Ever since the mid-1990s, when the first online transaction is believed to have taken place, the internet has served as an additional avenue to buy and sell products and services. But during the pandemic, for many, it was the only avenue, particularly among retailers. It’s little surprise, then, that e-commerce sales soared in 2020, topping $815 billion, up from roughly $571 billion in 2019, according to the Census Bureau. That’s a 43% increase.
But with the lockdowns lifted and the pandemic (for all intents and purposes) over, where does e-commerce and online selling go from here? Here are a few trends that will likely have an impact on what e-commerce looks like a year from now:
1. Online sales will pick up steam
While online buying may be down from its peaks in 2020, sales are still well ahead of where they were prior to the pandemic. Due to rising inflation, high fuel prices and customers taking advantage of free shipping, online buying should intensify next year.
A strong holiday shopping season is expected to set the stage for 2023 as a whole. Indeed, online sales in November and December are forecast to reach over $267 billion, according to the National Retail Federation. That would be a roughly 10% increase from last year’s total ($262 billion).
Retailers are also dealing with a glut of inventory, due in part to supply chain bottlenecks that have since worked themselves out. Offering deep discounts on merchandise to inflation-weary buyers can help sellers cut down on the inventory they have to carry over into next year.
2. Expanded use of automation
To save on business expenses and work around some of the social distancing measures designed to reduce the spread of COVID-19, many companies leveraged automation to supplant or support existing warehousing activities. With retailers still experiencing hiring woes, automation will likely expand its footprint, according to Lydia Jett, managing partner of an equity firm based in London. Speaking at Tech Live, an annual conference hosted by The Wall Street Journal, Jett noted that automation helps to improve the online buying experience for shoppers while streamlining the development process for producers. This includes addressing their frustrations with not having enough labor. Retail and the food service industry are among the sectors desperate for more workers.
3. Rise in social shopping
From Meta to Twitter to Instagram and TikTok, social media saturates the virtual world. Retailers are leveraging social media platforms to better connect with their target audiences and boost engagement. They’re not only advertising on the social web but also making it possible for customers to actually buy from there, a concept known as social shopping.
While social shopping is not new, it’s increasingly prevalent and will likely expand further in 2023. Kirsten Green, founder and managing partner of a venture capital firm, said at Tech Live that social shopping is a highly effective sales strategy, noting conversion rates are three times higher through the utilization of video rather than static images.