Top 8 eCommerce Technology Trends Shaping the Future of Online Retail
The e-commerce industry is constantly evolving, and businesses that want to stay ahead of the curve need to be aware of the latest technology trends. In 2023, we can expect to see several new and emerging trends that will shape the way we shop online.
According to Statista, global retail e-commerce sales hit 5.2 trillion USD in 2021 and are expected to reach 8.1 trillion USD by 2026, growing by 56 percent.
Brazil is set to lead global retail e-commerce development from 2023 to 2027, with a 14.6% annual growth rate. Argentina and Turkey are also fast-growing markets, exceeding 14% CAGR.
Artificial intelligence (AI), augmented reality (AR), and blockchain are three of the most disruptive technologies in the world today. They are already being used in a variety of industries, and they are poised to have a major impact on e-commerce in the years to come. Let’s dive in and discover the exciting developments that are reshaping the eCommerce landscape.
How eCommerce Technologies are Changing the Way We Shop?
Ecommerce technologies are indeed driving the future of sales by transforming the way businesses operate and consumers shop. This can be attributed to various factors, including the rapid growth of internet usage, advancements in technology, changing consumer behavior, and the convenience and accessibility offered by online shopping. Here’s an explanation supported by statistics, historical context, and examples:
1. Internet Usage and Accessibility:
- Over the years, there has been consistent growth in the global internet penetration rate. As of 2021, approximately 59% of the global population had internet access (Source: Internet World Stats). This widespread connectivity provides businesses with a vast customer base and opens up opportunities for online sales.
- With the advent of mobile devices and improved internet infrastructure, consumers can now access online stores from anywhere at any time. Mobile eCommerce, also known as m-commerce, has gained significant traction, with a study projecting that mobile sales will account for 73% of total eCommerce sales by 2021 (Source: Statista).
2. Changing Consumer Behavior:
- Consumer preferences have shifted towards convenience, variety, and competitive pricing. Online shopping offers a wider range of products, easy price comparisons, and the convenience of doorstep delivery, which traditional brick-and-mortar stores often struggle to match.
- According to a survey by BigCommerce, 96% of Americans have made an online purchase in their lifetime, with 80% having made at least one online purchase in the past month (Source: BigCommerce).
3. Historical Context and Growth:
- eCommerce has a rich history dating back to the 1970s, with the advent of electronic data interchange (EDI) facilitating B2B transactions. The emergence of the World Wide Web in the 1990s opened up the possibilities of B2C eCommerce.
- Over the years, eCommerce has experienced exponential growth. For instance, global eCommerce sales reached 4.2 trillion U.S. dollars in 2020, and it is projected to surpass 6.4 trillion U.S. dollars by 2024 (Source: eMarketer).
Key Future eCommerce Technology Trends for 2023
1. Artificial Intelligence (AI) and Machine Learning (ML)
AI and ML algorithms analyze customer data, purchase history, and browsing behavior to provide personalized product recommendations. It can analyze historical sales data, customer behavior, and external factors to optimize inventory management and accurately forecast demand. This helps eCommerce businesses avoid overstocking or stockouts, leading to improved operational efficiency.
- Fraud detection algorithms: These algorithms are used to identify fraudulent transactions. Some of the most popular fraud detection algorithms include anomaly detection, machine learning, and rule-based systems.
According to Juniper Research, AI will save retailers $340 billion annually by 2022 in fraud detection and prevention.
- Pricing optimization algorithms: These algorithms are used to optimize pricing for products. Some of the most popular pricing optimization algorithms include demand-based pricing, competitor-based pricing, and cost-plus pricing.
- Demand forecasting algorithms: These algorithms are used to forecast demand for products. Some of the most popular demand forecasting algorithms include time series analysis, ARIMA, and Exponential smoothing.
2. Augmented Reality (AR) and Virtual Reality (VR)
AR and VR allow customers to visualize products realistically before making a purchase. For instance, customers can use their smartphones or AR glasses to see how furniture would look in their homes or try on virtual clothing through virtual avatars. For example, IKEA has an AR app that allows customers to see how different pieces of furniture would look in their living room.
By 2027, AR & VR market volume is anticipated to reach US$52.05 billion, with revenue showing a Compound Annual Growth Rate (CAGR) of 13.72% between 2023 and 2027.
For Example, Apple Vision Pro is a new spatial computer that uses augmented reality (AR) to overlay digital information onto the real world. This technology has the potential to revolutionize the way we shop, making it more convenient, informative, and enjoyable.
3. Blockchain and Cryptocurrency
Blockchain technology provides a decentralized and immutable ledger that can securely record and verify transactions. This helps in mitigating fraud, counterfeiting, and data breaches, which are major concerns in eCommerce. Cryptocurrencies leverage cryptographic protocols to ensure secure and tamper-resistant transactions.
Cryptocurrencies eliminate the need for intermediaries, such as banks, in cross-border transactions. This reduces transaction fees, processing time, and currency conversion costs. Additionally, blockchain-based smart contracts can automate payment settlements, ensuring faster and more efficient transactions.
Even Shopify, the leading e-commerce platform announced that it will allow users to buy, sell, and hold cryptocurrencies through BitPay. Nike announced that it will launch a line of sneakers that can be bought with crypto.
Blockchain enables the tokenization of assets, including loyalty points or rewards, making them more versatile and easily transferable between platforms. This can enhance customer loyalty programs and incentivize customer engagement.
Suggested Read: The Most Popular Programming Languages & Frameworks of 2023
4. AI Chatbots
AI chatbots can provide round-the-clock customer support, addressing inquiries, and resolving issues in real-time. This tailored approach helps customers find relevant items quickly, leading to higher conversion rates. Example: H&M, a global fashion retailer, implemented an AI chatbot on their Kik messaging app. This personalized experience resulted in a 70% click-through rate on the recommended products. [Source: Salesforce]
- Order Tracking and Notifications: AI chatbots can provide real-time updates on order status, shipping details, and delivery notifications. Example: Domino’s Pizza introduced an AI chatbot called “Dom” that allows customers to track their orders, receive delivery updates, and ask questions about their pizzas.
- Upselling and Cross-selling: AI chatbots can suggest complementary or upgraded products to customers based on their preferences, purchase history, or browsing behavior.
- Reduce cart abandonment: AI chatbots can remind customers about items in their abandoned carts and offer incentives to complete their purchases. This led to a 60% engagement rate and an average order value that was 50% higher than non-chatbot users.
5. Omnichannel Retailing
Omnichannel retailing allows customers to have a unified shopping experience regardless of the channel they use. For example, a customer can start browsing products on a website, add items to their cart, and later complete the purchase at a physical store or through a mobile app.
For example, Starbucks has embraced omnichannel retailing by allowing customers to order and pay through their mobile app, website, or in-store.
By considering user intent, retailers can deliver a consistent experience throughout the customer journey. For Example: When a customer adds items to their mobile app cart but doesn’t complete the purchase, the retailer can send a personalized email reminder with the selected items, offering discounts or incentives to encourage them to finish the transaction.
6. Internet of Things (IoT)
In an eCommerce context, IoT can be applied in several ways. One example is smart inventory management. Retailers can utilize IoT-enabled sensors to track inventory levels in real-time, automatically triggering reorders when stock runs low. This ensures that products are always available to customers, minimizing the risk of stockouts and improving overall customer satisfaction.
Another application of IoT in eCommerce is through connected devices or wearables. Smart devices such as fitness trackers, smartwatches, or voice-activated assistants can be integrated with eCommerce platforms, allowing users to make purchases or interact with online stores through these devices. This enables convenient and hands-free shopping experiences, aligning with the growing trend of voice commerce and IoT-enabled convenience.
- Amazon Go: Amazon Go is a cashier-less retail store that uses IoT sensors to track customers as they shop. When a customer takes an item off the shelf, it is automatically added to their virtual cart.
- Walmart Connected Retail: Walmart oversees a vast network of over 7 million distinct IoT data points throughout its stores in the United States to track inventory levels, monitor store traffic, and improve the customer experience.
7. Livestream Shopping
Livestream shopping is a livestream shopping event, a host or influencer broadcasts a live video feed, showcases products, discusses their features and benefits, and engages with the audience.
One of the key advantages of livestream shopping is its ability to create a sense of urgency and exclusivity. Limited-time offers flash sales, or exclusive discounts can be announced during the live stream, encouraging viewers to make purchases immediately. Moreover, hosts can run polls, quizzes, or contests during the live stream to engage viewers and reward them with special offers or prizes.
Metaverse is a vision of a shared online universe that goes beyond traditional websites or online platforms, offering a seamless integration of virtual and physical experiences. The demand for the metaverse in eCommerce arises from the desire for more immersive, personalized, and engaging online experiences.
Brands like Gucci and Balenciaga have hosted virtual fashion shows where users can virtually attend and interact with the collection. It is important to note that the metaverse is still in its early stages, and the full realization of its potential is yet to be seen. However, companies like Facebook (now Meta) and Epic Games are investing heavily in developing metaverse-like experiences and platforms. This could lead to new ways of shopping, such as:
According to a recent report by Gartner, the metaverse could generate up to $800 billion in revenue by 2024.
- Virtual shopping malls: Users could browse and purchase products from a variety of stores in a virtual shopping mall.
- Virtual try-on: enables users to virtually try on clothing, makeup, and various other products to experience how they look before making a purchase.
- Virtual events: Brands could host virtual events, such as fashion shows or product launches.
The future of eCommerce is bright, and these trends are just a few of the ways that technology is making it possible for businesses to reach new customers and offer new and innovative shopping experiences. Businesses that are willing to invest in these technologies will be well-positioned to succeed in the years to come.
From augmented reality and voice commerce to blockchain and AI-driven personalization, these top eight trends promise to reshape the way we shop and engage with online stores.
At Gsquare, we are experts in crafting custom eCommerce software solutions to meet your specific business requirements, whether you are a startup or an established enterprise.
In the ever-evolving landscape of eCommerce, staying ahead of the curve is crucial. Embrace these cutting-edge technology trends to unlock new opportunities, redefine customer experiences, and propel your online business into a prosperous future.