International Finance

Nine factors influencing retail digital commerce

IFM_Retail Digital Commerce
Making the best use of digital data management tools will be the way ahead in retail trading

After Amazon and eBay made their debuts in 1995, the world of retail digital commerce has been steadily growing. As per the latest data, there are some five billion internet users across the world (63.1% of the global population). Out of this, some 4.7 billion have social media access. The sector got its much-needed boost during the COVID outbreak and subsequent global lockdowns. With the pandemic’s effects waning and the world coming back to the stage of being normal, these ventures are facing the challenge of staying relevant. In this pursuit, they are adopting some disruptive and path-breaking solutions, some of which we will discuss in this article.

Marketplace Model
‘Edge by Ascential’ has identified third-party sales via marketplaces as the largest and fastest-growing online commerce trend by 2027. While it will contribute to 38% of the global retail trade, Amazon, eBay, Flipkart, and Alibaba will gain massively, thanks to their abilities to curate, and compare the products across the catalogs and give the customers the best range of choices and prices. The retailer will have the benefit of increasing profits and they don’t need to hurt their purses too much to have partnership costs with these third-party platforms.

Circular commerce addressing to the need for going eco-friendly
With terms such as ‘Global Warming’, ‘Greenhouse Effect’ becoming household, consumers are going green as they are opting for ecologically sustainable products, packaging and delivery options. The businesses are responding to it with the ‘Circular Commerce’ method, where the users can buy, rent second-hand products or go after recycled ones. IKEA’s Ingka Centres have launched a rental platform called ‘Library of Things’ in London where consumers can rent out items like drills, sound systems and sewing machines. As per ThredUp’s 2021 Resale Report, 42% of retailers say used clothing will constitute a huge part of their businesses. And almost 24,000 would like to sell used clothing, while partnering with vendors from this product sector.

Conversational commerce and capable order management system
In the initial months of the global lockdown due to COVID, small and medium businesses started shifting to the online domain. However, they faced a problem in the form of not being able to access their product inventories across different geographical locations. Then arrived the ‘Order Management System’, which allowed the retailers to manage their product inventories better with an upgraded suppliers’ database. Another solution has been ‘Conversational Commerce’, allowing customers directly contact the traders via chatbots and other messaging apps. In the United Kingdom, a report from the Institute of Customer Service has claimed about 82% of consumers use the ‘Conversational Commerce’ method.

How about Buy Now, Pay Later?
Fintech firms Klarna, Afterpay and Affirm are now letting consumers buy products online and then pay in installments. For retailers, this comes with benefits such as increasing buying behaviours from consumers to low incidents of products getting ditched from the shopping carts due to higher prices. However, as this method of shopping has come under watchdog scrutiny, how the fintech firms deal with this will decide the trend’s future.

Live Shopping via ‘Social Media Influencers’
This strategy has become popular with the growth of social media platforms such as TikTok, Instagram, YouTube and Facebook. It is all about combining entertainment and shopping while using the popularity of ‘Social Media Influencers’. They showcase products via live stream. It started in China before 2020 and COVID made it globally. Instagram has already launched the Shop tab, allowing users to connect with brands. Many businesses are also partnering up with Social Media Influencers for sponsored ties.

Data being a favourite thing among businesses and customers
This approach has proved to be a good one for small and medium businesses, as they can access first-party data to shape their marketing campaigns. On the customer front, targeted and choice-relevant messages from the traders help things a lot. A mature business always knows how to reach out to its target audience and sell the products, instead of blindly messaging the consumers. Making the best use of digital data management tools will be the way ahead in retail trading. Traders have adopted methods such as delivering personalized customer experiences through emails and automated marketing tools (pushing relevant content through pop-ups and product recommendations).

Embracing Metaverse and other smart tech
The metaverse is also contributing to the transformation process by using virtual and hybrid physical-digital worlds to connect traders and consumers. It is becoming helpful for D2C marketers (direct-to-consumer) as the users can create, buy and sell products without wholesalers’ help.

Another invention has been the usage of the Smart Speaker Market, which will see revenue generation of USD 35.5 billion by 2027. Devices such as Amazon Echo or Google Home are allowing consumers to order their desired products without having a visual look at their phone screens.

SMS and Omnichannel Marketing, with a touch of SEOs
With mobile commerce or mobile-first strategy having this potential to grow further, SMS marketing emerges as another effective tool. Business SMS or SMS Marketing has a higher reach than emails, till you overflow your target audiences’ phones with messages and get yourself blocked as ‘Spam SMS’.

Another good medium is Omnichannel Marketing, where you can make your potential first-time customers come back for repeated purchases, through channels such as advertisements, websites, and social media. Apart from these, retail traders are also launching their own campaigns based on SEOs and customers’ search algorithms.

Artificial Intelligence to rule the roost
Marketing methods guided by artificial intelligence and machine learning become crucial for traders to understand the shoppers’ needs and create personalised product recommendations for them. US-based online grocery portal Peapod is working towards this solution with a service called ‘Order Genius’. This creates a smart grocery list that streamlines the customers’ past buys and helps them to buy the same products again through purchase cycle recommendations. Also, retailers are using this facility called ‘Socially Integrated Visualized Search’ to optimize their product offerings. All the users need to do is click or download the image of the dresses they want to buy. Then, with Google Lens help, they can find the shops selling these outfits.

The world of digital retail commerce embraces technology at a faster rate than anyone can anticipate. We are heading to a future where chatbots and virtual assistants will cover the interactions between traders and customers.

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