E-Commerce and online shopping are increasingly becoming drivers of the world economy. And with good reason: they are convenient for both businesses and consumers. They allow for a wider range of goods to be sold and stored, without the worry of theft, heavy maintenance of a storefront, or some of the other concerns of traditional retail. And while there were some concerns for some product types (clothes, for example), online businesses are innovative and finding ways around those problems.
Yet what can we learn not just from online shopping statistics, but from online shoppers as well? After all, eCommerce wouldn’t last very long if no one was buying goods online. What makes people like you shop online, and how do you shop online? What are your neighbors up to on the most popular eCommerce sites? There are so many questions to answer, and plenty of statistics to go over. Therefore, without further wait, here’s what you need to know:
How Common Is It
It seems as though everyone shops online to some degree these days. Everyone online and with a credit card gets something online, and most do so regularly. Think about how often you go online when you can’t find something in the store or are uncertain you will. Yet how much traffic is there, and how much money changes hands?
- United States eCommerce sales are expected to surpass $1 trillion in 2022. That is more than the GDP of most countries, and this is just consumer retail eCommerce. When looking at B2B eCommerce, which is an entirely different beast, site sales are forecasted to reach about $1.77 trillion. Different sites and studies might come up with different numbers, but they’re all huge, and they’re all indicative of future growth.
- When looking globally, those numbers naturally go up a great deal. By 2023 we can expect retail eCommerce to reach about $6.5 trillion. That is more than the current GDP of all but two countries (the United States and China).
- For B2B global eCommerce, it’s going to grow. In 2019 it totaled about 5.7 trillion. In 2020 it rose 10 percent. Some predict that by 2027 (only five years from now) it is going to reach a massive $20.9 trillion.
- Just because there is so much eCommerce does not mean that all eCommerce businesses are successful. People are simply uninterested in many of them, or they fail to market themselves properly. About 90 percent of eCommerce businesses fail.
The Pandemic Growth Spurt
And while eCommerce was huge before the pandemic, during the heights of the pandemic and even beyond that, it has become essential. People were regularly ordering their groceries online, and ordering even more goods online. Shipping companies had to scramble, and many businesses got lost in the rush, not doing nearly as well as they could have. The pandemic also forced many small businesses to get into eCommerce and more online activities to survive. Fitness-based businesses did online classes. Specialty stores started to ship more readily. Even churches, while not businesses, started conducting masses online.
This all means that the numbers for the last couple of years for eCommerce often did not meet pre-pandemic predictions, and that future predictions should be taken with a grain of salt. We aren’t entirely certain when things will go back to normal,
Handling Shipping
Shipping has always been important, but it has rarely been to the front of the public mind like it has recently. As of this writing, many companies are still dealing with a shipping crisis, and ports are backed up at times. While we won’t go into the full details and causes of this crisis in this article (though you absolutely should do your own reading and research), there are factors at play beyond what we are used to.
eCommerce drives a ton of goods through ports each year. Many goods are made to order to be sold online, and there are few warehouses stacked with goods in the event of a shortage. And when a shortage occurs, customers will grab more than they need of many goods, either to resell later or to prepare against the future shortage. Ironically, by doing so they extend it. Online shoppers are hardly to blame for the current trend of some shortages, but rational consumer behavior on an individual level makes things worse on a grander scale.
Bots and AI
One of the more interesting ongoing developments in eCommerce, customer service, and online marketing is the use of AI and chatbots to enhance the customer experience and increase retention of the customers on the site in a more natural way than annoying pop-up ads. There has been a lot of advancement in technology in the past few years, and it’s now easy and cheap enough to implement for the average business to use, even if they are not strictly dealing with many customers at once.
Companies are seeing the potential of chatbots. At least 80 percent of companies are already using or planning on implementing them, though obviously in different ways. And with the versatility of technology, imagination is the limit. While it can lead to some odd encounters, they are much cheaper than a dedicated salesperson when one might not be needed yet and can be modified easily as the use case changes. They certainly do not compare to a dedicated specialist, but a team of those is impossible to maintain for all customer’s needs. There are simply too many customers.
Mobile Vs. Desktop
eCommerce came to mobile just as quickly as anything, and there was a heavy financial incentive to do so. If you owned a business, wouldn’t you want to be able to easily access and bring in customers from anywhere around the world, wherever they happened to be? You’d make it easy to shop and be perfectly happy to invest a great deal in doing so. Some apps are better than others, but it’s clear that people like having the options.
- Mobile e-commerce spending in the U.S. reached $47.8 billion
- People spend more on desktops, at least in terms of the average order. In Q2 2021 the average was $184.44 for desktop orders and $134.39 for mobile.
- About 79 percent of smartphone users made a purchase on mobile in the last 6 months.
People are more likely to look at products on mobile. They are more likely to shop and buy something on a desktop. People might simply be window shopping online on their smartphones. When they go on their computer, they are more likely to be serious about it, and less likely to bounce from their intention (they may very well still bounce from a site).
People also may occasionally order something on a tablet, but such occurrences are relatively rare. Functionally speaking most of them aren’t different from smartphones, and people would be more likely to order something on one of those.
Cybersecurity and New Systems
People are understandably worried about cybersecurity when it comes to eCommerce. Some of these concerns have been alleviated by credit card companies being helpful when there is a scam, false charge, etc. There are plenty of systems in place to catch fraud when it happens, and an attentive credit card user who checks their online statement even once a week can notice if something goes wrong. Shoppers will be increasingly worried, and sites will have to step up their own measures to keep user data and the user experience safe.
And think of things such as Paypal, which allow for the transfer of funds online easily and without the use of a credit card. Certainly, there is also a darker side to this, which leads to scams, fraudulent payments, and heavily insecure eCommerce stores. There will need to be further action and regulation on this as time goes on, but similarly, customers are right to be wary about unproven methods.
Payment Methods
As eCommerce grows more prevalent, we are getting more ways to pay conveniently online or more digital ways to pay for physical goods. In either case, currency and the economy have gone digital. This brings with it unique cybersecurity concerns and general preferences. People are used to credit cards, but are people used to things such as Samsung Pay or Apple Pay?
- Interestingly, mobile payment platforms have a massive adoption and usage rate in Asian countries compared to the West. Alipay and WeChat (both Chinese methods) absolutely dominate the market in terms of the number of total users. Both have well over a billion users while Apply Pay is reaching about half a billion as of this writing.
- In terms of the general adoption of mobile payment options, about 81 percent of smartphone users in China use them. Compare this to about 29 percent of United States smartphone users.
- Why is this the case? The main reason is security. A Pew survey found that 38 percent of respondents believed mobile payments were poorly protected. Compare this to 22 percent of people believing the same about debit cards and nine percent believing this of credit cards. And there are reasons to believe this (credit cards have had time to perfect their systems), but the difference is nonetheless striking. This is even though in most cases a mobile payment system is simply linked to a credit card.
- Consumers still use different methods of payment online around the world. Taking a look , you will find that people in North and Latin America are far more likely to use a card, while people in Asia are most likely to use a digital or mobile wallet. In Europe, the Middle East, and Africa, people are more likely to use bank transfers (though other payment methods are still more popular).
- Why is this? Perhaps a mixture of practical, legal, and cultural reasons. If more businesses accept mobile payments, people are more likely to bother using them in the first place. People would rather not have a dozen different accounts just to pay for something online. They might rather stick with a tried-and-true credit card (if they have one) otherwise.
Naturally, as time goes on, we will see more companies try creating new payment methods and or expanding features. This is all part of the process, and customer adoption will depend on myriad factors. Ideally, it will lead to an overall safer and more efficient online system.
Social Media, Influences, and Word of Mouth
In an online environment filled to the brim with more eCommerce sites and pages, not even thinking about products, than one could count, what is a shopper to do? How do people decide where they want to spend their money? How do they decide between products when they can be hard to inspect themselves? Many of these questions are basic economics, but beyond basic needs, it comes down to marketing, word of mouth, and reputation. And all these things are vital if an eCommerce business is to survive. Here are some facts that clarify just how important it is:
- Blogs have their own important role to play as well. Content marketing is a key part of online business, directly related to affiliate marketing. People want expert opinions, and blogs can provide them (or at least the illusion of them). About 61 percent of United States consumers made a purchase online through a recommendation from a blog.
- Word of mouth is key. About 55 percent of online shoppers will tell people they know when they aren’t happy with a product or service. Surely you’ve heard a few complaints in the last year at least.
- A total of 81 percent of customers will research a product and look up information before purchasing it.
- Millennials, in particular, being effectively raised on technology and being one of the first generations to be digital natives to some degree, especially want information. 40 percent find a lack of information to be the most common problem they encounter when shopping online. Of millennials, 93 say they are likely or very likely to read reviews of a product. While the quality can differ, reviews are vital. There’s a reason there’s effectively a grey market for Amazon reviews and companies encourage customers to leave one at every opportunity.
Is eCommerce Bad for the Environment?
It depends on how you look at it, and it’s a complicated question. In terms of net carbon emissions, all those delivery trucks are adding something to the equation. And the trucks are often not the most fuel-efficient on the road given their purpose. Shipping, in general, is a huge environmental issue, with the shipping industry causing about 940 million tons of CO2 emissions each year.
However, compare those trips, which are dedicated and optimized to usually handle many homes in one day, to all those people heading out to the store on their own. They are likely doing so in individual cars, which each add their own emissions to the atmosphere (and clog up the roads). Looking at it this way, one might imagine that eCommerce allows for a net positive on the environment.
In terms of the manufacturing of goods, not much has changed. Consumer culture remains consumer culture. People may buy needless things or items they will never use, but so long as there is a demand, they will keep getting produced. eCommerce or no eCommerce, this has been the case, and there is little information on whether people buy more needless things now they have access to them online.
There is also the matter of digital goods, which in some cases have replaced physical media, documents, and more. Discussing the complete impact of digital goods on the environment goes beyond the scope of this article currently, but note that there is a lot of paper that has been saved by email alone. People rarely buy CDs anymore outside of collector’s items, instead of streaming their music digitally. While there is certainly a great need for physical goods that will only grow as the population grows, there might be some small hope that people will need fewer physical luxury goods.
Consolidation
Looking into the physical retail space, many people might bemoan the fact that it seems as though only a few businesses are dominating the market. There’s an array of big box stores (which are struggling in their own ways), supermarket chains, and places such as Wal-Mart, which is the largest employer in the United States and one of the largest companies in the world.
In a sense, yes. Amazon is by far the biggest retailer in the United States online and only growing. This is not even counting many of its other businesses and services (Amazon Web Services alone would make the company one of the largest in the world). And it started as a relatively simple bookselling site less than a few decades ago. Look at the growth over time:
Yet what do people buy on the site? You might notice that people go to Amazon for computer and consumer electronics a lot, and only buy a limited amount of food and beverage products from the online retailer. Amazon, for the most part, does not have a huge presence in the grocery space, and while they sell snacks and dry goods, the local supermarket is still a better deal for many and still a necessary trip. Unless one cannot find it in the supermarket. Other categories make sense and line up (how often do people buy auto parts at all?)
Much eCommerce happens on larger sites even when it is done by smaller sellers. Amazon sells many goods on its own, of course, but in truth, it is a much larger marketplace, where verified sellers do business on the platform, usually in conjunction with Amazon’s services. Walmart and a few other large stores have done the same, allowing for users and small businesses to sell their wares online (with the companies taking a cut, of course). Will brand names become platforms, much like how most fast-food restaurants are actually franchises? Only time will tell for sure.
There are also hubs dedicated to individuals selling goods. Think of Esty and eBay, which are huge marketplaces that have tons of traffic coming through them. Specific crafts are no longer relegated to craft fairs and word of mouth. If you want to buy something artisan-made halfway across the country, it can be done. And more people are doing so. It has made the market more competitive and more open as a result. Artists are finding their audience.
Digital Goods
How do digital goods and services enter the equation? Gaming is a huge industry in itself, with billions of people playing games in some form and the industry as a whole making more than practically all other forms of media combined. It is on track to grow, and mobile gaming is taking up the majority of its profits. However, that is a discussion for another article. Just note that it’s huge and getting bigger and more popular as more people grow up with gaming and it becomes more accessible.
Similarly, e-books are growing in popularity. It’s estimated that about 191 million e-books were sold in the U.S. in 2020, with more likely being sold last year.
Other goods such as subscription services are commonplace and a part of everyday life. Would you look at a Netflix subscription as part of online shopping? Probably not at first, but it does add to the importance of the digital marketplace and how much money changes hands online. In other cases, an online service compliments or is a necessary part of buying a physical product.
Think of Peloton’s exercise equipment, for example. They might have overextended themselves recently, but the business model is an example of what might be to come with online shopping, especially as the internet of things becomes all the more important. Some combination of the real and the virtual might dominate many areas of our life.
What Can We Expect from the Future?
We tackled future trends in a few statistics and facts listed above, but what are online shoppers expecting in the future, and what will online shopping look like?
- B2B eCommerce sites and businesses are huge currently, though we wonder if more of them will offer options to the consumer market. It might take a few options, but they might be able to make quite a bit of profit from the process, at least from bulk buyers. There are certainly options for consumers to buy wholesale sizes online already (why should a business care whether a business or individual buys), but we may see an expansion of this, or even some marketing focusing on such options.
- What we will certainly see is that businesses that can take full advantage of eCommerce will prosper the most. Gamestop , the video game retailer that was the center of much news for myriad reasons over the last few years, is aiming for a better online retail experience and an expansion of those capabilities.
- Looking to the past to predict the future, we only need to look at Sears. Decades ago the retail giant was on top of the world, but the failure to adapt and the failure to use its incredible resources to start with eCommerce options early. It’s ironic, given how successful they were with mail-order catalogs (the clear precursor to online shopping) before the birth of the internet.
- While practically everyone is already shopping online, in the coming years it will become normalized for more and more categories of products, and more demographics. Older people will become more comfortable with shopping online, and more products are available for easy and reliable shipping. There are some niches yet to fill. Don’t expect it to stay that way.
Conclusion
Online shopping and eCommerce are here to stay, and it is going to be one of the main drivers of the economy moving forward. Yet for both physical and digital goods, there is a lot more to come and the space has hardly been mastered. The internet is vast even if several companies are dominating the market. Specialty goods will always find their niche, and people and companies alike will always be trying new things. This year is set to be an interesting one when it comes to the internet, and we hope that you have learned a little more about yourself and the people around you as online shoppers.
Source:
InternetAdvisor Team
