Shopify's Future of Ecommerce Report 2022: Our Highlights
E-Commerce Trends 2022
Changing Privacy Laws
Changing privacy laws are limiting the ability for marketers to target potential customers the same way they used to. With privacy protections released with iOS 14.5 and Android planning similar changes shortly, marketers have been scrambling to achieve the same returns on their advertising as before. Additionally, there has been a decrease in advertising reach because of increased privacy rights and government laws like GDPR & CCPA. Customers are also becoming savvier and blocking advertisements on websites they visit. On top of this, there has been an increase in the cost of paid search and pay-per-click ads. All of this is to say that digital advertising is costing more and delivering fewer returns.
Opportunities for brands:
Marketing investments: Invest in both short-term performance marketing and long-term brand building to create long term customers. Shopify recommends an investment of 60% on brand building, and 40% on performance marketing.
First-party data: Acquire data through other means such as using email popups, customer surveys, product quizzes and brand collaborations (e.g. giveaways!).
Diversify: Diversify advertising and sales channels to lower cost of acquisition. One strategy suggested is to find an entry point into new markets by offering a flagship product that is available on multiple marketplaces. Use this product to introduce customers to the brand and bring them to your own sales channels. Brands may also create more ways to interact with them such as experimenting with live shopping and using AR in the shopping experience.
Customer Acquisition and Loyalty
With it being more difficult and expensive to reach new customers, and with competition being a huge obstacle to achieving growth, strengthening relationships with existing customers is more important than ever. The solution to new marketing limitations is to get more from the customers you have. Focus on retaining customers, lifetime value, increase AOV (average order value), and building a community that keeps customers coming back.
People are more willing than ever to buy from brands that resonate with them. There is an increasing number of shoppers who are looking to purchase from brands that have shared values, are relatable, and have a community. How can brands resonate with shoppers who are being more intentional about how they shop? Get creative with how you connect with customers by giving them the raw version of the story and beliefs of your brand. Storytelling on social media can set you apart from others.
Opportunities for brands:
Brand differentiation: Stay ahead of the competition by highlighting what makes your brand different from the others. Brands that speak to everyone speak to no one, and customers are looking for brands they can connect to. Potential areas for differentiation (especially for American brands that were lacking in these areas) were mentioned as: allowing customers to recycle materials, and distancing from manufacturing partners who won’t meet shared sustainability goals.
Values: Compete on values rather than price, and find ways to communicate values authentically. Make it easy for customers to understand the actions you are taking to achieve value-driven goals.
Personalization: Personalize the shopping experience using product quizzes to help customers find the right product for them, or have live shopping events.
Customer loyalty: Help incentivize customers to stay with and share your brand through loyalty points programs, featuring customers on your social media and providing coupons as rewards.
Future of Retail & Shipping
The rest of the report discusses the future of in-store retail experiences and shipping and logistics. It includes interesting trends in social media, multi-channel shopping, and suggestions on tackling supply chain issues through the lens of sustainability. My personal favorite section is about sustainability where regular supplier/supply chain audits are recommended, carbon offset strategies are discussed, and warehousing strategies are suggested to reduce shipping distances. If you're a business owner yourself, the full report is worth a read. Or, get the one-page Action Plan.
A quote from the report that sums it all up nicely:
"There have never been as many opportunities in the ecommerce space, nor has there been as much competition. Plummeting return on ad spend is pushing brands to prioritize customer lifetime value and promote brand loyalty."
Let me know what you think in the comments below.
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