Ecommerce has come a long way since the first internet marketplaces launched in the 1990s and merchants first learned how to accept online payments.
The online shopping ecosystem has ballooned to encompass an ever wider variety of channels, technologies, and payment methods that would have been inconceivable even a decade ago.
These innovations have transformed the ecommerce experience, delivering more trust, value, and convenience for businesses and consumers alike, and securing its future as the dominant commercial force in the global market.
After China, the US is the world’s second biggest country for ecommerce, and the best place in the world to observe these changes. Online commerce revenue is expected to grow from $915 billion in 2023 to $1,404 billion in 2027 - a CAGR of 11.29% - as it comes to account for 33.8% of all shopping activity (compared to offline).
The same period will see mobile surpass desktop to become the preferred sales channel for consumers in the US, growing from 49.2% today to 57.6% by 2027.
But it’s not just the devices that are changing: innovations like social, voice, and contextual commerce are becoming more widely adopted, while AI, of course, is already creating waves.
Join us for a deep dive into the future of online shopping and discover the trends and technologies that are set to define 2023 and beyond.
Over the past decade, we've seen significant consumer behavior changes, driven by the move from offline to online commerce. And the COVID-19 pandemic has supercharged this shift. According to data from Shopify, ecommerce volumes reached an all-time high in 2020, accounting for 16.4% of total global retail sales. And 98% of consumers told us they'd shopped online during the pandemic.
The growth of ecommerce payment processing volumes is only half of the story, however. The other, and perhaps more interesting development, is the changes we've seen in the factors that lead consumers to spend money with one brand over another.
In the offline world, price, availability and proximity are usually the key determining factors for consumers when making a purchase. That's less the case online. Instead, shoppers are looking to spend money with brands that deliver a complete end-to-end experience that meets their unique requirements and expectations — and making it happen with as little friction as possible.
In other words, it's those brands that allow consumers to shop where they want, when they want, and how they want that will succeed in an increasingly crowded digital marketplace.
What does that mean in practice? Here are some areas that I see the most innovative brands focusing on to deliver a best-in-class digital shopping experience:
It's no secret that speed and convenience are often top of mind for consumers when shopping online. Consumers want to find what they want, order in as few clicks as possible and have it delivered the next day.
Tapping into this consumer need and reducing friction at every step of the process — whether consumers are on mobile, desktop or tablet — is one reason that Amazon has become such a dominant player. And people will pay for the service. Today there are over 150 million Amazon Prime members worldwide, spending over $1000 a year on average.
But removing friction is easier said than done. And one area where friction often becomes especially acute — and costly — is at the checkout.
The checkout is the most pivotal moment in the customer journey as it's when you make a sale. Despite its importance, often merchants fail to spend any time or effort focusing on this part of the customer journey or checkout optimization. And it's a conversion killer that directly leads to lost revenue.
The good news is that fixing this step in the process isn't overly complicated if you have the right solution. Payment Service Providers (PSPs), like Checkout.com, provide merchants with a flexible range of tools to seamlessly build a checkout experience that their customers love.
Our system helps you improve your checkout flow by reducing the layers of friction that can result in dropout. For example, allowing customers to checkout as a guest is a simple method of conversion rate optimization (CRO) and easy to implement through Checkout.com. After all, mandatory account creation is one of the biggest causes of cart abandonment.
Likewise, single page checkouts are a simple change that can boost your conversion rate. By including all the necessary fields on one page, it’s easy for customers to complete their purchase, minimizing the friction that comes from having to click through multiple tabs.
You can also offer a dizzying number of payment options through Checkout.com, a surefire way to improve the customer experience and increase conversions. By catering to your customers’ needs and preferences, wherever they are in the world, you can build trust and vastly increase the chances of a successful purchase.
Depending on your objectives, this may include providing 'one-click' payment options to streamline the process for returning customers. Or it might mean offering a range of different alternative payment options tailored to individual markets or customer segments.
If you're a retail brand selling primarily to millennials, you probably want to offer buy-now-pay-later (BPNL) options like Klarna. If you're selling on social or through mobile, you'll want to offer Apple Pay and Google Pay. Or, if you’re business selling in the Netherlands, for example, you probably want to offer iDEAL as a form of payment.
No matter who you are targeting, though, the demand for new payment options is growing. According to our research, 2020 saw a surge in digital payments with 50% of consumers using a digital wallet at least once in the year and 5% using cryptocurrency at least once.
56% of consumers are permanently put off a site if it is not offering their preferred payment method.
Checkout.com and Oxford Economics research
Another vital point to remember is that consumer trends aren't static. You must regularly check the pulse of your target customers and adjust the checkout experience and payment methods you offer to meet changing preferences. And that's where it pays to have a payments partner with in-depth local knowledge in your key markets to help you stay ahead of evolving payment trends.
As we stated earlier, by 2027, mobile will be the preferred shopping channel for 57.6% of US consumers. But the term itself disguises the complexity and potential of mobile for payments and commerce.
This shift has been enabled by the advent of mobile-optimized hosted pages, such as those offered by Checkout.com, which have minimized the friction that plagued early smartphone purchasing, and in many ways have now made mobile preferable to desktop. Mobile has also given rise to customizable integrations and in-app shopping, the foundation of contextual commerce, creating more opportunities for consumers to discover and buy relevant goods and services.
However, the use of mobile wallets like Google Pay, Apple Pay, and AliPay - which allow consumers to securely store multiple payment cards for quick online purchases - is the most prominent innovation. Mobile wallets now account for 29% of all ecommerce transactions in North America.
It's estimated that nearly four billion people use social media worldwide. That's roughly 58% of people on the planet. And since their conception, B2C brands have used social media to market their products with great success. For example, today, over 600 million people now seek out new products on Instagram alone.
45% of consumers in the Middle East prefer to shop through social apps and bypass traditional ecommerce channels.
But as social networks evolve, more and more brands are starting to use them not just to advertise their products but to sell their products directly to consumers. This is known as social commerce: a sub-set of social commerce where the end-to-end consumer journey happens within a social networking platform. And it's a market set to be worth $604.5 billion by 2027.
Social commerce is an exciting way for merchants to tap into new pools and potential customers and increase revenues. But it's not without its challenges. And one big challenge is accepting payment when somebody isn’t on your site.
That's where a solution like a payment link comes into play. It allows you to bring your checkout experience to your customers wherever they are in the digital world. So when they're ready to make a purchase, they can, without ever leaving their social app, creating a completely frictionless end-to-end experience.
Today, 40% of consumers aged 18-24 say the ability to make purchases via social media would increase their online shopping frequency. And I expect that percentage to grow in the years to come as Gen Z and Gen Alpha become a large part of the global consumer base.
The key to success for merchants in the years to come will be to understand what networks their target consumers are using and to meet them on those networks to drive sales.
Live chat used to be a frustrating experience for shoppers, and one that could do more harm than good. Now, however, it’s becoming a crucial tool for customer support and improving the customer experience.
Shopify claims that 43% of customers will use live chat in the next year, with 60% of shoppers citing customer service as a significant influence on purchasing decisions. That’s because it enables brands to personalize online shopping like never before, giving in-the-moment help on products that could be the difference between making a sale or not, and providing post-purchase support that can boost loyalty.
In-app checkouts have been one of the most convenient recent innovations for consumers. Rather than having to leave a platform to visit a brand’s website to make a purchase, which causes major friction, users can discover and buy directly within a third-party, or even the brand’s own app.
This has had a big impact on the growth of social commerce, as described above, but it’s also created monetization opportunities for all sorts of businesses, enabling the easy purchase of subscriptions, digital goods and premium content. For example, subscribing to access the content behind a media outlet’s paywall.
Essentially it involves adding shoppable links to videos and lives, allowing influencers and video bloggers to take advantage of that moment of maximum engagement when their followers are actually watching and interacting with them.
Trust has always provided the foundation of the relationship between a business and its customers. Consumers wouldn't use a business unless they trusted it would provide quality products and services at a fair price.
In today's digital world, establishing trust is more important — and complicated — than ever. Research from Salesforce finds that 73% of consumers say that trust in companies matters more now than before. The same study found that just over half of consumers also say that it's harder now than ever for companies to earn their trust.
Why? Consumers shopping online are concerned with getting a quality product or service at a fair price. They also care about the security of the personal information they provide to make a transaction online.
Financial data is especially important, with RSA finding that 78% of consumers are most protective of their financial information. That makes securing the checkout — the place where that sensitive information is shared — a key priority for merchants looking to foster loyalty with their customers.
There are many ways that merchants can safeguard their customers and establish this trust. These include:
Voice commerce has been the inevitable product of consumers becoming more comfortable with speaking to their devices. Users can ask any smart-enabled device, be it a smartphone or speaker, to make purchases via their voice-assistant, which uses natural language processing (NLP) and artificial intelligence (AI) to interpret their command and take them to a relevant product page. Voice commerce is still an emerging technology, but it’s an exciting prospect for businesses as it allows for maximum speed, convenience and personalization.
Contextual commerce is an umbrella term for many of the technologies discussed above, including social and voice commerce, and in-app purchases. Essentially, it refers to any shopping experience that reduces pain points by allowing shoppers to make in-the-moment or context dependent purchases. For example, when they’re scrolling through social media and happen upon the perfect product, or even when they pass a restaurant while driving and make a reservation using their voice assistant.
It’s impossible to ignore the influence of AI on the contemporary digital shopping experience. One of its most game-changing impacts is on personalized shopping. No longer does a consumer have to be in the presence of a real shop-floor assistant in a brick and mortar store to receive tailored, responsive help and advice. For example, AI-powered chatbots can have naturalistic conversations with website visitors, learn about their preferences and even advise on sizing, color, and prices.
The future of commerce is still being written. Many question marks remain over how consumer behavior will change coming out of the pandemic. But what's for sure is that merchants seeking growth cannot achieve that without an online presence.
And, increasingly, even an online presence isn't enough. To win the hearts and wallets of the modern consumer, you must ensure that you're meeting customers where they want to be met, providing a seamless end-to-end experience from discovery to delivery, and ensuring their personal information is secure.
The checkout is a crucial part of this process and the experience that you create for your customers. Get it right, and you'll set yourself up for success. Get it wrong, and you will likely push existing and potential customers to spend money with your competitors.
The winners in ecommerce are the ones that are the most agile and responsive to changing trends and technologies. With Checkout.com, you get an end-to-end payments solution that will keep you ahead of the curve.
Our unified platform gives you everything you need to achieve global growth with a multitude of payment methods, seamless authentication support, and robust fraud detection.
Find out more about Checkout.com’s payment processing solution.