What will the future of commerce look like?
Trust is the main currency of the future of ecommerce. Brands must be transparent, authentic, and readily available to their customers, especially where online consumers spend most of their time: on
social media. Social commerce is at the center of online shopping for tomorrow’s consumer, with brands investing in video and live shopping.
Direct-to-consumer (DTC) companies are also investing in online communities to humanize their brands, increase customer retention, and overcome skyrocketing advertising costs.
Thriving in this new ecommerce landscape will require unique insight and action. We conducted extensive research with hundreds of DTC brands and thousands of consumers to identify the most important trends for 2022, as well as the strategies and products your business needs to stay
ahead of the competition.
Welcome to the future of ecommerce.
Rising acquisition costs force brands to foster long-term relationships with their customers
Less barriers – More online commerce
Advancements in technology and the growth of available marketplaces have made it easier than ever to buy and sell online.
As businesses came online during the COVID-19 pandemic, the global trend toward digitization surged ahead at lightning speed. Even as regions begin to reopen, ecommerce sales are still climbing.
Merchants continue to follow consumer demand online, flocking to ecommerce in record numbers. This means more brands competing for customers. As a result, digital advertising is more costly and less lucrative than ever before.
“As more businesses are online, it’s harder and harder to be found by new customers. Because it’s so easy to start online now, there are definitely rising costs of customer acquisition.
“Paid ads are getting really expensive, not to mention the Apple iOS 14 release, which has made it more difficult to track results in ad spend,” says Mel Ho Senior Product Marketing Lead, Shopify.
Spend more – Gain less?
Competition is the biggest obstacle to achieving growth in 2022,16 according to the 350 global commerce decision makers surveyed for this report. With privacy laws that limit marketers’ ability to target ads and consumers who are better at blocking ad interruptions, it’s becoming tougher to get a decent return on advertising spend.
The cost per click for paid search ads increased by 15%17 between the second and third quarters of 2021 alone.
“Our July 2021 report showed a 15–20% drop in the advertising reach of Instagram in Europe,” says Kepios founder and CEO Simon Kemp.
“That’s huge. Tens of millions of impressions disappeared because of certain kinds of laws and changes in Apple’s policies.”
Ben Jabbawy Founder and CEO, Privy says some brands are seeing ad costs go five times higher
than [before] to drive the same amount of traffic.
Despite the changing digital ad landscape, 41% of brands18 plan to increase investment in paid and organic search. Many hope that advances in hyper segmentation will make their advertising dollars more effective by targeting consumers who are ready to purchase, says the Shopify eCommerce Market Credibility Study, 2021.
Three problems with this approach:
Audience segmentation is not as reliable as merchants think. Harvard Business Review tested the
accuracy of the digital profiles data brokers sell, and the results were dismal.19 The age tier was only
correct 23% of the time, and gender was properly identified in well below half of cases.
As advertising platforms get more competitive, brands that haven’t developed familiarity and trust with
consumers will become more entrenched in a direct-marketing battle to offer customers the lowest price.
Even when high upfront ad costs and granular targeting create short-term wins, they aren’t long-term profit drivers.
Creating a sustainable customer base will require brands to build awareness and confidence with consumers who aren’t ready to buy, or who aren’t even in the market yet.
The brands most reliant on short-term performance marketing will struggle the most in the increasingly
saturated commerce space. It’s no wonder the world’s top companies have a brand building at the heart of their marketing strategies in 2022.
Invest in your commerce
One solution is to get ahead of the competition? It is to invest in your brand.
Marketers who want immediate, measurable results tend to undervalue brands, which is a longer-term investment. That’s why 70% of marketers20 who are cutting their budgets in 2022 will sacrifice investments in brand building, and only 13% will reduce performance marketing spending.
But performance-based advertising is only part of the equation. While conversion rates are important, most consumers already have a brand in mind by the time they’re ready to buy. In fact, Google reports that more than 80% of customers22 conduct their research online before making a purchase decision. A business needs a strong brand to earn its place in the minds of consumers.