The emergence of advanced technologies has brought about radical changes in the e-commerce sector in recent years. These changes such as personalized experiences, optimization of transaction processes, utilization of automation services, and the use of data insights, are helping the e-commerce industry grow.
According to Netscribes, the global e-commerce market is predicted to reach a staggering value of $3.41 trillion by 2024. This article details the key reasons for its growth and factors that all market players need to be aware of.
Growth drivers and opportunities
Higher smartphone penetration: Smartphones increase convenience and provide easy access to information regarding products, shipping, and delivery status. Furthermore, enhancement of GPS tracking features in smartphones enables users to track product deliveries. An increase in smartphone usage enables e-commerce companies to reach out to a wider customer base and is proving to be one of the major driving factors for e-commerce market growth.
Advanced technologies fuel the growth: Adoption of technologies like Big Data Analytics (BDA), artificial intelligence, and machine learning have benefitted the e-commerce industry vastly. BDA, with machine learning, allows identification of optimal price, determination of the most profitable customer category and related goods, and helps decide the ideal level of inventory. AI helps in capturing data from all avenues such as social media, chatbots, customer service interactions, and mobile messaging, which are fed into a BDA software to facilitate accurate analysis of data.
Introduction of cross-border and consumer protection policies: Governments of several countries are introducing favorable consumer protection laws and relaxing cross-border trade regulations, which is increasing consumers’ confidence in e-commerce platforms. Some cross-border trade regulations exempt tariffs, reduce taxes, and relax value limits for shipment of goods. The introduction of these regulations has fueled the expansion of global e-commerce businesses.
Challenges facing the E-commerce market
Risk of e-commerce frauds: According to CyberSource, online businesses lose 0.8-0.9% of their e-commerce sales each year to fraudulent activities. So far, financial institutions and banks have not been able to promote e-commerce, and have inadequate policies and standardizations regarding online transactions. Banks will need to engage more with online merchants to formulate policies which are specific to e-commerce in order to prevent losses from instances such as credit card fraud.
Imprecise return policies: Aside from this, some e-commerce websites which do not guarantee any refunds or exchanges in case the product fails to meet customers’ expectations, it can discourage online buyers from making a purchase from these platforms in the future as well. For the market to grow, it is imperative for e-commerce companies to have transparent and easy return policies, along with trained staff who can help customers with their issues.
Key trends in the e-commerce industry
Introduction of AI in retail: By deploying AI across the supply chain, e-commerce operators are focusing on improving operational efficiencies, and enhancing shopping experiences globally. According to Netscribes, over 1200 patent publications have been filed globally that focus on improving customer shopping using AI. Technologies such as chatbots are helping customers look for the correct products, check availability, and connect with the appropriate service personnel in case of any queries.
Surge in B2B e-commerce: Amazon and eBay are among the leading e-commerce platforms which are improving their B2B landscape by launching new B2B portals. These services allow users to purchase merchandise and supplies in bulk for their registered businesses, which in turn, is helping them boost sales by incorporating bulk pricing. By leveraging insight-based product content, B2B firms ensure easy access to product information and make informed purchase decisions. Forrester estimates that B2B e-commerce will reach $1.2 trillion and account for 13 percent of all B2B sales in the US alone by 2021.
Voice assisted services: Voice assistance makes online shopping easier since it curates recommendations and search results according to individual requirements. Many major retailers like Costco, PetSmart, Walgreens, and Walmart have partnered with Google to offer voice-activated services in the Google Home system. Despite voice shopping in e-commerce still being in its initial stages, organizations which are rapidly adopting this technology are expected to grow bigger than others.