2017 was an interesting year for retail, particularly ecommerce. In addition to overall growth, we’ve seen a number of trends that may indicate fundamental shifts in the way people shop. Some of these are developments that we’ve been anticipating since the early days of online shopping that are now finally possible thanks to a confluence of consumer behavior shifts and technological advances in AI and processing power. At the same time, entirely new types of marketplaces are emerging, opening up opportunities for buyers and sellers. Let’s look at 10 major trends, events, and changes that are likely to impact retail long-term.
#1 Mobile shopping is going mass-market
Smartphones have been in the hands of consumers for more than a decade, yet they have consistently lagged far behind PCs for purchasing. The common refrain has been that mobile devices are great for research, but shopping tends to be slower and more of a hassle. Over the last few years we’ve seen major improvements in adaptive web design, along with native shopping apps, and each step forward has helped create a more seamless shopping experience. 2017 may have been a tipping point, with a projected 34% of online retail transactions now taking place on mobile devices.
#2 Managed marketplaces are creating a win-win-win
When shoppers are hunting for bargains, they often seek out second-hand or refurbished items. For customers, however, these formats have been a challenge for online transactions where would-be buyers can’t examine the item in person. Buyers know that when they shop on sites like eBay where sellers often don’t accept returns or totally unmanaged exchanges such as Facebook Marketplace and Craigslist, they risk wasting money on something that’s broken or not as advertised. With little recourse beyond leaving a bad review, consumers may hesitate. This is where managed marketplaces, like The RealReal and ThredUp have identified a need and are running with it. Similar to what StubHub did for the secondary ticket market, these marketplaces take the risk out of buying used items by offering a guarantee from a third party, creating benefits for consumers, sellers, as well as the marketplace.
#3 Amazon bought Whole Foods!
Yeah, that happened… and a lot of people are still speculating about the long-term impact that it will have. In the meantime, it’s easy to see why they did it. Whole Foods is a trusted name that gives Amazon an immediate and proven entry into the grocery category. Plus, the acquisition provides them with an established brick and mortar presence to power a new channel of convenient access for returns and order pick-up.
The move has already spurred changes throughout the retail market. Traditional big box stores like Walmart have begun offering consumers lower prices to order online and then pick-up items in stores versus shipping to their home. This approach leverages Walmart’s large retail footprint to compete with Amazon on price in a new way, while also retaining valuable margin dollars by not having to pay for shipping.
#4 Non-traditional online retailers have started gaining serious traction
While traditional mall anchor stores like Sears and Macy’s, as well as specialty chain stores like Rooms to Go and Mattress Firm, have struggled to adapt to the ways people shop today, a new kind of online retailer has emerged that is more agile and ready to offer distinct value propositions to consumers. In 2017, these nimble retailers have grown exponentially, offering serious challenges to their decades-old competitors. Casper mattresses is a great example. For years, no one was able to significantly take on Mattress Firm due to the cost of spread-out sales infrastructure, distribution and retail overhead. Now, however, several online-only mattress companies have begun to chip away at a near monopoly, at a rate that would have been called impossible just a year or two ago.
#5 Generic goods are giving big brands a real run for their money
Retailers like Wish.com (pre-market valuation of $8.5 billion) and Amazon have begun selling good-quality, generic versions of popular items, offering a better overall value to consumers in a very straightforward way. The rise of generic goods isn’t limited to ecommerce — walk through any major big box retailer and look at the amount of shelf space devoted to store brand items displayed in fresh, modern packaging.
Why are consumers suddenly willing to give private label brands a chance? One reason is a change in the way we all think about shopping; even years after the crash, consumers are still wary of overspending. Another big reason is the phone in your pocket. With the ubiquity of smartphones and unlimited data plans, anyone can research any purchase at any time, instantly look up reviews and see that maybe the name brand isn’t so different from the generic option. This kind of transparency gives consumers the information they need to make a decision based on more than a trusted (ie. heavily marketed) brand name.
#6 True personalization has arrived
Another long-awaited promise of ecommerce has been refined personalization of the shopping experience. Apart from Amazon and a couple other massive sites, few online retailers had the resources to get the most useful insights from industry and shopper data. Well, in 2017 AI got smarter and more affordable for all. Some cool companies that are applying machine learning/AI in novel ways are found in a new class of fashion sites, including Stitch Fix and Le Tote. These sites provide custom recommendations for your personalized style, and over time their systems learn what you like and what you don’t, so they get better and better at sending hits every time.
#7 Shopping choices are becoming more transparent
Ecommerce revolutionized shopping in part because it finally offered consumers a chance to easily comparison shop. Until recently, however, price was by far the main metric consumers used to compare. And until this year it was still arduous to compare prices on new versus used, generic or local items–these different formats were siloed. A shopper would have to go to one site for used, another for new, and many different sites for local availability or generic options. Here at Price.com, we noticed this trend and set out to be the first, single solution for showcasing all the shopping options in one place. Price.com offerings now empower the consumer with more information and more choices.
#8 Visual search is fast becoming an “it” feature.
Visual search technology has been in the developmental stages for a long time, but it’s finally gaining real traction thanks to more affordable processing power and better AI. Throughout 2017, Pinterest honed its new visual search engine, integrating with Target and other retailers. At Price.com, we have also launched a visual search feature which works seamlessly through our own Chatbot, Chrome Extension and app. Before long, consumers are going to expect to be able to take a picture or click on any item within an image to find out where to purchase that item or similar products.
#9 Chatbots gaining popularity
As we went through the process of developing the Price.com chatbot, we quickly saw why this is inevitable — they are easy to use, a natural fit for mobile and web, and they give shoppers instant results. It’s a convenient way for companies to offer true 24/7 customer service and buying information, and the more customers use them, the better they become.
#10 Consumers are becoming more comfortable using voice technology to shop.
Amazon’s Alexa, Google Home, and other voice-activated shopping assistants are becoming trusted parts of people’s day-to-day lives. Their full reach and impact has not yet been seen, but this channel is definitely something to keep an eye on in the coming year.
Whatever 2018 holds, the future is all about bringing greater transparency and more simplified buying options to consumers. It’s an exciting time to be in this space, and we can’t wait to see where we will be a year from now.