eCommerce Marketing Trends and Predictions in 2016

The ecommerce landscape was incredibly exciting and dynamic in 2015. Social media and mobile commerce really took off and are now at the verge of maturity. A lot more focus was placed on conversion rate optimisation by ecommerce managers and all major technology providers announced either ecommerce specific features or products dedicated to online retail. Here is a summary of some major announcements:

• The new Apple TV supports online shopping using its e-commerce apps
• Facebook introduced Facebook messenger for business to a limited number of online retailers, that enables etailers communicate directly with the customers as a customer service platform
• ‘Buy buttons’ were announced by Google,  Instagram, Twitter and Pinterest
• For Google, product listing ads emerged stronger and paid search through AdWords is the predominant means of acquiring and scaling ecommerce search traffic
• YouTube made videos more shoppable with Shopping ads

With 2015 now behind us – what lays ahead in 2016 for ecommerce? Here are predictions on trends to expect in 2016:

1: Customer Segmentation by Average Order Value, Visit Frequency and Purchase Frequency

Maximising customer lifetime value (CLV) and repeat purchases from existing customers should be a high priority KPI for ecommerce managers in 2016.
In order to effectively improve these metrics, a more granular understanding of customers is necessary. Data-points that you gather about each customer should include their:

• browsing behaviour: interactions on your site and frequency of visits
• device/location information of each customer visit
• email behaviour from interactions with your email campaigns,
• response to advertising (especially retargeted ads),
• purchase history and purchase frequency.

These data-points can then be used to effectively segment customers into buyer behaviors groups such as:

• Top Purchasers: customers who will probably be 10% of the total size of your database, but who will almost certainly drive 50% plus, and in some cases 80% of all of the revenue to your business (whom I liken to Innovators and Early Adopters in the Innovation Adoption Curve)
• The Majority: They’ve purchase more than once but not loyal and drive 20-50% of revenue (whom I liken to, Early Majority and Late Majority in the Innovation Adoption Curve)
• One night standers: Are non-returning shoppers that have only purchased once (I liken them to Laggards in the Innovation Adoption Curve)

 

Other optional data points to consider include: geo-location, referral URL, search terms (from paid search) and lead scores.

2: Personalization

In 2016, savvy ecommerce managers will treat each customer segment differently by delivering different experiences, messages, modals, offers and even dynamic pricing to each customer segment with the view to increasing average order value, recovering abandoned carts and to increase purchase frequency from each group.

SaaS platforms that delivered segmented personalisation solutions have typically for enterprise retailers, like:

• Barilliance
• Monetate
• ChoiceStream 
• Apptus 

But over the last few years, a new breed of SaaS personalisation platforms have made their way into  the mid-tier ecommerce segment. Mid-tier online retail ecommerce managers, should consider the following personalisation solutions:

• Marketizator
• Rich Relevance 
• Ometria
• Commerce Sciences
• Nosto
• Qubit
• TrackIf
• Bunting
• BrainSINS

Personalization will be adopted by more retailers in bid to improve acquisition, engagement and retention via an overall uplift in conversion rates and higher customer satisfaction.

3: Mobile UX and Mobile Checkout Optimization

 

Mobile devices now account for over 50 percent of traffic in most e-commerce verticals. Data also collated by Ometria, a data predictive marketing platform showed that over 2015’s Cyber Weekend period, Year on Year mobile transactions increased by a significant 32% as compared to 2014. With shoppers now making a transition from simply browsing on their mobiles to mobile shopping, ecommerce managers should in 2016 continue to focus on optimising mobile checkouts and mobile user experience by stripping mobile checkouts to the barest essentials.

The reality is that shoppers are getting more comfortable with purchase completions on their mobiles and this will continue to be an upward trend all through 2016.

4: Google will establish its marketplace to compete with Amazon in 2016

Google announced their intention of adding a “buy” button on mobile search result product listing ads back in July 2015. Their intention they explained, was to reduce mobile purchase friction without interfering in the relationship between online retailers and consumers. Google’s ‘buy’ button of course directly competes with Amazon’s one-click order feature.

With 44% of ecommerce product searches beginning on Amazon and 34% on Google (according to research conducted by BloomReach), I expect Google to unveil their ecommerce marketplace that will feature a ‘buy button’ Q1, 2016.

Google has a mammoth task of shifting current shoppers’ behaviour of defaulting to Amazon when they need to make online purchases 44 percent of the time. Google want to own the checkout because whichever company owns the checkout will come out victor. Amazon’s retention engine is Amazon Prime; its annual membership program that offers free two-day shipping and a host of other perks such as a video streaming library similar to Netflix, unlimited photos storage and music streaming. Google will need a retention engine to rival Amazon Prime in order to have a chance against Amazon.

Ecommerce managers should encourage more activity on their Google Trusted Stores accounts as reviews will displayed on product listing ads. Ecommerce managers should also consider adding Amazon Payments to their checkout pages. 2016 will be interesting as I expect to see a showdown between these two internet giants. If Google wins, then expect less referral traffic and more transactional activity on Google and if Amazon continue to hold their ground, then it will be business as usual.

5: Amazon.com will migrate more towards Omni-Channel Retail

Amazon made a monumental decision to open a physical bookstore in November 2015 that stocked 6,000 books at the same price as their website in their Seattle University Village shop. Earlier in February 2015, they made a foray into providing ‘click and collect’ services by launching a ‘staffed’ campus pickup and drop-off location at Purdue University that supports a free 1-day pickup.

Amazon also started to offer same-day delivery to specific postcodes in and outside London (in the UK). In the U.S. Amazon launched Amazon Prime Now – which has both a free 2-hour delivery and a paid $7.99 1-hour delivery option for over 1 million product lines in select metro areas across the U.S.

Prediction for 2016 is that Amazon will continue to make strides to expand its Amazon branded pickup/drop-off locations and will likely open more physical stores. Amazon Prime Now will be introduced to London and expand to several more locations across the U.S.

6: Owning the Checkout: Amazon vs Google vs Apple

Amazon has gone on to prove that the 1-click checkout is the future of ecommerce. Time constrained mobile shoppers want the convenience of a frictionless  checkout. They really do not want to enter their details at checkout from their phones.

Apple Pay move to the mobile web

 

Apple Pay has partially solved this problem in physical retail and well as on apps that support payment with Touch ID pay. Apple could move this technology to the ecommerce mobile web space in 2016 – but this would not entirely solve the problem as Android has a sizable marketshare in most countries.

Amazon Payment Rapid Growth

Amazon currently has 285 million global user accounts (along with their credit card details). In the U.S,  44per cent of online shopping actually begins on Amazon. At Wired-Retail conference earlier in November 2015; Amazon Merchant Services’ senior manager, Cristian van Tienhoven confirmed that Amazon will utilize both social logins and Amazon accounts in their Amazon Payment Checkout button. This is in a bid to cut down average checkout time, currently averaging 1 min 34 sec to just 30 seconds! He claimed that “In four clicks, you get through the checkout process in 30 seconds”.

Google Wallet

 

Finally, there is Google – who desperately need a frictionless and secure payment solution to integrate with their ‘Buy’ button for their soon to be launched marketplace using Google Shopping listings. Google have the search volume but do not currently have credit card details of searchers – unless they tap into either Android Pay or Google Wallet user accounts.

Google confusingly have two payment platforms:
1: Android Pay, which is

• Google’s versionion of Apple Pay i.e. for making purchases in Google Play (Google’s app store) and for
• Contactless mobile payments in stores/shops that only works with Android devices.

2: Google Wallet, which is both a:

• A Person to Person money transfer application like PayPal or Barclays Ping it
• And a wallet for shopping on the web; and likely to be the main means of payment for Google’s soon to be launched Google Shopping marketplace (with a ‘buy button’ that’ll allow searchers to instantly turn to shoppers direct from Google search)

At the moment, you must own an Android device in order to use Android Pay.But you do not need to own an Android device to use Google Wallet on Google Shopping and online stores poised to offer it as a means of payment alongside PayPal and Amazon Pay.
So Google Wallet (if all goes to plan) is poised to be what PayPal was/is to eBay – the most popular means of paying for items purchased on Google’s soon to launch marketplace: Google Shopping (which is online i.e. web/mobile web).

All 3 giants will  battle the ownership of the ecommerce checkout in 2016.

7: Facebook messenger for Business will go mainstream

Facebook’s announcement of Messenger for Business as ‘a platform’ at their F8 developer conference in March 2015 indicated Facebook’s interest in not only wanting a piece of the online retail cake but also establishing Messenger as an ubiquitous messaging platform that will more or less plugin to several eco-systems. This is on the bet that messaging may either replace or support social as we know it today.

 

Facebook essentially want to replace email communication between online retailers and their customers with mobile messaging via their app. By making Messenger the default post purchase communication platform (if they succeed), Facebook will know a lot more about the purchase history and habits of their users. This will make advertising on Facebook an even more compelling proposition to advertisers and might challenge the future of email marketing in ecommerce. Facebook are currently testing Messenger for business with online retailers: Everlane and Zulily; and also working with Zendesk on live chat support.

Facebook messenger is set to go mainstream in 2016.

8: Facebook Messenger Marketplace

WeChat, the most popular messaging app in China  – comprises of an entire ecosystem of sub-apps that enables its users to shop online, hail taxis, order food, buy movie tickets, play games, check into flights, send money, book a doctor’s appointment and read articles.

Most of this functionality has been around for close to 2 years now. With Facebook’s focus on its messenger app all through last year, WeChat’s ubiquity is indicative of the direction Facebook is headed with Messenger.

On WeChat, online retailers are able to set their store front in its in-app marketplace as a platform. Facebook will in 2016 or early 2017 want to follow their steps. The ‘Buy’ button may make an even more compelling proposition to both online retailers and Facebook users within messenger.

9: Marketplaces – Amazon Will Grow Even Stronger in 2016

Amazon added 3 million prime members in the third week of December 2015 alone, according Jeff Bezos, Amazon’s CEO.
As Amazon continues to onboard more Amazon Prime members, selling on Amazon by 3rd party marketplace will continue to grow. I see no signs of Amazon’s warehousing and fulfilment service for 3rd party sellers: Fulfilment By Amazon (FBA) abating in 2016. As it is directly connected with Amazon Prime.
If anything, it will continue to grow as Amazon continue to strengthen both its ‘Amazon Prime’ brand and its deliverability, with same day and two-hour deliveries.

Even with all of this activity, I do not see larger retailers such as  Home Retail Group, (owners of Argos and Homebase) or John Lewis Partnerships selling through Amazon as Amazon will continue to be viewed as a disruptive force in retail.

With 44% of online shoppers in the U.S. beginning their ecommerce product searches on Amazon.com, Amazon’s marketplace poses a massive opportunity for smaller and mid-sized online retailers.

I am bullish on Amazon in 2016 and predict that their marketshare in both U.S and Europe will strengthen.

10: More Industry Consolidations to Drive Omni-channel Ecommerce

2016 will see a major consolidation of two FTSE 250 retail giants in a bid to compete against the existential threat of Amazon and improve the omni-channel experience of shoppers. Core experiences retailers are aiming to deliver include: same day delivery at a reasonable cost and price to consumers, free same-day in-store pick-up and a larger national foot-print of either stores or click and collect units.
Although Sainsbury’s bid to acquire Home Retail Group (owners of Argos and Homebase) was rejected, another heavyweight retail consolidation in 2016 is imminent.