It’s been an uncertain year for retail, defined by inflation and the cost of living. In October, sales volumes in the UK fell to the lowest level since February 2021. And while ecommerce has had a tricky year, too, sales as a percentage of total retail have been growing since the summer.
So, as retail launches into its busiest period, what is going to give ecommerce businesses a further leg up as they look to 2024? We asked some esteemed commentators for their predictions on what will shape the year ahead in ecommerce, with thoughts ranging from M&A to AI (p.s. stay tuned for further 2024 trends pieces on retail media and B2B commerce).
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1. Operational agility
Angus Knights, Head of Product Success, ParcelLab:
“The line between success and failure is defined by customer experience and operational agility. Success hinges on understanding and meeting customer expectations at every touchpoint – from browsing and purchase to delivery and post-purchase support.
“Operational agility is crucial – business must quickly adapt to market changes, supply chain disruptions, and evolving consumer behaviours. Brands that excel in these areas, leveraging technology and data analytics to stay ahead of trends, are the ones that set themselves apart in the competitive ecommerce landscape.”
2. The MACH stack
“The tech stack plays a vital role. The industry has been obsessive in talking about headless, composable, MACH (microservices-based, API-first, cloud-native, and headless) etc. But if you take a step back from the buzzwords and evangelism, there’s a clear strategic narrative: Be clear on the role of your ecommerce platform and build a stack around it that enables operational flexibility.
“Successful ecommerce businesses aren’t thinking about re-platforming to fix ecommerce platform limitations; they’re looking at the tech stack they need to be agile enough to respond to a changing environment. You shouldn’t need to rip and replace an ecom platform every three years. You need a stack that enables to add/remove components quickly and for relatively low cost.”
3. Hybrid retail evolution
James Gurd, Digital Juggler:
“The impact of platform choice is impacting in-store tech selection. For example, retailers moving to Shopify who don’t have an existing POS solution, or use an old solution they’re considering replacing, often end up using Shopify POS to enable greater data connectivity between online and stores. Shopify POS isn’t an advanced solution but they’re constantly adding features.
“We’re also seeing a rise in DTC ecommerce brands expanding into physical retail stores. Expanding into physical retail can also boost ecommerce, with brands getting on average 37% more web traffic according to Shopify data.
“The other area of interest is the diversification of retail space to transform stores from selling spaces to hybrid environments. For example, Ralph Lauren and Uniqlo have setup playgrounds and coffee shops within stores, something cycling brand Rapha has done effectively with cyclists going to the London store for coffee or breakfast even when they’re not in a buying mood.”
4. ‘Multi-local’ commerce
Jonathan Sheard, Vice President Sales, ESW:
“Competition in ecommerce will remain fierce throughout 2024 and customer experience (CX) will be the critical differentiator. And as online shopping continues to become more global in its nature as shoppers seek brands and products from an international pool, rather than just confining their shopping online domestically, brands will increasingly need to embrace a multi-local commerce strategy.
“This offers shoppers anywhere in the world a seamless buying experience, allowing retailers and brands to expand their reach and stand out amongst the competition when it comes to CX.”
5. Owned channels, owned audiences
Wulfric Light-Wilkinson, GM, Wunderkind International:
“With cookie depreciation and third-party channels becoming more competitive, increasingly expensive and, crucially, less effective when it comes to customer acquisition and retention, owning and optimising owned channels will become the defining factor in successful ecommerce performance.
“We’re seeing a seismic shift, not only in marketing channel performance but also in consumer behaviour, prompted in part by channel adoption but also driven by cost-of-living consumer behaviours, where the concept of value and that of value exchange are evolving. That calls for a change in marketing strategy – balancing the scales and pivoting to maximising value from owned audiences and channels will be critical as we look ahead to 2024.
“In 2024, retailers will have to work even harder to win conversions from increasingly cautious shoppers, whose consideration phases are lengthening as they try and make squeezed incomes work harder. By owning and optimising first party data, brands can ensure ROI on marketing spend, while at the same time providing a better and more personalised customer experience, which can make or break ecommerce success.”
6. Bread and butter machine learning
Wulfric Light-Wilkinson, Wunderkind International:
“When you think of pivotal moments in tech, the birth of the internet might come to mind, and excitingly, we’re living through another one of these moments: the AI boom. However, it’s important that retailers and brands don’t get swept away in needless hype – for AI to be successful and to drive performance in marketing and commerce experiences for shoppers, it’s key to understand that many of AI’s performance-driving capabilities come from its Machine Learning (ML) functions.
“A good example of how AI will evolve the shopping experience is in the use of recommendation engines within shopper journeys. Powered by AI, the recommendation engines allow retailers to better understand and analyse customers’ behaviours, then provide them with highly tailored suggested products based on the outcome to drive conversions and AOV uplift. We also predict that conversational commerce powered by AI in customer journeys will become more commonplace – and demanded by shoppers. Retailers can leverage chatbots or virtual assistants to interact with customers and provide them with product suggestions based on what they’re looking for to improve engagement and retention.”
Spencer Stirling, Director of Machine Learning & Artificial Intelligence, Wunderkind:
“The highest impact businesses are those that are really practical about AI. Concentrate on the products and use cases, and the AI will either fit or it won’t. When a new hammer comes out, everything looks like a nail. There are some interesting new use cases, but don’t forget the strategies that we already know work.”
“If you’re going to generate personalised content using AI, you need to restrict it to high-value interactions. Scaling to millions of low-value impressions per day is currently infeasible – it would cost tens or hundreds of thousands of dollars a day and be too slow. However, if you have a high-value interaction, such as a customer adding to cart or an interactive chat, you can use generative AI to boost that tailored experience.”
7. Fast-format delivery
Rory O’Connor, Founder and CEO, Scurri:
“The ongoing rise and rise of rapid and fast-format delivery services will remain one of the continuing standout trends for 2024, because there is still so much scope for innovation and new capabilities looking ahead.
“In this age of instant gratification, delivery options will continue to exert more influence over a customer’s choice to purchase than ever before. Strategically this means retailers will need to ensure delivery options are presented at the earliest possible opportunity within the customer journey to reassure customers their item is available within their desired or necessary timeframe to tip the balance and influence the ‘add to basket’ decision.
“To succeed in 2024, retailers will need to take control over the key pillars of delivery management: cost, offer, operations, issues, growth, and experience.”
8. Localised fulfilment and last-mile sustainability
Angus Knights, ParcelLab:
“There will be a significant shift towards more sustainable and environmentally friendly logistics practices. This includes increased use of electric vehicles in last-mile delivery and greater emphasis on reducing packaging waste.
“We also anticipate a rise in localised fulfilment centres to speed up delivery times and reduce costs. Furthermore, the customer’s desire for transparency and control will drive the adoption of real-time tracking and self-service options for delivery management. These trends collectively signal a more responsive, efficient, and customer-focused ecommerce logistics landscape in 2024.”
9. Post-purchase personalisation
Rory O’Connor, Scurri:
“Personalised post-purchase communication can transform one-time buyers into repeat purchasers. Capitalising on the post-purchase period allows retailers to boost brand loyalty through high-engagement communications where they can upsell products and offers, promote discounts or gifts, and encourage reviews to grow direct customer relationships and encourage them to return and purchase again.
10. Omnichannel mergers and acquisitions
Sue Azari, Ecommerce Industry Consultant, AppsFlyer:
“We can expect mergers and acquisitions to continue to shift the omnichannel landscape in 2024, as growing retail brands look to expand market share and global reach. This year, for example, Shein snapped up UK fashion brand Missguided from Frasers Group and also acquired a stake in rival fast-fashion retailer Forever 21, enabling it to establish a brick-and-mortar presence, while expanding Forever 21’s online presence.. Uniqlo in April also disclosed plans to expand its existing stores in North America by 10%.”
11. Starting with the customer (as always)
James Gurd, Digital Juggler:
Great CX hasn’t changed – it starts by understanding who your customers are, what they need, what puts them off buying etc. It’s about using data and feedback loops to build customer mental models and then apply these models to your customer journeys to work out where you’ve got issues to fix.
More on ecommerce
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