Our Predictions for the Ecommerce Industry in 2020

March 27, 2020

The Greek philosopher Heraclitus believed that the only constant in life is change. Indeed, this was true when Heraclitus first wrote about it in 500 BCE, and it’s true for the ecommerce industry today. 

When the industry first took off in the 1990s, the system was relatively simple. Ecommerce sites would list items for sale, and with the click of a button you could purchase them from your desktop.

Advances in technology have made the industry more complex. Mobile devices are now the most popular way to browse the internet, which means that online merchants must make sure that their site works as well on smartphones and tablets as it does on desktops.

Of course, technology has also made life easier for online merchants in many ways. For example, drag-and-drop page builders allow you to quickly create custom pages for your store without the help of a professional web designer.

The industry will certainly continue to change in 2020. Here’s what you can expect:

1. Rise of PWAs for Ecommerce

Essentially,PWAs offer all of the benefits of native apps with none of the drawbacks. They’re just as fast, they have the same features and users don’t need to go through the hassle of downloading them from an app store. 

So, it’s not exactly shocking to see that PWAs are poised to overtake native apps in popularity. Gartner had previously predicted PWAs would replace 50% of consumer-facing native apps by 2020, and at this point that looks highly likely. 

2. Real-Time Shopping Assistants with AI

Pizza Hut allows you to place an order directly through its Facebook Messenger chatbot. Staples teamed up with IBM to develop its Easy System, which allows customers to place orders through text, email, Slack and Facebook Messenger. Then there are stores like Sephora and H&M that use chatbots to recommend products to potential customers. 

Real-Time Shopping Assistants with AI
Image Source: Shopify

These real-time shopping assistants should only get more popular as AI technology continues to improve. Worldwide AI sales are expected to grow from $6 billion in 2020 to nearly $37 billion in 2025.

3. Augmented Reality

The biggest reason why people sometimes prefer in-store shopping over online shopping is it gives them a chance to touch and feel products before they commit to buying them.

Ecommerce sites can compensate for this fact by providing high-quality images and video of their products, as well as customer reviews for unbiased opinions. But these supplements will never be the same as experiencing what the product is like in person.

With augmented reality (AR), though, customers can get the next-best thing to the in-person experience. AR technology makes it seem like the customer is really in the same room as the product. It provides a more accurate representation than any two-dimensional product image or video. For example, the Glasses by Warby Parker app allows users to virtually try on a pair of glasses. 

Older man using Augmented Reality (AR) with your smartphone
Image Source: CNET

Some stores are even using AR to create experiences that aren’t available in-store.

In 2019, Wayfair released such features for their mobile app. The camera-based Interactive Photo for View in Room 3D feature shows the user what Wayfair products would look like in their home. A furniture store would never allow customers to bring products to their home without purchasing them first — but with AR, it’s possible. 

4. More Brick and Mortar

Expanding into brick-and-mortar retail was a popular trend for ecommerce stores in 2019, and you can certainly expect this to continue in 2020.

According to a JLL Retail study, Casper plans to open 200 new stores by 2021. Also, the women’s clothing store Adore Me plans to open 300 stores by 2023. 

New York City is the most popular location for ecommerce companies opening their first physical storefront. Almost 60% of ecommerce pop-ups and about 41% of ecommerce permanent locations are opened in NYC. Within New York City, SoHo is by far the most popular neighborhood for these stores — 48% of the ecommerce brick-and-mortar locations in New York City are in SoHo. 

Warby Parker, one of the first clicks-to-bricks retailers, converted a SoHo garage into a pop-up store back in 2013. At the time this was seen as an unusual move by industry analysts, but since then Indochino, Glossier and many other stores have opened up in SoHo. The footwear company Allbirds recently invested in a 4,800-square-foot SoHo storefront, which is huge for this dense, bustling area. 

Allbirds brick-and-mortar location
Image Source: Business Insider

Los Angeles is the next-most popular destination for ecommerce stores expanding into brick and mortar — this is where nearly 16% of ecommerce pop-ups and 12% of ecommerce permanent locations are opened.

After New York City and Los Angeles, San Francisco, Toronto and Chicago round out the top five locations for clicks to bricks retailers.

5. Brands to Focus on Community Building

Every ecommerce store wants its customers to be loyal. After all, it takes quite a bit of time, money and effort to transform people from strangers into visitors and then into paying customers. The investment that went into creating a customer will stop paying off if the customer decides to abandon your service for a competitor. 

It takes more than just good products or competitive prices to establish loyalty. There are a lot of stores that offer good products or low prices, or even both. To convince customers to ignore their other options and keep coming back to you, you must build a community. 

Social media allows you to interact with your customers, but you’re still on the other side of a screen. You need to connect with customers in person to form the strongest bonds. 

For example, the dating and networking app Bumble has an ambassador program called Queen Bee. Part-time employees that were hired exclusively for this program are instructed to host in-person events for members. Bumble’s membership has grown to over 26 million users, and the Queen Bee program is a big reason why. 

Another example is Peloton, which may have the most effective community-building strategy of all. Peloton’s business model depends on connecting to customers remotely. The company sells stationary bicycles and treadmills, and users can stream live training sessions from Peloton’s Manhattan studio. 

The convenience of these remote sessions is attractive, but Peloton also makes an effort to establish in-person connections with its customers by hosting annual Peloton Homecoming events. Peloton has held these events since 2016. Homecoming 2019 was attended by over 3,000 members from nearly every state in the country, as well as Puerto Rico, Canada and the U.K.

Peloton community event
Image Source: Peloton

In addition to helping you make more sales from existing customers, brand communities can help you attract new ones. When community members feel enthusiastic about your brand, they’re more likely to recommend your store to people they know. 

Eighty-four percent of people trust referrals from friends and family more than they trust advertising, according to Nielsen — this stat shows just how important word-of-mouth is to your business.

6. Eco-Conscious Ecommerce

According to CGS’s 2019 Retail and Sustainability Survey, 68% of consumers believe that product sustainability is important when making a purchase. 35% of consumers are even willing to pay 25% more for sustainable products.

When you break down how consumers responded by generation, it’s clear that eco-conscious purchasing habits are only going to become a bigger trend in the future. Compared to other generations, Gen Z consumers were much more likely to be willing to pay 50-100% more for sustainable products. In 2020, Gen Z is expected to overtake Millennials as the biggest generation in the world.  

It’s worth noting that this purchasing behavior isn’t entirely selfless. A 2018 study produced some interesting findings on what motivates people to buy eco-friendly products. Unsurprisingly, 80% of the consumers who make these purchases do so because they care about the future of the planet and 79% believe that humans have a responsibility to care for the other living creatures in our environment. 

But the study also found that there are other reasons driving these purchases, including:

  • 62% believe that eco-friendly products are healthier
  • 47% want to be a positive role model for their friends and family
  • 39% believe that eco-friendly products are of better quality

In other words, the appeal of sustainable products extends far beyond the environmentalist movement.

And sustainability is about more than just the products you sell. You can also take advantage of this trend by adjusting how you sell your products. Practices such as low-waste packaging and efficient shipping will help you reduce your carbon footprint and appeal to young consumers.

7. Drone Delivery

In December 2013, Jeff Bezos first announced his plans for Amazon Prime Air. He described a service in which customers could place an order and have their package delivered by a flying drone within 30 minutes.

At the time, Bezos estimated that the service would be available in the next four to five years. It’s now been over six years. And every year, there are articles published about how drone delivery is closer than ever (for example, The Verge published “Google X sets ambitious goal of drone deliveries by 2017” in 2015, and Forbes published “Drone Deliveries Are No Longer Pie In The Sky” in 2018). At this point, it’s starting to feel like Lucy pulling away the football right as Charlie Brown’s about to kick it.

But there are good reasons for why this has been taking so long. In addition to the technical challenges of developing reliable and safe delivery drones, Amazon (as well as all other companies pursuing this service) will need to get the go-ahead from the FAA.

In March 2019, UPS achieved a drone delivery milestone. They were awarded the first sanctioned use of a drone for routine revenue flights by the FAA — in a program that will be overseen by the FAA and North Carolina Department of Transportation, UPS and the drone-making tech firm Matternet will be transporting medical specimens from the WakeMed main hospital in Raleigh to one of WakeMed’s lab facilities. The drones are able to reduce the travel time on this route from 45 minutes to 10 minutes, which has life-saving potential. 

Another milestone was passed in October 2019, when the Google subsidiary Wing became the first company to deliver retail packages by drone. In Christiansburg, Virginia (pop. 22,000), residents can use Wing to have packages from FedEx, medicine from Walmart and even candy from a local shop flown over to their house. Instead of landing, these drones hover over their destination and lower their packages down with a cable.

One of the biggest obstacles for drone delivery is finding a way to ensure that drones don’t collide with other aircraft. This will be easier now that, starting January 1, 2020, aircraft will be required to broadcast their position using a type of radio called automatic dependent surveillance–broadcast out (ADS-B Out). This will make it easy for drones to detect and avoid other aircraft — in fact, leading drone maker DJI has already committed to outfitting all of its drones that weigh over 9 ounces with equipment that can receive ADS-B signals.

Will drone delivery be available everywhere in the country by the end of 2020? No, it won’t even be available to most people. But the amount of progress that was made in 2019 was a huge step forward, and the progress in 2020 is set to be even more substantial. 

Adam Ritchie is a writer based in Silver Spring, Maryland. He writes about ecommerce trends and best practices forShogun. His previous clients include Groupon, Clutch and New Theory.

Adam Ritchie

Adam Ritchie is a writer based in Silver Spring, Maryland. He writes about ecommerce trends and best practices for Shogun. His previous clients include Groupon, Clutch and New Theory.

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