In today’s digital age, buying goods online has never been easier. With just a few taps on a smartphone, consumers can browse through countless products and make purchases without ever leaving the comfort of their homes. However, despite the convenience of online shopping, e-commerce sales growth is slowing down. According to research firm eMarketer, global e-commerce sales are expected to rise by only 9 percent year over year in 2024, compared to 10 percent in 2023 and a significant 17 percent during the e-commerce boom of 2021. This trend is projected to continue, with the growth rate potentially dropping to as low as 7.4 percent by 2027.
One of the reasons for this slowdown is the shift in consumer behavior, with more shoppers returning to physical stores. Additionally, online shoppers are experiencing fatigue from sifting through similar products on various websites that all follow a similar grid-like format. What consumers are truly craving is a personalized shopping experience, similar to what they experience on social media platforms where algorithms tailor content to their individual preferences.
Juan Pellerano-Rendón, chief marketing officer at e-commerce logistics start-up Swap, emphasizes the importance of catering to customers’ needs and making them feel special and connected to the brand. To meet these demands, e-tailers are turning to artificial intelligence (AI) to enhance the online shopping experience. For example, eBay recently introduced a feature called “shop the look,” where users can view AI-generated images of shoppable outfits based on their browsing patterns and purchase history. This personalized approach has led to increased conversion rates for fashion items on the site.
However, not all companies have the financial resources to invest in AI-powered personalized shopping feeds or experimental features like ChatGPT-powered shopping assistants. Moreover, consumer receptiveness to these changes can vary, as seen in cases where brands faced backlash for implementing AI-generated models or size recommendation tools on their e-commerce sites.
To succeed in the competitive e-commerce landscape, brands must focus on understanding their customers’ needs and preferences before making significant investments in new technologies. Lisa Green, co-founder and chief commercial officer at e-commerce software start-up Daydream, emphasizes the importance of creating a unique and magical experience for customers that aligns with the brand’s identity.
For brands with limited budgets, leveraging existing data to improve critical selling features like product recommendations can be a cost-effective strategy. Women’s wear brand Vici, for instance, uses Mastercard’s personalization platform Dynamic Yield to target low-intent shoppers and enhance their shopping experience. By making simple updates such as improving visibility of the search bar and offering alternative options for sold-out items, brands can increase conversion rates without breaking the bank.
In addition to advanced personalization features, brands must also be open to feedback and continuously update their tools based on consumer input. Flexibility and agility are key in the fast-paced e-commerce industry, where trends and consumer preferences evolve rapidly.
Furthermore, brands can enhance the e-commerce experience by listening to customer feedback and implementing site improvements that do not necessarily require cutting-edge software. For example, Morjas launched a blog series showcasing different ways to style their footwear based on customer requests for more lifestyle content. This simple initiative resulted in a significant increase in conversion rates for the brand.
Even seemingly complex features like sizing can be improved without expensive software investments. Rental platform Nuuly added filters to its product reviews based on height, body type, and bra size to help users find items that best suit their shapes. By providing real-life feedback and recommendations, brands can instill confidence in customers and drive sales.
Ultimately, the key to success in e-commerce lies in understanding and meeting customers’ needs while staying agile and responsive to changing trends. By prioritizing customer satisfaction and delivering personalized shopping experiences, brands can retain existing customers, drive sales growth, and stand out in a competitive market.
