In the rapidly changing world of e-commerce, understanding how to meet current consumer needs while also monitoring and predicting future trends is critical.
“E-commerce is constantly transforming, and its role in consumers’ lives and brands’ strategies is evolving,” said Piotr Tomczuk, industry expert and E-Commerce Strategy Director at Pathfinder 23, a global end-to-end e-commerce agency under the Brand New Galaxy umbrella. “It is now not only about closing the deal but about leading consumers through the whole journey that ends with the deal.”
E-commerce was still in its infancy as recently as four or five years ago, Tomczuk explained, when brands were so focused on meeting the technical requirements of e-commerce that brand communications in that channel remained rare, and those that did exist were quite basic.
“Even if brands wanted to invest in media in e-commerce, doing so was tricky,” he said. “Either the e-retailers had very limited capabilities, or the media-buying process was very different on each platform, so it was hard to engage in e-commerce media at scale. Beyond simple promotions and discounts, activations in e-commerce barely existed, and so-called ‘360-degree campaigns’ were actually 270-degree campaigns because they were missing the e-commerce component.”
This started to slowly change in late 2016 when Amazon began to focus on serving customers more targeted and relevant ads, Tomczuk said. Next came sponsored products, which are now one of the most important ad formats on Amazon. In the first months that sponsored products were available the cost per click was pennies, Tomczuk later learned from Amazon representatives. That low cost not only meant very impressive ROIs for early adopters, but it also proved to companies the value of investing in e-commerce channels and leveled the playing field for indie brands and big manufacturers.
Today, it’s standard practice for brands and agencies to have the technical capabilities required for e-commerce, so the future lies in improved consumer experience. The need to deliver unique, engaging, and high-quality content has prompted companies like Amazon to invest tremendously in their media offerings.
“Brands are amplifying their communications in e-commerce, even making it a core touchpoint or developing e-commerce-specific campaigns,” Tomczuk said. It seems that transformation in e-commerce shows no signs of slowing down, so how can brands stay ahead of the curve?
What Drives Change in E-Commerce?
Trends in consumer behavior drive all retail trends, but the nimble, responsive nature of e-commerce allows it to adapt more quickly than other sectors. Hence, Tomczuk said, e-commerce serves as a disruptor in the wider retail landscape, with the potential to inspire developments in the offline world.
“ROPO [research online, purchase offline] and reverse-ROPO changed consumer habits and retail strategies to a great extent,” he said. “According to a study by Deloitte from 2017, so already more than four years ago, 75% of in-store sales were influenced by digital interactions. This shows the tremendous import of digital and e-commerce even in the case of offline purchases because consumers are turning to e-commerce sources such as Amazon for product content, ratings and reviews, or price comparisons to make their purchase decision. That’s why, even if the majority of your sales come from traditional offline retail, you simply cannot ignore the e-commerce channel.”
Consumers’ growing dependence on mobile devices has likewise had a huge impact on the development of e-commerce, as retailers and marketers work to take advantage of unprecedented access to digitally connected shoppers. At first, optimizing that access meant that content design had to be mobile-friendly, and then mobile-first. Now, mobile is a core element of every strategy, and not only in terms of design—mobile dictates the dynamics of all consumer communication.
“According to Statista, mobile sales will account for 10.4% of total retail sales in the U.S. by 2025,” Tomczuk said. “The dynamics of the mobile environment are crazy. In one moment, we have a shopper on our product page, and a few swipes later, she is somewhere else. This behavior calls for very efficient, performance-driven strategies focused on winning the consumer’s attention and then quickly closing the deal, or at least engaging the consumer in our communication cycle.”
Considering the Future of E-Commerce
As an e-commerce strategy director, Tomczuk has a front-row seat to industry developments. “One way [to track industry trends] is to observe what gains popularity among consumers and then watch how the industry adapts,” he said.
For consumers, Tomczuk expects we’ll see a further merging of online and offline worlds. This merging was likely inevitable but was accelerated by the COVID-19 pandemic, which forced hard-hit traditional retail businesses to quickly rethink their business models. For example, Tomczuk said, some retailers have already successfully adopted a “click & collect” model to boost online sales and leverage their offline stores as pick-up locations. (Though “successful” is perhaps putting it mildly—U.S. shoppers spent $72.46 billion using the click & collect model in 2020, a whopping 106.9% growth rate over 2019.)
“I expect traditional retail will gradually redefine itself,” he said. “It will be more about experiential shopping and more integrated with the online world.” To successfully adapt to this new landscape, Tomczuk said, businesses must stop dividing online and offline sales and start treating them all as just sales. “These two worlds are inseparably connected.”
When considering the future of the e-commerce industry, Tomczuk has his eye on three major trends: The usage of data, direct-to-consumer models, and sustainability.
The impact of big data in e-commerce cannot be overstated. “Data is becoming more accessible and even more important than ever,” said Tomczuk. “From my perspective, we are now dealing with data overflow rather than data shortage. For many companies, the challenge is to find the time or resources to synthesize data from dozens of available tools and sources into impactful, actionable conclusions.”
As brands find solutions for that problem, Tomczuk said, the result will be even more personalized and tailored shopping experiences for consumers. “This data will allow the whole marketing industry to finally move from being product-centric to being consumer-centric.”
With the pandemic completely upending traditional in-person retail, more and more brands are experimenting with the direct-to-consumer (DTC) business model. Tomczuk expects the model to have some staying power, but an important question remains: Where will consumers prefer to shop at the end of the day? “Marketplaces like Amazon will probably offer more convenience at many levels, whereas FMCG [fast-moving consumer goods] companies will probably lure consumers with unique offerings and an engaging shopping experience,” he said.
Finally, we have sustainability, which Tomczuk considers the most interesting point of observation. For example, while globalization fuels both the evolution and future of e-commerce, mass demand for international shipping has put a strain on the environment—something of increasing concern to many consumers.
“Ecological awareness is rapidly growing, and consumers are often choosing local businesses to support sustainability causes and are willing to pay more for sustainable products and services,” Tomczuk said. “This attitude is resonating with companies who strive to introduce sustainability to their products and operations, for example through refillable products or eco-friendly, reusable packaging.”
As these trends evolve and new ones emerge, experts like Tomczuk, Pathfinder 23, and Brand New Galaxy can help brands navigate the ever-changing needs of e-commerce. Change may be a constant in this industry, but one thing remains clear: E-commerce will be a crucial part of the future of retail, and brands who ignore it do so at their peril. “In the beginning, it was purely transactional, but now it impacts the whole consumer journey and disrupts the whole retail landscape,” Tomczuk said. “All eyes are on e-commerce.”
Piotr Tomczuk is the E-Commerce Strategy Director at Pathfinder 23. This interview is part of a blog series highlighting the extensive e-commerce expertise and thought leadership throughout Brand New Galaxy. To read more, click here.