Looking into the virtual crystal ball: E-commerce trends for 2017
This is a blog post written by Juha Valvanne, CPO at SUP46 alumni member Nosto.
When I started my first online store in 2003, the Internet was a very different place. Facebook was still just a glint in Zuckerberg’s eye, there was no such thing as YouTube (meaning the world was a much poorer place in terms of cat videos) and e-commerce, although in existence, was predominantly a frustrating experience. In fact, 83% of consumers were reported to be confused by online shopping.
Fast forward to 2016 and it is quite a different picture. We are seeing the 1-hour delivery slots, the first deliveries made by drones, and augmented e-commerce realities.
It begs the question, what could the future hold for e-commerce? Exactly how far could we go? As Chief Product Office for Nosto, it is part of my role to be aware of the newest e-commerce trends. If we are to be a company at the bleeding edge of e-commerce technology, then we need to know what that bleeding edge is.
In this blog post I will share some of my insight, gleaned over the last year, and my resulting predictions for 2017. Specifically, the five trends that I see holding the most promise.
With e-commerce it can often be tempting to focus on what needs to happen to get your customers over the virtual shopping line – however, it is actually the processes put into action after that point that are seeing some of the biggest changes, and having the biggest effect on how people feel about online shopping. I’m referring, of course, to order fulfillment – with impatient consumers becoming less and less willing to wait for online delivery, retailers are being forced to find quicker and more innovative ways to get the goods to their final destination; the hands of the buyer.
What does this mean for the next year? Well, we have already seen companies such as Amazon piloting drone delivery – but I don’t see this becoming a viable every day reality in the next 12 months (sorry, drone fans). Instead I think we will see retailers focus their efforts on same-day delivery, concentrated delivery slots and the use of local pick up points. The focus will be on both speed and flexibility – giving shoppers either the chance to get their products sooner, or giving them more control in how and when they do get them, shifting the Achilles heel – the last mile of delivery – and creating a more enjoyable experience. When this is done by the playbook, those unboxing videos and Instagram photos will also start driving essentially free traffic to your site or work as valuable user-generated content on the site itself. I predict the one-hour delivery slot to gain momentum (meaning customers are no longer kept captive all day when waiting for deliveries) and the introduction of more drop off points to enable customers to avoid the delivery waiting game altogether.
Another thing to keep in mind, is the leveraging of third-parties outside of the traditional courier. There is a possibility that services such as Uber could enter this space. In the country where I was born and raised, Finland, some local taxi companies and food delivery companies are also piloting a shared service model.
2. Personalization and especially real-time personalization
Ah personalization. As the founder of a personalization technology company, it would be concerning if I didn’t see this as playing a major role in the development of the e-commerce market over the next 12 months. The question is then less whether I think it will play a part and more how. The biggest change I think is that it will no longer be seen as a “nice to have”. Traditionally personalization was seen as the differentiator for companies such as Amazon and Asos, who have lead in this space. But it is no longer viable for serious e-commerce players, to see it is as a big boys’ game. As the trend picks up momentum and becomes more ingrained in what it means to offer an enjoyable online shopping experience, we see those neglecting it falling behind. In many ways this is because consumers are calling for it – and as we know, the customer is always right. After growing accustomed to service that businesses such as Spotify, Netflix and Facebook provide in curating personalized lists of content – they now expect this level of service to be replicated by retailers.
How I think personalization in this space will change is much to do with its pervasiveness and the need for unity as a result. Shoppers want a connected experience – with their preferences being tracked across multiple devices and channels. In short, they want to be able to look and click on a Facebook or Instagram post about a product, check it out on the store, served to them later on, be it via social media, onsite recs, or email, to be relevant based on their unique profile – saving it later on desktop and have a relevant path to checkout carved out for them based on this previous behavior. They do not expect to start from scratch, plowing through your inventory for that which might be of interest. They then expect any product recommendations to prevent them from having to click through a navigation and category jungle. And they expect it to happen in real time, with the course you send them on reflecting the current journey they are taking through your site, as well as their previous preferences. Personalization is one of the building blocks of good UX, as well as a way to show you value each individual customer – an absolute value for any e-com business.
A trend that, in many ways, still brings about visions of a robot run the world and for that reason may still feel light years away from coming to fruition. But the truth is huge strides have been made in this area within the last year and we are now seeing regular integrated use of chatbots in e-commerce. And this is something I think will only continue – particularly as digital assistants such as Siri, Alexa and Google’s Home [LL3] mean people are becoming more and more accustomed to talking to machines.
In fact, the truth is that messaging systems are becoming more and more ingrained into our lives – we Slack colleagues rather than picking up the phone, we pop off a quick message to our significant other to ask what is for dinner. In many ways, while we are embracing smartphones more than ever before, we are turning away from their more traditional call facility. This means that many people don’t want to call a company and talk to a representative, especially at the risk of being tangled in a never-ending automated system that sees it take 10 minutes just to get through to the right person.
With this in mind, WhatsApp, Twitter, and Google (Allo) have all introduced chatbots. But it is perhaps Facebook where we are seeing the most extensive e-commerce application. Bots are able to answer simple questions, provide product recommendations and push customers towards desired actions – in fact towards the end of 2015 Facebook made it possible for a purchase to be completed entirely within the Facebook messenger app and without the aid of a human shopping representative.
While customers moving further along the funnel may appreciate the human touch and a more informed expert opinion, those at the first point of contact seem to be embracing the quick and easy nature of these interactions and so I think we will soon see this not only become the norm but even change consumer behavior and journeys – something to which retailers will need to adapt.
Unless you have been living under a rock for the last few years, you will know that mobile has been, and will continue to be, an important trend. In fact, I almost didn’t want to put it on this list – so sure was I that it would elicit a host of “we already know this” groans.
But there is no escaping that mobile is here to stay. In fact, as we become more and more connected, it is more important than ever. My prediction, however, is not that mobile is important (we know that already), but that we will have to change the way we perceive it. Study after study (including our own report) show that mobile, as a channel, is attracting more e-commerce traffic than ever before, turning it from a buzzword into a dominant e-commerce channel. Yet, smartphone conversion still lags behind that of a desktop.
Normally the response to this is to improve and concentrate on mobile design. And I am not disagreeing with this approach. Even if people don’t convert on mobile, the fact that they are spending time there at all means the experience needs to be highly tuned and relevant. A smartphone by its nature is a device we pick up dozens, if not hundreds, of times a day – meaning the experience needs to be crafted for short periods of browsing. But we also need to go one step further – focusing less on where people convert and more on making their journey between devices, a seamless one.
Most of the e-commerce activity on mobiles can be seen to be “pre-shopping” – that is discovery and browsing. According to Google, 60 percent of online conversions in the US start on one device and end on another. Which means mobile, while perhaps not the leader in terms of conversion, often plays a critical role in the first step of your customer’s journey. Your focus should then be on how they are able to transition to the next step (and device), without starting again.
It also worth noting that our phones are often a tool that we use for distraction, procrastination and entertainment. As opposed to our desktops, which are used more in our working lives. This means you may even want the experience you craft on mobile to be more of a joyful or playful nature, applying gamification techniques. In other words, stop seeing mobile as just another digital store façade.
5. Augmented & Virtual reality
While I don’t think augmented reality and virtual reality are likely to change the face of e-commerce in the next year, I do think it is one area where we will see leading brands and pioneers differentiate. We have already seen some interesting applications of this technology in the e-commerce world with eBay and Meyer combining forces to bring the first virtual reality store to fruition, Tommy Hilfiger adding a virtual reality fashion show experience to their bricks and mortar stores and even the use of augmented reality to show virtual interior design accessories imposed onto a user’s home.
Essentially these technologies could allow people to add a layer of interactivity to the e-commerce experience, immersing shoppers so that they are more engaged in the shopping process and stories around the items they might buy. What is most interesting with these technologies is their ability to go beyond the physical world, creating experiences that do not even exist today. The possibilities are endless and if companies are willing, they could create a whole new way to connect with their customers. While it’s not quite clear where this technology might take us I, for one, am excited to see how the bold may use it.
So, there we have it. Are any of these trends currently shaping your e-commerce business? And what do you see being the next big thing in commerce in 2017? I’d love to hear your thoughts.
Do you want to contact Juha Valvanne? You can email him here.