In e-commerce, change is a constant and 2019 will be no different. We asked our team and our customers what they predict will be the major e-commerce trends and changes in 2019. There were a lot of responses.
Here are 4 common themes:
1. New DTC brand launches will start strong in Q1 and Q2 but then dip in the 2nd half of the year.
Over the last few years a tremendous number of new Direct to Consumer (DTC) brands have launched. From Glossier and Fenty Beauty in Cosmetics, to Brooklinen and Great Jones in homegoods, to Hims and Roman in healthcare. With all these launches there is a tremendous amount of noise with so many brands fighting for share of voice in relatively few channels. Not everybody can be heard, and the cost of being heard is rising across social media channels and in online advertising. So, in 2019 DTC brands that are close to market ready will launch in Q1 and Q2. Those that are not as far along (or don’t have a truly unique position) will find that the economics have changed and that their financial models don’t work, resulting in fewer launches in Q3 and Q4.
2. B2B companies will push hard on their e-commerce initiatives.
We have seen (and made) a lot of predictions about B2B growth for the last few years….. and we believe 2019 is the year of B2B (make enough predictions and some will be right). Our prediction is backed up by Forrester’s forecast that US B2B eCommerce will reach $1.8 trillion and account for 17% of all B2B sales in the US by 2023. In addition, Forester forecasts a compound annual growth rate (CAGR) of 10% for B2B eCommerce over the next five years. These numbers are backed-up by the interest that we are seeing from B2B companies.
Historically, B2B sites have been “functional” at best. Many lack the User Experience and functional capabilities that successful consumer sites have as standard. Today’s B2B buyers have high expectations that are based on their B2C shopping experiences and won’t put up with “sub-par” vendor sites. Forward thinking B2B organizations have identified the User Experience gap and will be pushing hard in 2019 to bridge this gap. They will be launching new e-commerce initiatives and focusing on User Experience in a way that they have not in past.
3. Costs to acquire new customers online will increase.
As more and more companies ramp up their online advertising (you can blame the DTCs), the costs of acquiring new customers has steadily risen. Google and Facebook continue to claim more advertising dollars from advertisers (and the % of spend with these platforms is growing every year) and the cost of running campaigns continues to grow. Google, Facebook, Instagram and LinkedIn have tremendous reach, but even they have finite inventories of ad space. The additional Amazon advertising options will increase some of the inventory, but it is a closed network and it too has a finite inventory of ad space.
We are faced with a classic case of “Supply exceeds Demand”. Since there are not a lot of other channels to reach consumers online, the cost to reach them through the incumbents will continue to rise in 2019. Given these financial implications, digital terminology such as LTV (Loan to Value), CPA (Cost per Acquisition), traffic and ROAS (Return on Ad Spending) will enter the boardroom as not just digital metrics for people working in ecommerce but important KPIs at the corporate level as well.
4. E-commerce platform consolidation will accelerate.
The e-commerce platform market is rapidly maturing and the Tier 1 “Mass E-commerce” Platforms (e.g. Magento, Shopify, SFCC / Demandware, and Hybris) are making it increasingly difficult for the Tier 2 Platforms (e.g. BigCommerce, Volusion, Intershop, DNN, and Spree) to close deals. No deals = No $ = Out of Business. As platforms exit the market, the remaining competitors will be fighting for market share through price discounts and acquisitions. Both tactics will result in a consolidation of the e-commerce platform market.
5. Optimizing the 360 degree e-commerce User Experience will be a focus for many companies.
With customer acquisition costs increasing (see prediction 3), e-commerce operators will put a renewed focus in 2019 on converting new visitors and retaining existing customers. Brands will focus on their existing sites to ensure that the expectations of consumers is met and their dollars don’t go elsewhere. In addition to testing and optimizing their sites, they will implement programs (e.g. rewards programs, referral programs, subscription programs, etc.) that drive stickiness and increase the Lifetime Value of customers.
We anticipate an exciting year ahead in e-commerce. Check back this time next year for a review of where we were right or wrong, and get our 2020 predictions. Need help making your e-commerce operations grow? Give us a call (617) 859-7900 or email us at [email protected].