It’s a necessity.
Keeping up with industry trends is especially vital for e-commerce business owners who want to stay competitive and spot new opportunities. It doesn’t matter where the business is—America, Germany, or in Panama (where I am currently living)—staying on top of trends is akin to staying ahead of the curve, because if you are not up-to-date on what’s happening in your industry, you are already behind the times.
With this in mind, I want to highlight a few e-commerce trends to keep an eye on and also talk about the problems that lie ahead and how to confront them.
COMPETITIVENESS: Every single day, the e-commerce market is becoming more and more competitive.
The last industry report I read mentioned that by the end of this year (2022), e-commerce will account for up to 25% of global retail sales (impressive). Just a few years ago, that number was roughly 10%. To put it another way, the e-commerce market is becoming heavily congested.
One of the many factors contributing to the rapid rise of e-commerce is COVID-19. Fears of the virus and stay-at-home regulations have influenced customer behavior in uncertain times, driving offline traffic to internet retailers. As demand grows, a large number of e-commerce enterprises emerge.
E-Commerce ADVERTISING COSTS & EFFECTIVENESS: The costs of advertising are rising, and campaign effectiveness is gradually changing.
E-commerce heavyweights and newcomers are competing for customers’ attention. As a result, advertising expenses have climbed, and the return on ad expenditure (ROAS) has decreased. For example, Facebook advertising is nearly 50% more expensive than it was a year ago.
However, the situation does not end there. Cross-app data sharing is now restricted unless users opt in, thanks to Apple’s privacy improvements in iOS 14.5. The policy’s ramifications are significant and immediate: Advertising on Facebook and Instagram, in general, is no longer as effective as it once was.
GLOBALIZATION: To address growth barriers, more e-commerce companies are going global.
It’s only natural that more e-commerce companies will expand into the global stage when businesses approach their growth limits in their home market. Consumers are also joining the globalization movement. In fact, according to a recent survey, aproximately 75% of internet customers have made purchases on a site outside of their home country.
The road to worldwide business expansion is not going to be easy. For one thing, a lack of money would limit growth options. Furthermore, management would face obstacles in terms of competition and talent acquisition in an unfamiliar market. Cross-border supply chains can also be difficult to manage.
E-Commerce FINANCING: Conventional financing methods are taking a back seat.
Alternative finance is becoming increasingly common among e-commerce businesses. Many businesses now choose other forms of cash injection, such as revenue-based finance (RBF) and inventory financing, over taking out loans or swapping shares for investors’ money.
The paradigm shift did not occur by chance. Applying for a bank loan takes a long time. Startups don’t have any assets yet that can be used as security for loans (e.g., vehicles or real estate). And fixed-rate loan repayments would place a strain on their businesses’ cash flow.
Over the last decade, a wide range of financial instruments customized to the demands of new-age firms have arisen. These financing options will take some time to become comfortable for e-commerce owners.
In revenue-based finance, for example, funds are not repaid in fixed installments. Rather, until the loan is fully repaid, RBF platforms will share a defined amount of your company’s revenue.
This method has both advantages and disadvantages. Repayment is flexible, which is a positive. However, in order to use revenue-based financing, your company must have recurring revenue. These are some things to think about before deciding on a financing option for your business.
Recommendations: Thinking ahead.
As the cost of customer acquisition continues to rise, increasing efforts on customer retention is another way out of this difficult situation. By maximizing your customer lifetime value to customer acquisition cost ratio, you can maintain profitable margins for your business and plan ahead to prepare for growth. Exploring alternative financing solutions will fuel business growth because e-commerce companies need extra capital, yet conventional bank lending is beyond the reach of many fast-growing e-commerce companies, so exploring different forms of friendly financing is needed to bridge the gap.
Now or Never
Mediafy.pro E-commerce is always changing, and always changing fast. Thus, the future of e-commerce will be—for lack of a better word—unpredictable (who saw the pandemic coming?), so having an emergency or contingency plan is a must to move forward.
Now is the time to consider the forces that will shape the business world in the years ahead. The seismic shifts that the world of ecommerce has recently experienced could not have been predicted, but having a long term plan in place is absolutely vital to not only stay afloat but to succeed.
