E-commerce is the new wave, slowly turning into a tsunami. The internet is such a powerful medium for transmitting information. Any any other medium renders itself inefficient when compared to the worldwide web. Lets look at how and why e-commerce is being affected and what the future has in store.
In order to ascertain factors affecting e-commerce, one must take a look at the various trends that directly impact it. The first and most ubiquitous trend to look at is of course social media. According to a study conducted by Forbes earlier this year, 55% of people buy products after finding out about them on social media. Moreover, influencers on social media are being used as a business channel have proven to be extremely profitable. Companies need to start investing more time and money into their specific social media branding approaches. Mostly that represent them and their unique target audience. Social media selling has quickly and easily become one of the most important factors in a purchasing decision. More and more people posting pictures and talking about their purchases. Therefore, user-generated content is a big theme among brands.
Moreover, in the Forbes study we see that Facebook and Instagram lead the way with product discovery rates. They come in at 78% and 59% respectively with regards to number of users finding out about new products. 11% of those people buy immediately. Moreover, 44% are buying it later, which are very impressive conversion rates.
Another factor e-commerce sites are dealing with is the crowded and cut throat advertisement market that drives costs up with respect to obtaining clicks. Over the past decade, digital marketers have become increasingly quantitative in their approach. The E-commerce brands with the most resources are becoming more and more precise. Many brands are constantly testing different criteria of photo and video content, user generated content, and analyse ROI accordingly. To curb rising digital ad costs, some brands are opening storefronts and holding events as a branding opportunity. Moreover, they are emphasising experiences and community building, which they then also post on social media to double the engagement.
There are now a staggering 19 companies with $100M+ in annual revenue built on a direct- to-consumer model. These are the first companies of a new generation that started with online only sales and built huge communities of fans online. Hence, proving beyond doubt that E-commerce is undoubtedly the way forward. This shows that social media doesn’t only work for e-commerce, it also works at scale.
One of the most important factors driving e-commerce engagement is definitely video and media content. It provides unique ways for consumers to discover new products and engage with brand advocates. With people spending copious amounts of time on Instagram/Facebook, the better your content is, the stronger following a brand can accumulate. Video content heavily influences online purchases, in most markets. Social platforms like YouTube play a massive part in this.
There are more and more people gaining access to internet connections in Tier-2, Tier-3 cities and beyond. The number of estimated internet and smartphone users in India is estimated to hit 460 million and 337 million users respectively by the end of this year.
E-commerce sales have continued to rise seeing a 16% year-on-year growth, while actual brick and mortar retail has only seen a measly 3% year-on-year growth. Online shopping app sessions via mobile grew 54% annually. This data highlights the sheer reach that mobile shopping has.
Speaking from a consumer point of view, issues of internet security are a big hindrance to the general growth of e-Commerce. The perceptions of risk regarding Internet security has been recognized as a problem for both experienced and inexperienced users. This is since hackers are always one step ahead of them. So the onus lies on the company to upgrade their software to ensure a smooth and safe experience.
These are some of the more prevalent factors influencing changes in the e-commerce industry, one which only seems like it can go forward with increasing advancements in technology.
By Abhishek Aggarwal