Consumer behaviour changed at an unprecedented pace during the peak of the pandemic, resulting in ninety days worth of e-commerce growth consolidated into just 90 days. In addition to making purchases online, shoppers of all ages turned to their smartphones and tablets to shop for groceries, apparel, and home furnishings. More than two billion people now shop online, and nearly 95% of all commercial transactions will take place online or through digital channels by 2040.
The numbers indicate that most of this behaviour is here to stay, regardless of the argument that 2020 was an exceptional year. It is estimated that retail e-commerce generated around 4.9 trillion dollars in sales worldwide in 2021, representing an increase of 16 per cent over the previous year. According to Statistics, this number is expected to reach 7.4 trillion dollars by 2025, an increase of 50 per cent. We are so far from seeing a slowdown in this growth or this shift in consumer behaviour.
A fast-growing market necessitates rapid growth from you as well. To grow revenues by over 12% in 2022, entrepreneurs, managers, and product owners of eCommerce companies must act. If this is not done, severe consequences will follow, as we have seen in the past. The companies that did not maintain their top-line growth have disappeared within 30 years. The majority of eCommerce companies today are facing the same problem, although there are exceptions. They need to focus on growth to survive.
ECommerce owners have a clear message: Go Hard or Go Home. However, market forces such as rapidly increasing competition and increasing acquisition costs have made it increasingly difficult to grow.
Competition is at its peak
ECommerce has become a strategic goal for every business since the pandemic. As a revenue-generating channel, eCommerce has become a top priority for large brands, incumbents, and new entrants alike, and these changes are occurring globally.
Across-border sales have grown by 21% in 2017 because consumers are more open to shopping on eCommerce sites located in other countries. According to research, 57% of online shoppers have made at least one purchase from an overseas company over the last year – and a further 22% have considered it.
Today, there are an estimated 24 million eCommerce sites around the globe, compared to a decade ago when there were only a few. The ease and affordability of setting up eCommerce stores made possible by tools like Shopify and WooCommerce contribute significantly to this growth. Thousand of new players have entered the market thanks to these tools. Over 30,000 copies of the Woo-commerce plugin are downloaded every day on Shopify in 2020. In eCommerce, the competition is getting fierce no matter how you look at it.
As a result of growing eCommerce competition, brands need to focus on growth to maintain their market share while at the same time fighting harder for growth. In addition to competition pressures, they face the perfect storm of higher acquisition costs and higher competition.
Costs associated with acquisition increased
Business owners find it increasingly difficult to stand out and capture audiences due to an increase in cost per mille, cost per click, and customer acquisition costs. Growing competition is one of the reasons for this increase. Additionally, changes to Apple’s advertising and privacy policies, which have made reaching audiences on social platforms like Facebook increasingly complicated (and expensive), also add to the challenge.
Business Insider reported that each major social media platform experienced double-digit increases in costs.
- Google’s CPM increased by 75%
- TikTok’s by 185%
- The cost of meta ads increased by 61%,
- CPC growth for Amazon’s sponsored products grew by 14%
As a result of this, eCommerce brands are increasingly facing an acquisition cost challenge, with everyone the world over seeking lower click costs and lower per thousand impression prices. No matter what your target market is, you will struggle to find super affordable, highly targeted traffic. The rising cost of acquisition is inevitably a concern for eCommerce owners and marketers.
E-Commerce entrepreneurs are unsure how to increase their growth exponentially as acquisition costs and competition rise.
Is there growth potential?
Many eCommerce companies can find what they are looking for in their data to achieve transformational growth. The number of enterprises that analyse their data is quite small. They will provide reports on their profit and the number of goods sold each month. This data is not widely used and is not engaging. Less than 25% of people in most organizations pay attention to data, most surveys show. However, data is an invaluable asset that should not be ignored. This will provide a huge opportunity for growth if analysed correctly.
In most organizations, there is a literal goldmine of information hidden in the data that can reveal where money is being wasted or improvements are needed. Your eCommerce site and marketing campaigns will be more effective if you create smart double-digit improvements based on these insights. Many companies report a 50% increase in revenue when they implement such improvements. You need to start analysing your data to reach this next level of growth.
Throughout this series of articles, I will explore how eCommerce companies can harness their data to increase growth. Check back soon.
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