Author: 21 Dec 2023minutes read
With rising inflation and interest rates, plus some industries still struggling to rebound from the pandemic, 2023 has been challenging for consumers. But in the National Retail Federation’s (NRF) latest monthly economic review Chief Economist Jack Kleinhenz commends consumers for their resilience and their positive effect on the economy despite these challenges.
“The remarkably resilient consumer sector has been the story of 2023,” he says. “Consumer spending has provided continued resilience to the economy, with nominal personal spending rising 5.3% year over year.” This has helped push up gross domestic product growth estimates to 2.5% by year-end, higher than expected a year ago.
More recently, consumers surprised economists with record-breaking sales during the five-day shopping period from Black Friday to Cyber Monday. According to NRF, 200.4 million consumers shopped over that holiday period, surpassing NRF’s initial 2023 forecast of 182 million and 2022’s record of 196.7 million.
Surveys from earlier this year said consumers planned to spend less this holiday season, but the data says different.
The upward trajectory is expected to continue into 2024, according to Insider Intelligence, with global ecommerce sales in particular expected to increase 9.4% in 2024 to $6.33 trillion. But what’s behind this growth? And how do the growth drivers impact ecommerce businesses today?
In this year-end roundup, take a look at what trends are influencing consumer shopping and the greater ecommerce space. And more importantly, learn how these trends will shape 2024 and how you can stay ahead of the game.
Trend: hybrid shopping
The COVID-19 pandemic years forced many consumers to adjust how and where they shop, with many moving online and some adopting hybrid models. As such, buy online, pick up in store (or BOPIS) became a more popular hybrid approach, especially for groceries, as retailers and consumers adjusted to social distancing. Although some consumers still use the model for its convenience, BOPIS has leveled out over the past year, according to the NRF, and is forecast to stay flat.
A similar hybrid trend is forecast to pick up, however, with many consumers researching online and then purchasing offline (or ROPO). A 2024 ecommerce trend forecast from HubSpot expects it to become more advanced and reliable in 2024, using information from social media, geolocation, mobile payments, store inventory tracking, and analytics tools to “help retailers accurately measure how well their digital ads are contributing to in-store sales […] By knowing which digital ads are most efficiently contributing to sales, ecommerce businesses can create higher-conversion, more targeted campaigns, and feel confident that what they’re doing online is meaningful to their consumers.”
Trend: social commerce
With social commerce sales expected to reach $2 trillion globally by 2025, according to Deloitte, any brand that hasn’t already tested the waters should plan to in 2024. Today, shoppers not only use social media to discover new brands and hear about products from peers, but also want to shop brands directly in their feeds without leaving the apps. From Instagram Shops and TikTok Shop to shoppable Meta ads and Amazon Live, social outlets are evolving to offer this seamless shopping experience.
Some businesses are even offering customer service on social through direct messages (DMs) or Facebook Messenger chatbots. Although the uptake isn’t as broad as social selling, the HubSpot research says consumer outreach for customer service using DMs is up 45% from 2022. This represents an opportunity for merchants to diversify their customer service strategy to include social.
Trend: mobile commerce
A whopping 75% of consumers prefer to use their mobile devices for online shopping, according to research from HubSpot. As shopping becomes increasingly easier on mobile, with wider adoption of secure mobile payment, fingerprint and facial recognition, and easy one-click checkout, mobile will continue to be the device of choice for online shopping. Even if you’re not ready for some of these advanced technologies, it’s more important than ever to make sure your site is optimized for mobile.
Trend: livestream shopping
For the past couple years, livestream shopping has been gradually gaining momentum with the likes of Amazon, TikTok, YouTube, and Shopify all launching their own shoppable livestreams. Think QVC for the millennial and zoomer generations. Similar to the driver behind social commerce, consumers want a seamless shopping experience offered in the channels where they spend their time. Livestream shopping is another way to make this possible. For brands with products that might benefit from demos, live reviews, or interactive discussions, shoppable livestreams might be worth adding to your omnichannel strategy in the new year.
Trend: deal hunting and discount shopping
Although shoppers surprised economists during the Black Friday-Cyber Monday shopping period, overall many consumers have cut back on spending in 2023. To combat inflation and high interest rates, shoppers are turning to cost-saving measures like discount stores, price comparison, and coupons. “In this cost-conscious environment, shoppers are researching more than usual because they need their dollars to go further,” Forbes reports in a 2024 retail outlook. “They’re also straying from their tried-and-true brands and becoming increasingly open to exploring alternative options that will help them save money.”
Discount stores and sites, especially big box retailers, are seeing a higher volume of shoppers, and brands are being forced to cut prices and run promotions to compete. “However you want to do it as a retailer—coupons or promotions—it’s about offering shoppers a deal because that’s what they’re looking for,” says Rieva Lesonsky, CEO of SmallBusinessCurrents.com and long-time small business expert. She notes the increasing number of price comparison sites and browser plugins that allow shoppers to easily compare prices and go to the site with the best price. She adds, “Consumers are looking for who has the best deal at the moment.”
If you’re a Buy with Prime merchant, you can use coupon codes and automated promotions in campaigns to help attract new shoppers, increase conversions, and retain existing customers.
Trend: free shipping
Online shoppers, especially Prime members, have come to expect this perk, with myriad research pointing to the importance of free shipping in shoppers’ purchasing decisions. These days, however, free shipping has also become a necessity as shoppers look to save money. “Free shipping is the number-one influencer of people deciding to make an online purchase,” Rieva echoes. “And it will continue to be a huge driver of sales.”
She acknowledges that ecommerce businesses are facing their own pricing pressures, responding with restrictions on free shipping or getting rid of the perk altogether. But that could be the difference between a sale and an abandoned cart. “A lot of companies are setting their free shipping thresholds too high, so then people abandon their carts to go find free shipping on another site. You’re effectively inviting them to shop elsewhere,” Rieva says. “While shipping costs are no doubt eating at your margins, calculate how much business you might lose if you charge for shipping before you eliminate the option.”
Trend: subscriptions and loyalty programs
Although these retail programs have been on the rise for several years, they’ve peaked in popularity as a way for shoppers to save, whether through discounts, rewards, or free shipping. If your products have a high repeat-purchase rate or work well in bundles, consider a loyalty program with free shipping or a subscription option with discounted pricing to set yourself apart among cost-conscious shoppers. If you’re a merchant using the Buy with Prime app for Shopify or Buy with Prime for Salesforce Commerce Cloud, the integrations are compatible with third-party loyalty apps or programs that you might offer.
As retail categories become saturated and marketing noise bombards people from all channels, consumers are increasingly looking for personalized shopping experiences. For brands today, it’s not enough to differentiate yourself from the competition. You now have to stand out at a more granular level with a personalized experience. According to the 2023 State of Personalization Report from Twilio Segment, 62% of consumers say that a brand will lose their loyalty if they deliver a generic experience. On the brand side, nearly 80% of business leaders say that consumers spend more—35% more on average—when their experience is personalized. This trend is forecast to continue in 2024, especially as predictive analytics and generative artificial intelligence (AI) capabilities strengthen.
Trend: Generative AI
This past year has been abuzz with talk of generative AI (GenAI) and even some significant advancements. Some categories that have tapped GenAI to enhance the shopper experience online include clothes, accessories, cosmetics, furniture, and more. With virtual try-on technology, which uses augmented reality and machine learning, brands can offer a shopping experience similar to that in a store, allowing the shopper to virtually try the product on or see what it looks like in their home. Amazon offers virtual try-on for eyewear and shoes on its mobile app.
In the broader ecommerce space, however, brands are still figuring out how to leverage GenAI, while shoppers are trying to decide what they think about it. “We’re still early in the development stage, so businesses aren’t quite sure how to deploy it yet,” Rieva says. “But 2024 will be the year, especially with personalized shopping experiences and marketing.”
The rapid growth won’t come without its speed bumps, though. As GenAI development and adoption spreads far and wide, consumers are growing increasingly skeptical. Recent data from global consumer insights firm GWI shows that people are generally excited about AI’s potential, but are even more concerned about its implications and explosive growth. “In the world of business, everyone from beauty brands to sports retailers and beyond has AI-related decisions to make over the next 12 months,” GWI shares in its 2024 Connecting the Dots report. “Adopting it means different things for different industries, and acting with awareness and sensitivity on a case-by-case basis will be key. Given that AI’s growth seems inevitable, it’s important for businesses to know what their customers are most excited about—and what their worries are.”
Read more about GenAI and ethical considerations for ecommerce businesses on the Buy with Prime blog.
Trend: innovations in search
As more people do their shopping online and technologies simultaneously advance, search is playing a bigger role in enhancing shoppers’ experiences. With mobile being the preferred device for online shopping, the photo-based search capabilities that have largely been limited to Google and Pinterest are expected to branch out to online shopping. “Businesses will begin offering options to visually search for products by using personal photos or photos found online,” HubSpot estimates. “Since image search offers opportunities to find similar products at a cheaper price online, it could eventually drive consumers to shop online even if they started in a physical store.”
Similarly, voice search is having a bigger impact in the ecommerce landscape. According to the same HubSpot forecast, about 40% of US internet users rely on a voice assistant at least monthly. Alexa already lets you place orders on your Amazon.com account and Walmart Voice lets shoppers place orders using Siri or Google Assistant. Says HubSpot, “It’s critical to optimize your business for voice search in 2024, or you could lose the vast majority of consumers who choose to shop through voice-activated devices.”
Trend: baby boomers online
As the richest generation, baby boomers remain a generation to pay attention to, especially as they’ve learned to embrace online shopping. Over the past few years, many entered their 70s and many more entered ecommerce. “The pandemic changed the entire dynamic for how baby boomers shop,” Rieva points out. “This huge generation was primarily in-store shoppers, but the pandemic got them shopping online.” Before, they were resistant to change and the learning curve, she says, “but once they were forced into it during the pandemic, they saw that they could do it and it changed their whole perspective on shopping.”
Boomers are also using social media more, including platforms more popular among younger generations, like TikTok. In fact, GWI says their TikTok use is up 57% since Q2 2021. As a result, TikTok has adjusted its approach over the past year, Rieva notes. “It used to be firmly ensconced in the zoomer and alpha generations, but TikTok purposely decided to branch out to older generations that have money to spend.” So brands, too, should take note and adjust to not only reach, but also accommodate this valuable shopper audience.
Trend: Generation Z entering workforce
Colloquially known as zoomers, this shopper audience is already wielding billions in purchasing power—$360 billion to be exact—with the top end of the generation entering the workforce and the rest helping spend their parents’ disposable income. Because they grew up during recession and many have student loans to pay off, they’re cost-conscious shoppers. But in the same token, they have high standards and won’t hesitate to spend on brands that resonate with them and their values—and they definitely keep tabs given their significant use of social media—Rieva shares in an article for Forbes. So if this age group is a key shopper audience for your product, it’s important to understand what’s important to zoomers and how they shop.
Learn more about this important shopper audience and how to reach them in a deep dive into Gen Z shoppers on the Buy with Prime blog.
Trend: Generation Alpha pester power
Although this generation is only in its infancy—literally—it actually has some notable purchasing power. “Their ‘pester power’ contributions to the economy have been enormous, asking parents and others to buy stuff for them,” Rieva says. But these kids, born from 2012 up through 2028, have grown up during some major economic, environmental, and social events. So instead of pestering for a pony or new bike, Gen Alpha’s influence on its parents’ spending is tied to global matters. For example, 25% have encouraged their parents to switch to products that are better for the planet. Although these shoppers aren’t earning true incomes yet, their more than $140 billion in direct and indirect spending power and more than $300 billion in pester power is worth getting in front of.
Trend: sustainable and ethical shopping
Although sustainable business practices and consumers’ expectations of them aren’t anything new, they’re now more important than ever. Younger generations, which have historically placed higher value on businesses’ sustainable and ethical practices, are increasingly putting their money where their mouth is as they age and gain purchasing power. According to research from HubSpot, 66% of consumers want companies to reduce their environmental impact, and 46% of consumers are more likely to purchase from a company that actively donates to charity. So if your company is already supporting causes or creating products from sustainable resources, make sure your shoppers know about it. But do it authentically—shoppers can see right through corporate lip service. And if your ecommerce business hasn’t caught on to consumers’ preference for shopping ethical and sustainable brands, you have some work to do in 2024 because this trend isn’t going away any time soon.
Trend: short-form video
Today’s consumers prefer video for their media consumption and engagement with brands. In fact, 91% of people say they want to see more online videos from brands in 2023, according to Wyzowl’s 2023 State of Video Marketing report. Short-form videos, whether added to your home page and product detail pages or shared on social and YouTube, can be a great way to tell shoppers about your brand, demo how to use a product, or feature customer testimonials. Beyond building brand awareness, video content can help increase engagement, search engine optimization, and brand credibility. If your ecommerce business is looking to boost brand visibility and achieve growth, then developing a video marketing strategy is a great goal for the new year. Don’t know where to start? Learn seven tips for effective video marketing on the Buy with Prime blog.
Trend: social proof
Forbes’ 2024 retail outlook calls out the shift in power that’s happening from brands to consumers. More and more, consumers are tuning out the marketing noise and, instead, looking to peers for validation and recommendations. As consumers increasingly look for social proof before spending their hard-earned dollars, influencer strategies and authentic customer reviews are becoming key elements of an ecommerce businesses’ marketing mix. Whether or not you’re a personal fan, influencers might have the influence that you need to stand out. So embrace the creator economy and find content creators who resonate with your brand values—and make sure yours resonate with them, too.
In the same vein, shoppers seek social proof through product reviews from actual customers. Shoppers want to hear about the product from someone like them—not from the brand. “People like reviews because they want to hear what an actual user is saying about the product,” Rieva says. “Research shows that reviews are what pushes a shopper to make a purchase, not necessarily the star rating, but what customers are actually saying.” According to a 2023 survey from PowerReviews, 98% of surveyed consumers say reviews are their essential resource for making purchase decisions and nearly half said they won’t purchase a product if there are no reviews available for it. Although you don’t have control of your review content, reviews are one more way to share information about your products and help shoppers make informed purchasing decisions. Adds Rieva, “This is an advantage that online sellers have, so play that up.”
Whether or not you currently use a reviews feature on your ecommerce site, consider adding Reviews from Amazon to your site to help boost shopper trust and drive conversions.
Trend: AI-generated content
As GenAI continues to generate buzz, marketing will be one of the areas with early adoption and impact—good or bad, depending on how it’s used. Experts at Forbes see AI-generated content marketing in particular exploding, with potentially decreasing effectiveness if the messaging doesn’t resonate with consumers. So it’s important not to lose the human element in your content creation and, worse, the connection with your customers. “Authenticity is absolutely crucial to brands and retailers in today's day and age, as consumers have become more and more inclined to spend money with brands they trust,” Forbes reports. “Brands and retailers should invest in technologies that enhance the quality and efficiency of [content creation] while still maintaining a human touch. Establish clear guidelines for AI usage to ensure it aligns with your brand's values and ethics. Strive for a balanced integration of human creativity and AI-driven efficiency.”
Clearly it’s been an exciting, albeit interesting year for ecommerce, and 2024 is shaping up to be the same as consumer expectations evolve and powerful trends like social commerce and GenAI take hold. By staying on top of these expectations and trends, you can be well-positioned for ecommerce success and growth in the new year.
Learn how you can grow your ecommerce business with Buy with Prime.