Did you hear about ChannelAdvisor’s recent Q&A with CEO David Spitz? Our second live webcast was one of the most popular to date — with good reason.
Spitz has been closely connected to the e-commerce industry for more than 14 years, and frequently predicts (with uncanny accuracy) where the market is headed next.
So we weren’t surprised when hundreds of brands and retailers showed up to hear him talk about the future of e-commerce in 2020.
In case you missed that discussion, here’s a quick recap of five forces Spitz predicts will continue to shape the industry this year.
E-Commerce Industry Force #1: China
Chinese retailers have long benefited from low international shipping rates and other structural advantages that make it difficult for domestic sellers to compete.
And now, Chinese sellers outnumber US sellers on Amazon.
Among the top merchants selling to US consumers, 49% are based in China. Less than half (47%) are in the US.
That milestone is a remarkable one, says Spitz, since it puts tremendous pressure on domestic sellers. While the benefits of cross-border trade are undeniable, this is one area where the shrinking global landscape can create considerable challenges — particularly for brands and retailers selling in categories where there’s fierce competition from international sellers with a major cost advantage.
His advice? Start focusing on proprietary products.
Whether it’s tweaking an existing product to make it better or creating something truly unique, being able to offer something other sellers don’t have is your best defence. And if you offer an item that can be trademarked, you can take advantage of brand gating to own the ASIN and define how it’s described.
E-Commerce Industry Force #2: Mobile Commerce
It’s amazing, Spitz says, to see just how many e-commerce websites and emails still aren’t optimized for mobile. With consumers rarely using laptops and desktops to shop, e-commerce content that’s unreadable on smartphones is a major roadblock.
When you consider the fact that many buyers don’t even have home computers, there’s a good chance the lack of mobile-friendly content could be costing you a tremendous amount of sales.
Based on shopping activity tracked by ChannelAdvisor, 70% of e-commerce clicks are now from smartphones — nearly triple the amount of mobile traffic we saw in 2014:
Staying competitive in this mobile-first world requires putting small screens at the centre of every strategy. If your company is among those lagging behind in this area, 2020 is the year to make mobile your #1 priority.
E-Commerce Industry Force #3: Marketplace Advertising
Another major force of change is the convergence of advertising and transactional channels, with the clearest example occurring on Amazon.
Just a few years ago, advertising on Amazon was still considered an optional channel by many brands and retailers: Taking advantage of Sponsored Products and Display Ads might have helped boost listings a bit, but they weren’t viewed as a necessity for winning sales.
Not so today. Amazon Advertising is now the third-largest advertising platform in the US, netting $10 billion. Brands and retailers that advertise on Amazon are growing faster than those that don’t.
In fact, Amazon Advertising was the fastest area of growth among ChannelAdvisor customers last year. While more than half of managed ad spend among ChannelAdvisor customers went to Google in 2018, that number had shifted significantly by Q4 2019. Google ad spend fell below 50% as Amazon Advertising’s share jumped from less than a third to 44%:
That’s a significant shift — one that we expect will continue well into 2020. If you don’t already have a program in place, it’s time to seriously consider your options for executing effective Amazon Advertising campaigns in 2020.
E-Commerce Industry Force #4: Fast-Growing Marketplaces
Yes, Amazon has continued to see strong double-digit growth. But are you familiar with what’s happening among other e-commerce marketplaces?
On Target, which launched its online marketplace in 2018, same-store sales grew at an astounding pace for ChannelAdvisor customers last year. Rakuten, Walmart and Zalando are all outpacing Amazon growth among ChannelAdvisor customers, thanks to the unique competitive advantages offered by each marketplace:
If you’re not at least looking into additional marketplaces that could be a good fit for your brand and product catalogue, now’s the time to start. We’ve seen companies grow their online business by as much as 50-100% after expanding to new marketplaces. Target, Walmart and Rakuten are all strong options to consider, along with other growing channels like AllSale and Shop.com.
E-Commerce Industry Force #5: Brands
For several years now, the e-commerce industry has experienced an explosion of manufacturing brands entering the realm of direct-to-consumer (D2C) selling.
For companies that specialize in proprietary products, e-commerce marketplaces, in particular, have opened the doors to more sales and revenue. In response, many brands are opting to rethink and redesign their business models. From well-known fashion designers to a nearly century-old footwear company, more manufacturers are selling directly to consumers every quarter.
We’ve mentioned many times that consumers prefer to interact directly with their favourite manufacturers, and will often go out of their way to visit D2C websites. What you may not know, however, is just how fast this segment of the market is expanding. ChannelAdvisor’s internal same-store sales data from marketplaces like Amazon, eBay, Target and Walmart indicate brands are growing much faster on marketplaces than traditional retailers. We saw retail customers grow in the mid-single digits in 2019, while brands’ same-store sales grew over 30% during the same time period.
For brands that are not yet at least considering the move to direct-to-consumer selling, 2020 is the year to begin exploring options for selling on e-commerce marketplaces. However, it’s important to note that making a successful transition to the D2C model is a big endeavour with many components, particularly when it comes to managing relationships with retailers.
With the industry in a constant state of evolution, it’s important to watch these and other trends as they unfold. Each year brings big changes for e-commerce, which is why the experts at ChannelAdvisor work so closely with key players like Amazon, Google and Facebook.
For more details on each of the areas above, plus live Q&A insights, see what Spitz has to say in the full on-demand webinar: Connect Live with ChannelAdvisor’s CEO.