The e-commerce landscape is evolving. From how retailers sell to the way consumers buy, it’s never been more convenient and accessible to exchange goods and services online, and during the COVID-19 pandemic, the pace of change has accelerated.
From our work at Antler - the global early-stage VC - with companies and founders from across the world working on the forefront of innovation, here are some of the areas where we see the biggest shifts and changes occurring in e-commerce and retail.
Gen Zers are the first generation to not know life without a smartphone or tablet. What has been a device or tool for previous generations is now an extension of these young people with one study finding that they spend up to 10.6 hours a day online. Paired with this generation’s values of self-expression, social advocacy, and pragmatism, as backed up by research conducted by McKinsey, young people are buying and selling more online than ever thanks to technological and societal shifts.
Just look at Depop, an online sales platform which earlier this month was acquired by Etsy for US$1.625 billion, as a case study. The site which enables individuals to sell second hand clothing and items plays right into this generation’s focus on sustainability, creativity and “buying local”. Reebelo - a company backed by Antler - is another example. Launched in Singapore in 2019 and already APAC's leading marketplace for pre-loved tech, this startup enables consumers to buy, sell and rent tech devices in a more affordable and sustainable way.
2020 was a huge year for e-commerce as people in lockdown turned to the internet. According to a recent McKinsey report, at the height of the COVID-19 pandemic, 10 years of ecommerce growth happened in just 90 days.
During the peak of COVID-19 TikTok grew 553percent. This social commerce movement, whereby consumers are using social media to browse and discover new products and brands, has been dubbed by some as the future of e-commerce. And big brands are catching on. From Gucci to JW Anderson, these incumbents are leveraging the power of TikTok and its new e-commerce features to monetise content to go viral amongst this audience.
Social media platforms are now also experimenting with live stream shopping, a trend also fuelled by the restrictions laid out in the wake of COVID-19. Live stream shopping using live video to share products, answer questions, and close sales with customers who are joining remotely to watch, chat, and, of course, buy. The trend has been made popular in China where live-streaming shopping is set to double to US$171 billion this year, according to a WARC Data study.
In response to this rapid growth in e-commerce, brands are increasingly also adopting omnichannel strategies. This is enabling companies to optimize commerce across online marketplaces, social media, and retail supported by new technology infrastructure that creates unified experiences as consumers move between an offline and online state.
Just look at Koala, an Australian furniture e-retailer, which launched in 2015. Since inception, the business adopted a headless architecture via ShopifyPlus, allowing it to offer the right experience for customer type at the right time. And thanks to endless buyer-facing touchpoints and back-end flexibility, paired with its social impact mission - to save koalas - and aggressive social media campaigns targeting millennials, it’s net revenue is expected to increase 74percent to $175 million in 2021, according to the Australian Financial Review.
As seen by the meteoric rise of the Chinese e-commerce industry, emerging markets will increasingly play a defining role in the future of e-commerce, particularly considering around 3 billion consumers from emerging markets will have access to the internet by 2022. This is a huge opportunity for companies looking to tap new audiences and startups looking to leverage new markets.
Importantly, a key to this market will be mobile commerce. The rise of internet access in emerging markets typically correlates with the increased adoption of smartphone use. Take India for example. Internet penetration levels rose from about 30percent in 2013 to more than 80percent in 2018, according to Credit Suisse, a surge largely driven by the increased use of smartphones and expansion in the mobile data market.
Then, of course, there’s payments. Buy Now, Pay Later (BNPL) is just one of the multiple payment methods out there right now and a preferred way to buy. BNPL offers extreme flexibility in shopping online, enabling customers to make purchases and pay them off in installments over time with the store often incurring the interest, not the customer. With its popularity accelerated by the global pandemic and the adoption by millennial and Gen Z consumers, retail giants such as Alibaba have all jumped at the opportunity to offer the payment type.
In the US alone, BNPL is expected to grow by 41.7% on an annual basis to reach US$126071.5 million in 2021, according to a recent Research and Markets report published by PRNewswire. Despite that, many agree that providers are still into a regulatory grey area with the need for a better understanding of how these services work and the associated risks, as outlined by a recent article by The Paypers.
These are some of many defining trends currently at play in the e-commerce space, and just some of the ones we’re watching at Antler.
While it’s in the industry’s very nature to be constantly shifting as it meets the demands of younger shoppers, whilst leveraging new and powerful technologies to do so, the companies to win in the future will be those which can meet at the convergence of many of the trends aforementioned, while maintaining a focus on providing a convenient, customised experience for the buyer. That’s not going to be easy for retailers, particularly more established companies, which will increasingly have to invest in and prioritize innovation and technology to stay ahead. But, on the flipside, it also makes e-commerce a very exciting space to build a new business in.