best-of-breed commerce components and combining them into a custom application built for specific business needs.
It’s a balancing act between what an eCommerce platform should provide and how easily it can be customized. The considerations will differ from business to business. But don’t be tempted to “compose” your own platform, or to implement one without essential features. This will slow you down unnecessarily and create layer upon layer of technical debt.
One is the loneliest number
Buzz factor: ***
An architectural and organizational approach to software development where software is
composed of small independent services that communicate over well-defined APIs.
Microservices architectures make applications easier to scale and faster to develop, enabling
innovation and accelerating time-to-market for new features. Modern eCommerce platforms are
leaning into this approach to accelerate their own development roadmap and help businesses tailor
their digital engagement to the needs of their customers.
Small but mighty
Buzz factor: *
An approach that involves separating the front end and back end of your eCommerce website to
allow for rapid development and customization on each end.
The buzz around headless has been (and still is) so loud that businesses are made to feel old-fashioned
if they don’t adopt a headless approach. Not true. Headless is only “modern” if you need it to grow your
business. But you probably don’t because your eCommerce platform has – or ought to have – more
than enough off-the-shelf templates for front-end implementation.
Keep a cool head when it comes to headless
Buzz factor: ****
This stands for Microservice API-first Cloud-native Headless
Talk about ticking boxes … and as for the buzz, MACH is a beehive. The concept is less macho and
intimidating than it sounds; you could look at MACH as an interpretation of composable commerce,
where a lot of the composing has been done for you! The thinking around MACH commerce sits nicely
alongside developments in generative AI as both technologies are great enablers of personalization.
One to watch
Buzz factor: **
A strategy that enables eCommerce businesses to bring together all aspects of its brand,
product, marketing and more under a single platform
How is this different from omnichannel? You could say that unified commerce is omnichannel from
scratch without prior systems, technologies, platforms, and so on. It’s been described as “not only an
evolution of omnichannel but its panacea”. Big words like that make us nervous. We would all like to start
from scratch and we envy start-ups their freedom, but for most of us omnichannel is a strategy we
need now, with the technology we have already.
It's probably the future but there is stuff I have to get done first
Buzz factor: ****
At the time of writing, the global geopolitical context was more
fraught than it has been since the end of the Cold War. Inflation is
still stubbornly high, and it’s become clear that the era of near-zero
interest rates is over.
But businesses are more optimistic about their futures than they
have been in a long time – rightly so, we believe, because of the
coming of age of generative AI.
As a society, our attitude to AI is ambiguous. We know it is a great
wealth creator, but we also fear its power because we cannot yet
see where the technology will lead.
It is not the job of eCommerce to write laws or even to fret about
the perils of AI. What we do is create or sell products that people
want, at prices they are willing to pay for it – and that leave us in
profit.
Next year, and some way into the future, AI and sustainability will
work hand in hand to bring profound changes to the eCommerce
landscape. Businesses have no choice but to work out the
implications of these changes for themselves – and to do it quickly.
We may be uncertain about the nature of the changes, but we know
they will happen much more quickly than we had expected.
AI and sustainability are game-changers, not trends. Rather than
watch from the side lines, we want to work hard to be part of that
change and help shape it.
We wish you all every excitement and prosperity in 2024.
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