At the beginning of 2023, many economists predicted a mild recession in the United States and a deeper one in Europe. What a different image we have now: there was no recession in the United States and Europe managed the situation better than anticipated. Moreover, many countries in Europe (including Romania) managed to shift from a consumer-led economic growth to a much healthier investment based growth. Throw into the equation the rapid growth in artificial intelligence (AI), and we can quickly see why the forecast for 2024 looks pretty encouraging.
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So, let’s have a quick look at what strategies ecommerce companies can adopt to make the most of this positive outlook. Also, we will use this opportunity to look into the near future and explore the various technological advancements set to influence the realm of eCommerce in the upcoming months.
Last year for the major eCommerce platforms
Luckily, the uncertainty for Magento open source faded once Adobe announced that they will continue to provide critical and security fixes at the same time with the ones released for their flagship platform, Adobe Commerce. Indeed, throughout 2023, Adobe delivered what they promised and versions 2.4.6 and 2.4.7 (beta 1 and 2) were released, which included countless security fixes and platform security improvements for both Adobe Commerce and Magento open-source.
While Adobe engineers contributed to critical updates, the mother company also gave the Magento community the ownership and the flexibility to contribute to releases and support their own short term versions.
Throughout 2023, Adobe Commerce consolidated its position as one of the most complex eCommerce platforms. Its capabilities and innovative features – like a powerful customer account management that centralizes order details from all sales and fulfillment channels, real-time product inventory availability and visibility, top-class B2B functions, the Adobe Commerce’s PWA Studio which uses innovative web technology to provide an app-like shopping experience – all these make it a key player in the online marketplace.
Adobe Commerce is now part of the Experience Cloud, with all significant capabilities being delivered outside of that traditional installed application. New features come in the form of microservices and are not applied to the Magento code base.
And these tools have gotten even more impressive with the help of AI, which allows the platform to deliver timely and relevant content, by personalizing site search, product recommendations, and browsing, as well as promotions that match customers’ needs and interests, thereby driving engagement and encouraging purchase decisions.
2023 saw Shopware consolidating its status as one of the main open-source ecommerce platforms and a top competitor for Magento and Adobe Commerce. With new features being launched at every release, the platform became the preferred choice for online stores in Germany and is pressing hard the gas pedal to take over the marketplace across the big pond too. The $100M investment from PayPal and Carlyle are paying off too and for 2024 Shopware are preparing some revolutionary features like enhanced support for 3D product visualizations, Augmented Reality for mobile devices with QR Code activation and many Spatial Commerce tools made available to the Shopware developers community.
2023 was a great year for Shopify, too. From Amazon’s new app launch in the Shopify app ecosystem, which enables U.S.-based retailers using Amazon’s fulfilment services to integrate a “Buy with Prime” option directly into their Shopify Checkout, to AI-powered capabilities built directly into Shopify and a 3D scanner tool which allows users to create 3D images of their products in just a few minutes, the platform did everything in its powers to help merchants increase their sales. And such a great job it did! The numbers for Black Friday sales surpassed all expectations, reaching $4.1B, up 22% from the previous year, with a peak of $4.2M sales per minute.
In 2023, Shopify announced the integration of AI Sidekick, a virtual assistant which helps with repetitive, tedious tasks and create reports automatically. The feature is free across all plans.
They also reduced their checkout pages to 1 (previously 3), making the experience shorter, faster, and more intuitive than ever.
Looking back at 2023, eCommerce followed its usual ascending trend and total global online sales exceeded $6 trillion. However, brick and mortar retail still held pretty strong, with a 79% vs 21% ratio. And this was mainly because people love the in-store journey. There is pleasure in seeing and trying out products before committing to a purchase.
With AI the main ‘culprit’, 2023 has been a year marked by incredibly rapid technological growth. The eCommerce sector was one of the first to take full advantage of these breakthroughs, geared mostly towards tightening the gap between offline and online retail, when it comes to offering an immersive and personalized shopping experience.
AI made gathering and understanding customer data accessible, enabling businesses to design targeted products, services, and campaigns, track shipping and orders efficiently, and implement strategies like personalized abandoned cart emails to enhance customer engagement and sales.
Frankly, the eCommerce ecosystem has never seen a more diversified range of apps, platforms and tools to help merchants focus on what matters the most – create exclusive buying experiences that turn visitors into loyal customers. With this diversity came a lower financial barrier. Suddenly, features that a few years back were accessible only to a few fortunate ones with big budgets to spend, have become open to the masses.
Although this evolution brought immense benefits to the eCommerce sector, it introduced a significant challenge – the scarcity of a highly skilled workforce capable of harnessing the full potential of these technologies. This skills gap is becoming a critical issue, as the complexity and sophistication of e-commerce tools require specialized knowledge and expertise.
In 2024, we anticipate merchants with substantial budgets to invest heavily in their technology stacks and online retail platforms. Additionally, a significant portion of this investment will likely go towards recruiting and training employees skilled in these advanced technologies. This strategic move will help businesses gain a substantial competitive edge over their counterparts.
On the other hand, less complex but intuitive platforms like Shopify, which do not require deep technological knowledge, and now come packed with future-proof features, are a fantastic first step into the sector and will definitely foster new online store developments. An integral part of this transformation is the rise of efficient fulfillment centers, which streamline the process of storing, packing, and shipping products, thereby enhancing the overall efficiency of the e-commerce supply chain.
Additionally, various EU-funded programs aimed at digitizing businesses will run throughout 2024, covering the development of online shops. The synergy between technological advancements and supportive policy frameworks is setting the stage for a dynamic time in online retail.
In the modern retail landscape, offering an omnichannel sales approach has become the norm. Customers expect to shop seamlessly across various platforms. If retailers fail to provide an easy method for customers to buy products wherever they find them – be it through online search engines, websites, social media, or in physical stores – they are essentially missing out on valuable opportunities.
In this quest to offer shopping opportunities at customers’ fingertips, mobile apps have become a cornerstone, revolutionizing the way consumers interact with brands.
Their role has expanded dramatically, driven by the surge in smartphone usage and the growing preference for digital transactions. These apps offer a personalized, convenient, and often more engaging shopping experience compared to traditional web platforms.
With features like push notifications, augmented reality, and integrated payment systems, mobile apps facilitate instant access to a vast array of products and services, enabling consumers to shop anytime and anywhere. This shift towards mobile app-centric retail has not only transformed consumer behavior but has also compelled retailers to innovate continuously, focusing on app optimization and user experience to stay competitive in a rapidly evolving digital marketplace.
As always, Social Media is the place to be if you want to present detailed information about the quality of the products, talk about your offerings, present tutorial videos, or conduct Q&A sessions. Instagram, Facebook, Snapchat, YouTube, TikTok, and WhatsApp Business, have evolved into proper sales channels, enabling the direct purchase of products. 2024 will be extremely fruitful for those who will spend time creating interesting content to increase their communities of followers. Regardless of your approach – whether it’s using influencers, crafting interesting content, product presentation videos, or any other pursuits – prioritizing social media in your marketing strategies is essential.
Technology and eCommerce in 2024
Traditionally, eCommerce has always been one step behind brick and mortar due to the absence of that in-person feeling. However, the progress in technology is proving to be a boon in this context, and 2024 is set to witness several intriguing developments in this area.
First of all, 5G is well under way and pretty much all urban areas are now covered. This means faster load times for e-commerce websites and apps, making the mobile shopping experience smoother and more efficient. The increased data transfer speeds and improved analytics capabilities with 5G can enable e-commerce platforms to gather, process, and utilize customer data more effectively. This can lead to more personalized shopping experiences, tailored product recommendations, and targeted marketing.
Additionally, 5G’s low latency can streamline online transactions, making payment processes quicker and more secure, which enhances the overall customer experience. Blockchain technology is increasingly being integrated into e-commerce for payment processing. A fantastic piece of news for many online retailers looking to expand into cross border sales, as their need for simpler financial transactions is more acute than ever.
With 5G’s high speed and low latency will come a more effective use of augmented reality (AR) and virtual reality (VR). This will allow eCommerce to be more fun, shifting from a purchasing process to an immersive and pleasant experience. The integration of VR and AR into e-commerce is not just about technology; it’s about crafting interactive shopping experiences that resonate with customers on a new level. Using these technologies, customers will have the chance to ‘try before they buy’. They can see themselves wearing clothing, eyewear, or jewelry from the comfort of their own homes. Similarly, VR can simulate the experience of using a product in a real-world environment.
Artificial intelligence and machine learning will definitely take the headlines in 2024 too. After we witnessed the launch of GPT3 with its 7 billion parameters capabilities, larger language models soon followed in a matter of months. A simple look at the increase in capabilities (GPT4 features 1.7 trillion parameters, is multimodal and has human-level performance in various benchmarks) and we can easily imagine what an immense potential AI has for the future. As these models grow, so will the capacity of the eCommerce tools employing them. Analysis tools and Product recommendations will become much more accurate, with endless possibilities to offer customers a more unique experience, tailored specifically to their needs and requirements.
Helped by AI, 2024 is expected to be a breakout year for drones, offering faster and more cost-effective delivery options. Until now, Amazon has been operating in just two communities (Lockeford, California, and College Station, Texas) using dedicated drone fulfillment hubs. For 2024, Amazon has announced a third U.S. site, plus two more in Europe, in the UK and Italy, before accelerating its push. And it’s not the only one. Zipline, which started out delivering medical supplies to outposts in Rwanda and Ghana, has already flown more than 60 million commercial autonomous miles and is rapidly expanding its U.S. operations. In Europe, the UK’s NHS partnered with Zipline for drone delivery of medical supplies.
Reflecting on the dynamics of 2023, the eCommerce landscape is poised for an even more vibrant and technologically-driven 2024. Key developments like enhanced AI capabilities, the expansion of 5G, and innovative features in major platforms have set the stage for a transformative year. With a focus on bridging the online-offline gap when it comes to making shopping a pleasurable experience and leveraging mobile apps and social media as vital sales channels, businesses are well-positioned to capitalize on these advancements, offering consumers an increasingly personalized and immersive shopping experience.
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