Will these be game changers for online retail in 2020?
From the rise of buy-now pay-later platforms to the emergence of contextual commerce, here’s what could change the face of online retail in 2020 and beyond.
In 2018, Australians spent $27.5 billion buying goods online - up 13% from the year before. But what’s the next game changer that will propel sales even higher? Three eCommerce entrepreneurs shared their predictions at the Online Retailer Conference 2019 in Sydney.
Australia Post’s General Manager for Segment Development & Marketing, Rebecca Burrows, set the scene by outlining three game changers that drove the growth of online sales in 2018.
She observed that events like Black Friday and Cyber Monday had originated overseas but were the biggest online shopping week in Australia’s history last year, recording strong growth of over 28% year-on-year (PDF 6.2MB).
“The increase in popularity of these events has had a marked effect on seasonal growth. Shoppers are choosing to wait for a bargain, which means retailers have to manage fluctuating inventory levels and margin erosion,” Rebecca told the audience.
Other factors include the rise of buy-now pay-later platforms to meet shoppers’ demands for a frictionless end-to-end shopping experience; the growth of mobile shopping as consumers become more comfortable making purchases on smartphones; and finally, a 31% growth in marketplaces last year.
Shane Lenton, CIO of CUE Clothing, meanwhile, said contextual commerce would be the biggest game-changer for 2020 and beyond. Contextual commerce involves seamlessly implementing purchase opportunities into everyday activities and natural environments.
“In other words, customers can buy anything, anywhere, any time with the click of a button or even just their voice. It's a purchase being made in the moment,” Shane said.
Examples include conversational commerce; click-to-buy buttons on a product details page rather than requiring the shopper to go to a checkout; and buying in social media platforms without having to leave the platform.
“It's about providing the opportunity for customers to complete a purchase and transaction when they're in the moment, without having this notion of immersion and then jumping onto a different device or looking to transact later,” Shane explained.
“The majority of payment platforms are already available. It's now a matter of us as businesses and business leaders adopting these features - our customers will be adopting them, as well as our competitors.”
Shane said the opportunity for retailers is allowing customers to buy something on Instagram without leaving the site or recommending a product to a customer on a messaging platform and allowing them to buy it then and there.
“Contextual commerce is going to enable these transactions. Disruption is happening and the world and online retail are changing. We need to evolve with it.”
A sense of purpose
Julie Mathers, Founder & CEO of vegan and ecofriendly product site Flora & Fauna, focused on a societal trend. She pointed out that purposeful businesses – those using their power to do good, drive change and are focused on things other than just revenue and margin – will be the game changers.
“It’s because anyone born after 1980 – millennials and the next generation – are massively driven by purpose,” she said.
The numbers reveal how much purpose matters to this generation. According to Julie, millennials want to work for businesses with values that reflect their own; most are happy to take a pay cut to do so; and they want to shop with brands that have a purpose beyond the products.
The importance of the trend is magnified by the fact that by 2020, millennials will overtake Generation X to become the largest spending group. By 2025, 75% of the workforce will comprise millennials, according to data from US think tank the Brookings Institution.
“So ignore purpose at your peril,” Julie emphasised.
No game changer but stronger sales
Tony Nash, CEO and founder of online bookstore Booktopia, took a different tack, arguing there would be no game changer but that online sales would continue to grow nonetheless.
In the 15 years of running Booktopia, he’s seen sales grow at the online bookstore at an average of 30% a year, rising from $9 million in 2009 to $130 million today.
“My message is to position yourself to be there for your customers as they choose to buy online. It's very comforting for all of us to know that more and more people are buying online.”
Read our 2019 Inside Australian Online Shopping report for insights into consumers’ online shopping behaviour and how technology has influenced Australia’s shopping habits.