Cecilia Beard
Senior Content Writer @ Yotpo
June 1st, 2023

The eCommerce TLDR for the first half of the year.


Table Of Contents

At this point, we should all embrace eCommerce’s constant change and unpredictability. With eComm’s boom in the past few years, the landscape feels like it’s iterating daily — even hourly. In January 2023, we put forth eight eCommerce retention trend predictions:

  1. The metrics of retention will expand and mature
  2. Customers will struggle with decision fatigue and favor focused  communications
  3. Education will draw customers closer to brands
  4. The bar for what it means to know your customers will be higher than ever
  5. Brand loyalty will lead the way for the next phase of D2C sustainability
  6. Brands will find new ways to offer customers convenience
  7. eCommerce brands will find new ways to connect with shoppers offline
  8. Subscriptions will get an upgrade to VIP-level memberships

And, as the year’s first half draws to a close, we thought we’d reflect on what has actually happened so far for eCommerce businesses.

1. Twitter and TikTok make acquisition efforts more tenuous

Paid social media efforts have been suspect as customer acquisition costs continue to rise. According to Profitwell, CAC is up around 60% compared to five years ago. Brands are spending more to reap even less. Now, with Twitter and TikTok’s respective issues brewing, marketers’ acquisition efforts might suffer even more.

After Elon Musk’s Twitter acquisition in 2022, brands began pausing their ad spend on the platform, including corporate giants like American Express and Johnson&Johnson. With the new leadership underway — and a social media free-for-all seemingly with it — brands expressed concern over what unchecked content their ads may appear next to (read: hate speech and the like).

As of January, the social media giant has tried to lure advertisers back under the promise of new “brand safety tools”: third-party advertising tech companies DoubleVerify and Integral Ad Science (IAS). Brands are slowly returning to the platform after this announcement, but time will tell if they stick around.

TikTok, the short-form video company, is pushing brands’ social media limits even further. What has been a mecca for micro-influencers, macro-influencers, small businesses, and product virality alike, the platform has been banned among federal employees, and, as of March 2023, Congress is debating broadening the ban nationwide as national security concerns ramp up. The government’s ultimate decision could have adverse effects on brands relying on the platform as a main driver for customer acquisition. In fact, 67% of users say TikTok inspired them to shop when they weren’t looking to do so.

Our take: Both of these looming social media platforms’ decisions reiterate the industry-wide need for more robust retention plays. Acquisition only gets you so far in today’s market. Retaining existing customers is more cost-effective than acquiring new ones. In fact, while repeat customers account for only 21% of customers, they generate 44% of revenue and 46% of orders. Imagine if that percentage of repeat customers was even higher for your brand.

2. ChatGPT cements artificial intelligence as the new normal for eCommerce marketers

Virtual Reality (VR) and Augmented Reality (AR) technologies have gained significant traction in the fashion and beauty industries. These tools enable brands to create immersive experiences that bridge the gap between online and in-store shopping. Brands can offer customers the opportunity to virtually try on clothes, experiment with makeup looks, or visualize how furniture would look in their homes before making a purchase.

The integration of VR and AR technology allows customers to make more informed buying decisions, leading to increased satisfaction and reduced product returns. For fashion brands, virtual try-on experiences allow customers to see how clothes fit and look on their own bodies, eliminating size and style uncertainties. Similarly, beauty brands are leveraging AR to enable users to virtually test different shades of makeup, empowering them to make confident choices when purchasing cosmetics online.

And yes, ChatGPT is all the rage — especially among eCommerce marketers. The introduction of GPT-4 has revolutionized the way marketers can approach their campaigns. With the latest iteration of ChatGPT, marketers can now tap into the power of personalized text-based messages and analyze multimedia content to create highly engaging campaigns. They can transform simple UI sketches into functional websites, unlock insights from visual campaign elements, and identify common threads across different campaigns to better understand their target audiences.

Our take: AI isn’t going anywhere and will only become a more pertinent tool in marketers’ toolboxes, especially when it comes to personalizing communications. As we outlined in our initial predictions, customers are setting a premium on bespoke experiences with brands — but how are marketers going to execute this at scale? With AI-based solutions, brands can tailor copy and product recommendations to specific audiences without the hassle. By aggregating customer data across several channels — loyalty, SMS marketing, subscriptions, reviews — brands can offer customers the tailormade interactions they crave.

And, while VR and AR aren’t exactly “offline,” they do allow brands to create new, eye-catching experiences that strengthen their relationship with customers — and show that their brand provides value beyond just their products.

3. Conversational commerce continues to grow

Another emerging trend in the eCommerce industry is the rise of AI-powered conversational commerce. Conversational AI platforms and chatbots are transforming customer interactions by providing personalized experiences at scale. AI-powered chatbots can understand natural language, answer customer queries, make product recommendations, and even assist with the purchasing process.

Conversational commerce allows eCommerce brands to engage with customers in real-time, providing instant support and guidance throughout the buying journey.

With the help of AI, brands can offer personalized product recommendations based on customer preferences and purchase history, creating a more personalized and efficient shopping experience. Moreover, AI-powered chatbots can handle multiple customer inquiries simultaneously, reducing response times and improving overall customer satisfaction.

Our take: In line with our focused communication prediction, conversational commerce cuts through the noise during the Awareness and Sustained Engagement stages of a customer’s path to purchase. Born out of social media messengers, conversational commerce is rapidly expanding into SMS marketing as well. Instead of having to send the user to a checkout page on their desktop, shopping bots can provide a seamless buying transition right on your smartphone.

“One of the most important elements of a great customer experience is making sure that your retention is tied into your CX tools. Everything should be integrated together. If someone has an open ticket, don’t email them. If there is an opportunity to use conversational SMS, to touch base with your customers, do that. Make them feel like you want to know more about them and their experience with the brand,” says Nikki Tooman, CEO and Co-Founder at Sticky Digital.

4. Consumer spending is lagging behind easing inflation rates

This past November, inflation rates in the United States hit all-time highs. Everyday essentials like utilities, basic groceries, and rent have increased significantly in the past 12 months, and with costs up, so is customers’ price sensitivity. While we have seen these inflation rate spikes begin to settle back down, shoppers still aren’t feeling the same confidence in their purchasing decisions that we saw in 2020 and 2021 during the eCommerce boom. Inflation remains the top worry for public consumers worldwide — even topping COVID-19.

Our take: Some brands are turning to their tried-and-true customers during this time: their loyalty members. According to Shopify’s latest Commerce Trends 2023, to keep ahead of inflation, some brands are changing product prices weekly or even daily. More than eight out of ten businesses surveyed have increased or plan to increase product prices due to inflation. This is where loyalty members come in: Because nearly 90% of shoppers will pay more for a product from trusted brands, brands with robust customer loyalty can raise prices with less risk of customer churn.

5. Supply chain issues persist (and persist)

Supply chain delays, supply chain delays, supply chain delays — it’s all we’ve heard about since 2020. And unfortunately, based on recent reports, this trend will likely continue. According to a new CNCB survey, 61% of respondents said their current supply chain is still not operating normally. Additionally, 60% of respondents assumed their supply chain wouldn’t resemble something closer to normalcy until 2024 or later — especially with infrastructure issues, SEC pressures on emissions disclosure, and reinstated duties and tariffs coming into play this year.

Our take: In our initial 2023 predictions, we focused on what the customer can get out of a subscription: perks for being a subscriber and VIP treatment. What we didn’t note was what brands could get from subscription model in these trying times.

While supply chain delays are distressing for brands, customers’ patience is wearing thin, pushing some to think outside the box and embrace prepaid product subscriptions as an unexpected solution. For low-stock products, brands can set their PDP to ‘out of stock’ and only fulfill their subscription orders, encouraging high-intent shoppers to subscribe and ensure their purchase.

What’s to come in 2023?

Since 2020, the “new normal” has been a term used with every sharp turn in eCommerce. We say: What, at this point, is all that normal?

As we move into the latter half of the year, BFCM strategies are top of mind for most brands. Many brands are already beginning to strategize on how to upgrade this year’s holiday sales cycles — especially in light of these eCommerce trends. We’ll check back in with you in December to see how the final shakeout of our retention predictions. But in the meantime, we’d love to chat about how current eCommerce trends are affecting your brand.

Contributed to the article: Cecilia Beard