The advance of the Internet has brought with it an evolution in every aspect of daily life and one of the most affected has been the financial area, from how we do business, the way we move and store money, generate income and make purchases. The digital era is here to stay and with it all the old processes must be adapted to this new reality.
The convenience of online shopping has fueled the growth of e-commerce, with a steady annual rate of increase in revenue and users. Although the future in which online shopping will completely displace face-to-face shopping still seems distant, the year 2020 with the COVID-19 Lockdown gave us a lesson in how dependent we can become on online shopping, its sustainability, advantages, disadvantages, and an overview of an economy sustained mostly by this modality.
While it is true that face-to-face commerce is still predominant and its disappearance is not conceivable in the medium or long term, as there are things that cannot be done online, the growth of online commerce has outpaced the growth of retail sales from 2007 to 2020, i.e. by thirteen years. The peak of this growth was experienced in 2020, with a 44% increase due to trade restrictions and quarantine. However, taking 2010 as an example, when the economy was just beginning to recover from the 2008 crash, e-commerce growth then was 17.1% while retail sales were 3% in the US, so we can see a much higher growth trend in online commerce, in fact, online sales have grown nine times more than retail sales since 1998.
What is the reason for the increasing preference of users for online shopping?
There are multiple reasons for this increase, related to the interdependence between the consumer and the market, and of course the evolution of the digital ecosystem and the possibilities it offers to commerce. One of the big factors that have driven the increase in online consumption is the consumer paradigm shift that drives them to purchase everyday or immediate consumption products such as groceries online. In 2015, 87% of the revenues recorded by e-commerce had been in the area of electronic goods, currently, although this area is still one of the most profitable, the sale of health, beauty, groceries, and in general everyday consumer items have been gaining more relevance in the online aspect, along with education.
An example of this could be how big and well-known brands like Morrisons are betting on online commerce, one way to motivate consumers to opt for this form of shopping is through special promotions. If you search for Morrisons offers the options you will find will be directly from Online groceries shopping, If you enter pages like Primark you can find what products they have in their store in real-time, in the social networks of the range you can see the distribution of all their products by home area and need.
E-commerce platforms, social networks and brand and company websites have evolved to make the consumer’s shopping experience easier and easier. Consumers look for a number of factors when making a purchase, product, brand, quality and reliability are central points. But then there are the add-ons, offers, promotions, speed and ease of the process, e-commerce has become the best way to achieve this set of factors, especially because of the ease of comparing products and suppliers.
Another of the driving forces behind the rise of online commerce, a particularly controversial protagonist, is targeted advertising, that is, online advertising aimed at a specific audience that responds to interest in the product or service. This type of advertising is much more efficient than traditional advertising because it responds to the need and interests of users. It is done through tracking technology that records the user’s searches.
Returning to the example above, if a user shows interest in groceries or grocery shopping it is likely that you may find advertisements for Morrisons offers. This has generated some controversy regarding user privacy but there are ways around this, by rejecting page cookies, browsing incognito, and even other more evasive methods. However,personalized advertising is beneficial for both brands and users, as it prevents them from receiving advertising that is not of interest to them and facilitates their search process to make purchases.
This method of advertising has in fact contributed to many users increasingly opting for e-commerce, because it saves them having to search for the products they want, making them available directly at their fingertips. The changing mindset of consumers, the vast options offered by the internet, and the increasing reliability of online shopping along with the growth of the online financial ecosystem suggest a positive bet for the future of e-commerce and steady growth, advances such as e-money, digital wallets, and cryptocurrencies further drive this paradigm shift, which points to a future dominated by e-commerce.
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