A PIM perspective of TOP-7 e-commerce trends for 2023 and beyond
The year 2020 brought an acceleration in the use of e-commerce at an unprecedented rate. While the growth of online shopping had been at similar levels for years, the pandemic caused it to accelerate dynamically to unprecedented dimensions. This rapid market shift has had a direct impact on consumer behavior, creating a demand for convenience, personalization and options when shopping online.
But more importantly, there has been an increased awareness on the part of entrepreneurs themselves of how important it is to digitize their retail offerings in order to successfully compete for the future.
The year 2023 and beyond will therefore bring further challenges in streamlining business processes to support digital transformation. Investments in automation and product data management will underpin competitiveness.
Here are a handful of thoughts related to some of the most important challenges for the coming year.
1. Marketplaces boom
Marketplaces allow you to aggregate multiple offers from different suppliers (vendors) under one common label. In many countries, this shopping model has even become the primary choice for many online consumers. This sales model will stand to grow rapidly in the years to come.
Worldwide B2B marketplace sales could reach an estimated $3.6 trillion by 2024, up from an estimated $680 billion in 2018, says London-based payments research and consulting firm iBe TSD Ltd. In comparison, B2C marketplace sales across the globe, over the same time period, will reach a projected $3.5 trillion annually from an estimated $1.1 trillion. Peer-to-peer marketplaces such as eBay and others will generate $240.8 billion in global sales by 2024, up from $47.8 billion in 2018, iBe says.
How can marketplaces affect the e-commerce market?
Branded and industry-niche marketplaces (vertical marketplaces) - in many industries, dedicated marketplaces will be created, which will allow consumers to have a better shopping experience, because purchases will be handled by specialists who perfectly understand the specifics and context of a given industry. Companies that decide to change their business model in this direction will expand their assortment offerings as well as increase their scale of operations and revenues. This will also be an opportunity to increase customer loyalty, especially among the more educated customers, who are currently the most price-sensitive in the market, as they do not see a partner supporting the purchasing process on the other side, but only a supplier of a specific offer.
From a PIM perspective, such marketplaces will primarily pay attention to perfect parameterization of product data, the offer will have to be much more complete, specific and with fewer errors. The entry threshold for a supplier with product data will therefore be much higher than in global marketplaces selling all brands. Vertical marketplaces will also rely on business partners who can cover specific categories of product offerings in their entirety, so that it is not the price but the quality of service and shopping experience that will attract customers.
Seamless and unified multi-channel experiences - the number of opportunities to distribute commercial offerings will increase dramatically. Even in small domestic markets, there will be opportunities to appear with an offer in at least a few marketplaces. Companies will therefore need to build processes for managing product content that is contextually tailored to a given sales channel, without losing the unique identity of their brand and commercial offerings. Tools that streamline processes for managing multiple versions of content, easy manipulation and curation of product data will become critical to building equal and consistent shopping experiences. A good and consistent shopping experience in one's own sales channels will be insufficient, businesses will be forced to step up to the next level and acquire new skills in a truly multi-channel world.
Cross-boarder sales - the rise of marketplaces as well as eased regulations in selling in different markets (e.g., in the European Union, another far-reaching easing of VAT regulations for selling in different markets has come into effect) will make both the temptation to enter new sales markets, but also competition in home markets even greater. Here again, entrepreneurs will have to acquire the skills to efficiently build and manage multilingual offers. And it will not be enough to simply translate languages, but first of all to understand the context of sales in a given market.
2. Headless & Composable commerce
In previous years you could often hear the term PWA, basically every growing business discussed this technological "three-letter word". The year 2022 brought some change - ecommerce teams understood that usually to get a PWA ready application you need quite a lot of technological changes in terms of so-called Headless Commerce. In a nutshell, the idea is to separate the logic of the entire monolithic ecommerce system in such a way that the visual (so-called front-end) layer functions completely independently as a separate system and communicates through APIs with the "back-end" layer, i.e. the engine that drives most of the operations and the database.
Headless Commerce applications will definitely be a major point of discussion in 2023 among managers of growing e-commerce businesses.
There are many Headless Commerce engines (frameworks). An interesting comparison can be found on the website of one of them - StorefrontX.io
You can implement the idea of headless by plugging the visual layer application directly through the API into the back-office engine. Surely, this will generate less cost, provide good performance, the implementation will be more predictable and will not be a revolution within the whole organization. However, this approach has a fundamental problem - it is not highly scalable. Basically, all the disadvantages of the current e-commerce platform will be even more strongly "stuck" in such a model and the subsequent exit will be more expensive. This is because in such a model, the headless application has to one-to-one implement the functionalities that its e-commerce engine serves on the back-end.
The second model is more complex where appears the proxy layer (so-called middleware) between the storefront and the back-end. The middleware is a kind of bridge for data exchange. It takes data from the back-end ecommerce engine and appropriately routes it to the front-end application. In this model you can easily replace the back-end engine, or plug into the whole puzzle more specialized solutions, such as a PIM system for product catalog management, which could send featured product data directly to the store-front, DAM/CDN for more efficient handling of photos and multimedia, or pricing/promotion engine for more effective customer loyalty.
By plugging more blocks into the whole puzzle, we aim for an architecture of so-called Composable Commerce - a series of specialized applications designed to streamline and often automate various e-commerce processes.
Therefore, the idea of headless in the Composable Commerce approach, although more difficult and complex is a long-term strategic solution that for ambitious, growing commerce players.
It is worth to note that the PIM system can, on the one hand, handle the processes inside the organization related to product data onboarding and enrichment, but also serve directly some of the data to the headless store-front.
3. AI support for content creation
On November 2022, the entire IT world was enchanted by the possibilities of AI algorithms so-called natural language processing through chatGPT. In this year 2023, this trend will be strongly visible in e-commerce. In hard times of crisis and certain recession, any solution that improves operational work will be crucial.
At Ergonode, we have already implemented solutions based on AI GPT-3 algorithms to automatically generate product descriptions and translate texts into different languages in October 2022. You can see how it works in practice in the videos below.
So this year we will see a change of working with product content, thanks to AI algorithms it will be possible not only to create and translate descriptions. Here I see the potential for a whole range of tools to improve work with data handling. Among them, such solutions will certainly appear in Ergonode as:
- ability to shorten, summarize, bulletize
- various sentiments of the generated descriptions
- stylistic and grammatical correction
- automatic suggestion of product categories on the basis of parameters or photos
- auto-complete of technical parameters on the basis of data from descriptions
- possibility to create additional content about the product (e.g. article 10 ways to use product X)
- mass actions with the use of AI
I also see great potential in auto-generation of product images for selected industries. Already today, with a simple query, you can see "interesting" results for the cosmetics industry, for example: "beautiful woman hands with shiny yellow color nails".
The algorithm - as you can see in the illustration below - is still imperfect, I think it will be definitely more effective by the end of the year.
One thing is for sure, we are witnessing a revolution that will bring very serious changes in the responsibilities and roles of product content writers. The efficiency of product teams will increase significantly. The e-commerce product copywriter will be more like an editor who is tasked with making appropriate corrections and checking the correctness of data, rather than a creator of descriptions.
4. Operational excellence
Expenses are the only known constant variable in business that 100% of any entrepreneur can control at any time. Revenues are always subject to forecasts and their final value is the result of the coincidence of many internal (operational efficency) and external (business environment) factors. Why do I mention this - because in the era of recession, big market turbulences and inflation increasing by leaps and bounds, this and the next year will not be marked by the pursuit of revenue growth in e-commerce, but by the pursuit of operational excellence. Automation of processes, more efficient operations will allow, even with less revenue, to be more competitive and finally increase profits.
So in 2023, we can expect to see an explosion of interest in all kinds of tools that will automate processes and transform routine manual-work activities. Among the platforms that will support e-commerce to digitize more efficiently will certainly be:
- iPaaS platforms for automating low/no-code data exchange (e.g., Alumio) - these are platforms, middleware type, which, thanks to powerful rule engines, allow to automate data exchange between different systems quickly and without the need to hire programmers
- PIM platforms (e.g. our Ergonode) - these are solutions that support teams to work more effectively with product content
- DAM/CDN platforms - which will streamline multimedia management and delivery
- No-code app building platforms - which, thanks to the use of AI, allow you to create quite advanced mobile, frontend and web applications without the need to hire a whole team of developers
5. Phygital - next-level of omnichannel
Over the past few years there have been trailblazers who have changed the picture of the reality of traditional commerce. Luckily, Poland was a forerunner in many areas of digitalization of the retail space. Bold concepts of Eobuwie/Modivo brand stores or Sportano brand stores appeared.
In 2023, we will see the emergence of similar sales concepts across Europe. One thing is certain, a very good "phygital" requires a consistent combination of two sales channels online and offline. PIM-type tools can help "extend" the traditional offline store product experience by providing and aggregating additional product information. This can be simply more detailed information, but also video interviews with experts, animations showing the design or manufacturing process, interactive 3d models showing the "inside" of a product, and probably many more.
6. The raise of B2B Commerce
According to the ""B2B-Marktmonitor"" report published by ECC Köln, only in Germany in 2022 the value of B2B e-commerce market revenues is estimated at €1.731 trillion. This is a 16.7% increase over 2021 (€1.486 trillion). And interestingly, this represents only about 27% of the total B2B market, in other words, less than 30 out of 100 B2B companies have implemented any degree of digital digitization for online sales. I suspect that we will see a real revolution in the coming years - both in terms of the digitization of B2B sales itself and also in the search for new innovative forms of it.
Compared to the previous year, B2B online commerce (without EDI) of manufacturers and wholesalers grew by 30.7 percent in 2021 and thus recorded a total net turnover of 352 billion euros. Growth of 33.5 percent was the forecast for 2022. What is suprising for both manufacturers and wholesalers, half of B2B e-commerce turnovers (incl. EDI) are generated in Germany and half abroad. B2B e-commerce turnovers in other EU countries are almost at the same level as global turnovers.
The report also points to a major trend and challenge behind the implementation of B2B ecommerce solutions - "personalization of the shopping experience." Personalization, unlike online B2C sales, not only increases revenue, but often makes it possible to complete online B2B purchases in the most efficient way possible and significantly improves the shopping experience of customers. This includes such sensitive elements as personalized discounts and price catalogs, purchase histories, limits and trade credits, but also recommendations of kits, replacements, or parts.
Personalization of commercial offerings makes product digitalization a critical process in B2B. PIM systems allow for the preparation of a more flexible data model and better parameterization of product catalogs, which later translates into more effective ways to use them in personalization for B2B ecommerce.
7. Social Commerce
Social Commerce is defined as buying and selling things directly through social media. Unlike in the past, when social media was used solely for marketing, several of these platforms now have built-in technology that allows individuals to buy directly through their apps - Facebook and Instagram Shops are examples.
It is likely that the social commerce industry will grow steadily by 22.8% between 2022 and 2028. According to recent estimates by Accenture, social commerce will grow three times faster than traditional E-commerce solutions, more than exceeding from $492 billion in 2021 to $1.2 trillion in 2025.
Currently, Pinterest, Instagram and Facebook have their own tools for buying and selling things, and TikTok has unveiled TikTok Shopping.
Social media can become not only a direct sales channel, as social commerce also involves advertising items on social media increasing interaction and recognition. In addition, consumers can now get information, advice or comments on items directly from where they buy them.
Live Commerce can also be distinguished in Social Commerce. Since live streaming is now the foundation of communicating with fans on social media as of now, it is becoming one of the important e-commerce solutions. According to McKinsey research, live commerce sales might account for up to 20% of total E-commerce by 2026.
As with the Marketplace, Social Commerce's multiple and fragmented sales channels will require different sales strategies, and thus tailored and contextually personalized product information. PIM may therefore prove to be an indispensable system for building a better shopping experience.
Thanks for reading!
