Happy New Year 🎉 🎉 🎉 With the holiday season behind us and as we start to settle into the New Year, it’s time to get back to business! 2022 was an exceptional year for eCommerce, but that doesn’t mean we should be complacent. After all, the world of eCommerce is ever-evolving! So what will 2023 hold for eCommerce?
7 eCommerce Predictions for 2023 and How You Can Prepare For It
Consumers will expect more from brands
Consumers have been steadily growing their expectations from brands mainly because of the sheer volume of choices they have. Plus, as Millennials and Gen Z command more spending power, concerns such as the environment, social issues, and governance become more pressing when it comes to purchasing.
(Source: PWC)
If we do enter a recession in 2023, we’re sure to see more consumers only doing business with brands that meet their high expectations. In addition to sacrificing loyalty for a more competitive price, consumers will only spend money with brands that focus on sustainability, support local communities, and have ethical business practices. In other words, brands will need to show their morals.
In 2023, brands will need to instill confidence in shoppers by aligning with their concerns and beliefs. Partnering with local charities and launching initiatives that see a portion of sales going to them is a good way to do this. Also, being transparent about where your products are sourced from and how data is used is important. Create a dedicated page that details this information and also share it via your social channels.
Visuals is the next rising wave
Visuals have long been a part of eCommerce, but this year we’ll see them play a pivotal role. Let’s start with visual search.
Performing a search using just an image used to be reserved for the likes of Pinterest and Google. Now, we’re beginning to see eCommerce stores pick up this form of searching as it becomes more favored by consumers.
Pinterest is a great place to look at if you want to know how impactful visual search engines are for consumers. The platform performs over 600 million image searches per month, and 80% of its users start with searching for lookalike images when shopping.
Gen Z and Millennials are early and dedicated adopters of visual search. Therefore, it's no wonder eCommerce sites are beginning to adopt it to satisfy these large and potential audiences.
You can expect to see more and more major brands add this to their search experience, and perhaps even apps to help SMBs gain this capability.
Another step forward we’ll see when it comes to visuals is the prominence of video content in eCommerce. In particular, short-form video content.
Short-form video content seriously dominated 2022. TikTok became the most downloaded app of the year with 672 million downloads worldwide, and we also saw YouTube and Instagram place more focus on short videos with YouTube Shorts and Instagram Reels.
Short, captivating, and catchy videos are starting to reveal relevance to the eCommerce world.
TikTok has become a hub of product discovery. 58.2% of users on this platform look for shopping inspiration. As a result, we saw Shopify integrate with TikTok which made content shoppable. What's more, in the Fall of 2022, TikTok rolled out new advertising capabilities. Brands can now create targeted ads with video shopping ads or try their hand at live shopping with live shopping ads.
YouTube Shorts also gained some traction with brands such as Nike, American Eagle, and Gucci utilizing it. With more than 30 billion daily views, 1.5 billion monthly users, and comparatively little competition from e-merchants, YouTube Shorts holds a lot of promise for brands that get in early. Shopify is also teaming up with YouTube to help merchants connect with shoppers in this new way.
These promising numbers and tools are sure to see 2023 loaded with creative short-form video content by brands and influencers.
Greater integration of AI in eCommerce tools
2022 was a great year for AI and machine learning. AI made headlines as it catapulted to a level of maturity that made it accessible and ready to be used by your average person.
AI tools were used to make beautiful works of art with a few prompts. There was also ChatGPT which stunned the public with its ability to generate original pieces of literary content, generate code, and give a direct answer for pretty much any problem.
(Source: Twitter)
This means that AI is getting better at learning and is in a better position to help us with tasks. This increased proficiency is certain to filter its way through to eCommerce. You’ll certainly witness a number of tools adding AI capabilities to its offering as well as AI being used to handle tasks. This could include:
- Helpdesk platforms leaning on AI to handle all customer queries with little intervention
- More robust AI-powered product recommendations
- Marketing campaigns and SEO being built with AI
- AI being used as a coding partner to develop apps and fix bugs
In fact, this year here at Boost, we’ll be adding AI capabilities to our app to bring a more intelligent site search and recommendation experience. Keep your eyes peeled!
First-party data collection gets creative
This year, Google Chrome waves goodbye to third-party cookies. This type of data collection has been imperative to marketers for years. About 82% of web ads used to rely on cookies.
Google did announce the phasing out of third-party cookies with ample time for e-merchants to prepare their businesses for it. Plus, privacy around customer data has been somewhat of a hot topic for the last few years. As a result, we’ve seen quite a concerted effort towards luring shoppers to give up their data to brands.
Quizzes were a massive feature of 2022 with brands such as Little Company using them as a method of data collection. Shoppers are prompted to provide their email addresses so they can view their perfectly paired products. This allows brands to build rich profiles of their customers which can be used to direct highly personalized marketing campaigns.
As brands continue to experiment with methods to get a hold of data directly from shoppers, we’ll certainly see more creativity in this space.
Social commerce becomes even stronger
2023 is going to be a big year for social commerce. The notion of using social media throughout a shopping journey is no longer alien. 1 in 3 consumers uses social media to discover new products whilst 68% have bought items directly from social media. With such huge uptake, social commerce is expected to account for 20% of global retail eCommerce sales this year.
Social media platforms are taking huge strides to make selling to customers on social media easier. Aside from updates to TikTok and YouTube Shopping for Shopify, Meta introduced new ad formats for Instagram, Messenger, and Reels.
Brands using new ad formats on Facebook (Source: Ad Age)
Meta will help advertisers reach audiences based on how they spend their time on the platform. On Reels, these ads can be paired with free, high-quality music. It can either be automatically selected based on the content of the ad, or advertisers can choose one from a library. Meta is also testing post-loop ads that play after a Reel has ended.
On Messenger, AI is being used for lead generation. It’ll funnel customers to either Messenger or a form, depending on which one the customer is most likely to interact with. There will also be the ability to run Click to Messenger ads that reach the people who are most likely to make a purchase in a thread.
This has created exciting new ways for marketers to reach their audiences on social media. It’s also making social platforms a way more viable stomping ground for commerce with tons of potential. Expect to see more brands, big and small, flock to social media to take advantage of these new tools.
For Shopify merchants, it’s a good idea to turn your attention to YouTube. YouTube Shopping will help you instantly sync your products to the platform. This will open the doors to creating live shopping experiences, and have a first-mover advantage on commerce via YouTube Shorts. Experiment with the new ad formats on Meta platforms, especially on Reels as engagement here has increased by 30%.
A vulnerable economy and eCommerce market
The end of 2022 saw the economy in quite a fragile state. Sanctions that came as a result of the Russia-Ukraine war had a significant effect on trade. This led to inflation marking the entire world, rising to the highest it’s been in 40 years. The rising inflation may indicate a slight recession in 2023. This will ultimately squeeze the budgets of consumers and businesses.
Both businesses and consumers are feeling the worry of a looming recession. 71% of companies are preparing for a recession in 2023, and consumers are 208% more concerned about it than the coronavirus.
(Source: Shopify)
This could spell slower growth for the eCommerce market than what we witnessed in the previous few years. Consumers will spend with more caution and price will become a major influencer.
To keep shoppers flocking to your store even with tighter pockets, you’ll need to adopt a more flexible approach to making purchases. For example, allowing customers to pay in installments, or pick up parcels in-store or locally. These options will help your store be a lot more pocket-friendly.
It’s also a good idea to start looking at where you can cut costs so you can remain profitable as prices soar. Cutting costs where possible will also help you avoid raising the prices of your own products which could price out your existing customer base. Some questions you should ask yourself to reduce expenses are:
- What outgoings are essential and which can you do without?
- Have you got the most competitive price or supplier?
- Are there discretionary items that can be discarded or paused?
Special predictions for Shopify
Shopify Marketplace will be the next highlight
Online marketplaces are proving to be big players in eCommerce. Since 2007, the number of marketplaces globally has shot up by 500%. 2022 was a strong year for marketplaces. 56% of global eCommerce sales was projected to come from them.
This is predicted to be an ongoing upward trend as retailers prioritize marketplaces as a core strategy. This leads us to wonder, will Shopify vye for a slice of the marketplace pie in 2023? It may not be so out of the question!
(Source: Shopify)
In 2022, Shopify launched its Marketplace Kit, making it easier for Shopify merchants to connect with other merchants and their products. Essentially, this gives Shopify merchants the power to create a marketplace in their store, develop a marketplace site on Shopify, or find new channels for their products to be sold on.
Another clue that signals the possibility of a Shopify Marketplace is the Shop app. This new channel gives shoppers the ability to effortlessly make purchases with a single click using Shop Pay. In 2022, Shopify further incentivized this for consumers with Shop Cash. When customers pay with Shop Pay, they’ll also be able earn cash rewards that are redeemable via the Shop app.
The Shop app is giving Shopify access to unprecedented amounts of customer data. Currently, the number of its users sits at over 100,000,000 worldwide. Furthermore, the app has created a hub for shoppers to explore Shopify stores. The app could quite easily turn into an Amazon-like marketplace with super personalized recommendations!
As Shopify is already investing in marketplace capabilities for merchants, 2023 could see the platform take steps toward building a marketplace of its very own.
Headless Commerce becomes more accessible
We may also see headless commerce coming to more Shopify stores this year. Hydrogen and Oxygen, the tech stack for headless commerce on Shopify, was big news for the platform last year. This essentially makes it a lot easier for development teams to power headless commerce for Shopify stores with in-house solutions.
The toolkit has been steadily modified and adapted, including the addition and acquisition of one of the best React frameworks in the world - Remix. Shopify is clearly serious about headless architecture for its merchants. As it stands, this is deployed mostly by top-level stores. But with big updates coming in Q1 of 2023, could we see headless architecture becoming a standardized option that merchants can easily migrate to if they wish? Time will tell!
The Future Is Bright For E-commerce In 2023
There are a lot of exciting opportunities in store for eCommerce. From new ways to advertise your store and products, to more robust AI-powered functionalities, the eCommerce realm is set to shine even brighter. However, that doesn’t mean it won’t be without its hurdles. The economy could take a big hit leading to much more cautious shopping, and the end of third-party cookies will make advertising and marketing more challenging.
The best way to tackle adversity is with creativity and a robust understanding of your customers. Don’t shy away from testing out new ways to connect with your customers, harvest data, and make a point of harnessing customer insights to provide exceptional experiences. If you can do all of these things, 2023 could be your best year yet!
