What the future holds for Ecommerce: Knowing your customers

In this article series, we are looking at what is happening in Ecommerce currently, how the landscape is changing for brands, and what new technologies are rising to bring forth high-level customer experiences.

 

• Part 1 – The current challenges
• Part 2 – Knowing your customers
• Part 3 – New technologies and channels

Understanding the needs of the consumer should always be the top priority for brands, as without that understanding you cannot deliver exceptional customer service.

With the current rising generations becoming the dominant shoppers alongside the cultural shifts taking place, the expectations that people have of brands are at an all-time high. Simply put, people shop from brands that they connect to on a deeper level. People are craving for connection and they want to connect with the brands they can relate to and feel are making a positive difference.

Worldwide megatrends such as sustainability, health & wellness and inclusivity have awakened people to care about where and how the products are produced and how they affect their health and impact the planet and people. This is proved by the rise in online searches for “sustainable goods” globally since 2016. (Future of Commerce Trend Report 2022, Shopify) 

As customers want to feel connected to the values of a brand, they also want to feel like the brand is connecting with them and providing high-quality service. 93% of consumers are expecting the online shopping experience to be better or atleast equal to that of in-store shopping (Ecommerce Relevance Report 2022, Coveo).

Consumers are also shown to more likely shop from brands that offer them relevant and personlised experiences (Pulsey Survey 2018, Accenture). With these statistics in mind, many brands are understanding the importance of building a high-level customer experience to increase customer loyalty as customer acquisition costs keep increasing. Studies found that acquiring new customers is on average 5x more expensive than keeping current customers. This is why brands are utilising different concepts for increasing customer lifetime value, as an example the rise in subscription services. 

Although we know now that customers are looking for experiences that are better tailored for their unique preferences, according to Mckinsey, only 15% of retailers are utilizing personalisation. This shows the huge gap that still exists where needs are not being met by a large portion of brands. Despite consumers desiring for more personalisation, they simultaneously have a huge concern for their privacy. With new privacy laws in place, access to 3rd party data is trickier to retrieve. In the 2018 Pulse Survey, it was revealed that customers did not mind sharing their personal information if they gave consent to it and it made their shopping experience better. The problem arises when their data is collected without their consent, as it makes the customer lose trust in that particular brand. The shift happening between brands and their customers therefore is transparency. Customers demand transparency from companies on how their data is being collected and used, but also how the products are being produced.

Brands who are only selling through retailers will find it harder to build trust and deep connections with their customers because they do not have direct access to them. With all the challenges mentioned prevously, it is no wonder then that Direct-to-Consumer or D2C is rising in popularity.

Many D2C native brands like Warby Parker and Dollar Shave Club have already shown the way for better customer experiences with a D2C business model. Established brands with retail channels have also been waking up to the realisation that they need to start experimenting with their own channels because a failure to do so might decrease their commercial performance in the future. Statistics show that D2C eCommerce sales for established brands are expected to reach 161 billion dollars by 2024, 3x more than digitally native brands.

A D2C business model offers so many opportunities for brands to foster the long-term relationships with their customers. As you are selling directly to your customers and cutting out the middleman, you have access to the first-party data, which brands are utilizing now in different ways. With real-time data, deeper knowledge is gained much quicker and is allowing brands to map out the customer journey more precisely. With a direct relationship, feedback can be collected and product development can also happen at a more rapid rate.

Stay tuned for the next chapter where we talk more about how new technologies are enhancing the shopping experience.