E-commerce expert Alexander Graf predicts the five key changes he sees coming in 2022.
Manufacturers have traditionally relied on selling to the likes of Walmart, Amazon or Sears, but now they are learning they can only thrive when they control access to consumers—and they can’t get there through third-party online/offline ‘stores’. As a result, the main story for 2022 and beyond is the fight for direct access to consumers. From food to FMCG, expect heavy investment in direct-to-consumer business models.
2022 will also be a record year for B2C marketplace investments. Unfortunately, most of them will fail. In the US, 57% of B2C e-commerce sales flow through marketplaces, so every big manufacturer wants a slice of that pie. Macy’s has announced a marketplace initiative, while Decathlon, a European leader in sports goods, has similarly announced such plans. But companies trying the marketplace model need to understand that moving from a retail situation where you own the inventory to owning the customer access is a complete transformation. And that is why 2022 will be a record year of new consumer marketplaces that will fail quickly if they only optimize for the retailer and not the customer.
Over the coming year, most of the story in global business will not be about winning new customers, but about attracting and retaining the best internal talent. Brands will struggle to attract great people in the e-commerce industry, and only the companies with the best employer branding and well-designed business models will have a chance of enticing the best. It’s time for radical HR flexibility, and as a basic being willing to support fully remote working all the time. Working from the beach should no longer be a dream.
The trend of customers who are not loyal to one business and who buy anything, anywhere, was accelerated by the pandemic and the supply chain issues that came with it. At the beginning of Covid, McKinsey research found that rather than sticking to familiar patterns and brands, consumers have embraced change amid great uncertainty, with 40% of consumers saying they have tried new brands or retailers. Loyalty was particularly vulnerable in the US, where 46% switched. That won’t change in 2022, and it’s the companies that can live with this new style of consumption—most can’t—that will eventually win the game.
Not everything will be new under the e-commerce sun in 2002, with old-school ‘buy now, pay later’ payment methods expected to thrive. Adobe research, for example, has found that this payment method is seeing a boom, with 215% year-on-year growth in the first two months of 2021. Even better for merchants, consumers using this method tend to place larger orders: up to 18% bigger. Even so, expect a lot more payment methods—and payment providers such as Klarna may well try to make a play in e-commerce. My advice to new entrants is that there is a lot of revenue to earn in this space, but it is best earned from a platform perspective of selling customer access, not from handling merchandise. The reality is that the player handling merchandise is the biggest loser in e-commerce!