The accelerated growth of the COVID-19 pandemic has contributed to ecommerce’s growth. But the industry isn’t just about selling stuff. It’s also about improving customer experiences through supply chain and fulfillment capabilities. These two facets of the industry are expected to contribute to this industry’s growth in coming years.
ecommerce growth accelerated by COVID-19 pandemic
The COVID-19 pandemic has prompted a major change in consumer behavior. It has affected different countries and sectors differently, and the rise of online shopping has accelerated in those countries. The COVID-19 pandemic has also sparked a new wave of innovation in physical shopping. It has prompted consumers to shift away from cash and pin-and-swipe credit card payments in favor of contactless methods.
Ecommerce growth in South East Asia has increased by 60% year-on-year, and consumers in this region are embracing digital retail. According to a recent study, 80% of South East Asian consumers currently shop mostly online. Additionally, shoppers in SEA are now purchasing items from 60% more online product categories than in 2020. Indonesian shoppers are leading the way, buying items from an average of 8.8 verticals a year.
The ecommerce share of total spending grew more rapidly in economies with higher levels of online penetration before the pandemic. Although the online share of total spending in these economies is still higher than before the pandemic, it is still below the levels that would have been expected in an economy without the crisis. However, the recent data suggest that these countries are gradually returning to pre-COVID levels.
The global ecommerce market is expected to continue its growth despite the COVID-19 pandemic. According to GlobalData, 90% of the ten largest ecommerce companies will experience double-digit growth in 2020. The fastest growing market in 2020 is Pinduoduo, which will see revenue growth of nearly seventy percent. It will have a much smaller share of retail sales in 2020 than its rivals, while Amazon will have the highest market share worldwide.
The COVID-19 pandemic has shifted people’s shopping habits in unexpected ways. For instance, consumers who had been avoiding social situations in recent months turned to online shopping for the comfort of their homes. Additionally, the rapid growth of mobile devices has made browsing and buying online a more convenient process. Consumers can now shop for their preferred products in one hand and can even complete their order without looking up a map.
Supply chain and fulfillment capabilities improve customer experience
Supply chain and fulfillment capabilities are integral to ensuring a seamless customer experience, especially with the ever-increasing number of online shoppers. Customers want more options and customization, as well as fast delivery and tracking. In addition, customers expect to know the exact status of their order. This is where omnichannel supply chain management can help.
The process of creating and implementing a robust ecommerce supply chain starts from the planning phase. The first step is to collect data on customer requirements and product demand. The next step is to identify suppliers and manufacturers. Once suppliers and manufacturers are found, the next step is the making stage, which involves converting raw materials into finished products. Then, the products are packaged and stored for delivery. Often, the delivery of products includes handling return goods and expired products.
With ecommerce sales now accounting for 17% of all retail sales, omnichannel operations and supply chain capabilities are crucial to improving the customer experience. For example, centralized inventory data can be useful to prevent overstocking and improve customer experience. By using a technology solution such as Kuebix TMS, retailers can provide customers with flexible delivery and tracking capabilities.
As delivery times decrease, the importance of supply chain science becomes increasingly critical. For example, fulfillment operations need time to pick and pack orders. Despite the fact that fulfillment operations can fulfill orders as quickly as two hours, the time required for a parcel to reach a customer is crucial. In addition, parcel carriers have their own cutoff times and may take additional days to reach the customer.
Aside from improving the customer experience, inventory analytics can also help companies better position inventory in key omnichannel markets. Moreover, automation can streamline the process and reduce costs.
New segments in e-commerce poised for growth
In addition to traditional retail sales, new e-commerce segments are poised to grow, such as those for food and personal care. These industries are set to be major growth areas, and e-retailers must figure out how to fill the needs of these online shoppers.
New e-commerce segments are emerging as consumers begin to migrate online to make everyday purchases. The covid pandemic, for example, has driven the sale of fast-moving consumer goods (FMCG) online. In the four months following the pandemic, ten million households purchased FMCG online, up from 4% in April 2012. However, the number of categories and frequency of purchase varied by consumer segment. Furthermore, e-commerce penetration jumped to five times that of pre-covid levels, while customer retention climbed to new heights. Today, 31% of the population has shopped online in the past year. In addition, 28% of people have bought groceries online.
The global b2c e-commerce market is highly fragmented, with several large and local companies competing to gain market share. In order to gain market share, companies invest in research and development and focus on competitive pricing. This is a good sign for the overall growth of e-commerce.
E-commerce is a significant market, particularly in emerging markets such as Latin America and Southeast Asia. Increasing internet use and connectivity are driving the growth of these regions. Many emerging markets have younger populations and spend more time online than consumers in developed markets. For example, consumers in Brazil and Colombia spend more than five hours online each day.
Consumers are increasingly using e-commerce to find items for their hobbies. This is especially useful for those seeking niche products. Moreover, e-commerce sites also provide unique perks such as trusted product reviews and price comparison tools.
Amazon’s own exploding ad business
Amazon’s ad business has boomed over the last five years, and its DSP footprint now rivals Google’s. The company has also ramped up its video and audio sales pitches. The company recently announced that it will invest $1.1 billion in sports content by 2022. Experts explain how sports feed Amazon’s business.
The rise of e-commerce is complicating profitability challenges for ad agencies. Companies must spend more on defense and ad-words in order to be visible to consumers who search directly for products. Some brands are sacrificing profitability in order to gain market share in ecommerce. Other brands are grudgingly advertising on Amazon, despite its relatively high cost.
Despite its monopoly position, Amazon has proven its ability to be a strong player in the marketplace. Last year, it reported $136 billion in revenue, and is increasing its market share every year. With 10 global marketplaces (and rolling out to Australia soon), Amazon is becoming the online store of choice for consumers.
Amazon’s own ad business is an important part of Amazon’s future strategy, but the company has yet to fully exploit its massive ad business. The company’s aggressive growth has prompted other retailers to create their own media platforms. It is now the third largest digital ad company and is on pace to hit $31 billion in ad revenue by 2021. It is also driving the ad industry forward by pushing TV advertising to new frontiers. The company is also pursuing ad placements in Whole Foods stores.
Impact of commerce media on e-commerce
The evolution of commerce media is changing how businesses do business. Traditionally, advertisers faced challenges in connecting the impressions that they paid for to the transactions that resulted from those impressions. This was a complex and often imperfect science, but now commerce media helps advertisers connect audience impressions to omnichannel transactions. This new approach allows brands to serve their customers better and feed results back into their full-funnel marketing models.
Commerce media is rapidly expanding. From affiliate advertising to retail media networks, retailers are connecting content with commerce opportunities to enhance the consumer experience. These new technologies include shoppable ads, which allow viewers to purchase products directly from the screen of their device. In addition to this, live commerce has emerged, which allows viewers to buy products directly from a television or video screen. This type of commerce is already common in China, where it is projected that purchases from live commerce media will top $170 billion by 2020.