Competition in e-commerce technology is increasingly becoming a straight fight between the US and China, with a handful of tech behemoths dominating the market and amassing huge troves of user data. As markets in Western countries become saturated, the e-commerce giants will be rushing to grab market share in the emerging digital economies, with India and Africa as the primary battlegrounds.
Listed below are the top e-commerce technology trends, as identified by GlobalData.
The e-commerce sector is divided between the giant internet ecosystems and the rest. Smaller e-commerce companies face a constant battle to stop their customers from drifting towards the larger internet ecosystems. Amazon, Alibaba, Google, Tencent, and Facebook have gained such a stranglehold on global online markets that they are now virtually impossible to dislodge. Mid-sized e-commerce players will remain largely confined to their domestic markets.
E-commerce-related mobile payments underpin the many different ways in which people manage their finances and conduct purchases and payments. A wide range of companies are targeting different aspects of this technology. Mobile payments in e-commerce will remain an extremely fragmented space. Within most mobile payments sub-segments a few outright leaders will dominate, while the mega-players will challenge each other for pole position in as many segments as possible. Niche specialists will also find room to thrive.
Conversational e-commerce technology platforms
Conversational e-commerce technology has emerged as an important way for businesses to interact with consumers. It allows applications, websites, and devices to become the user interface, operated through voice commands and offering a range of functions, from support to sales. Automated customer support systems and automated home technologies hold great promise, although both are still in their infancy. The accuracy of virtual assistants, particularly when faced with multiple languages, regional dialects, and slang, is a major factor holding back this market’s growth.
Social networks have moved into e-commerce via embedded click-to-buy functionality. The development of chatbots, spurred initially by Facebook, can make it easier for customers to find, review, and buy goods within social media platforms. Instagram has rolled out an in-app checkout feature for certain brands. China’s WeChat is an all-purpose messaging network hosting all kinds of services and a direct line of contact to a variety of businesses. Chatbots will not replace apps anytime soon and most people buying online will continue to do so at dedicated e-commerce sites.
Subscription-based services are a booming e-commerce segment. Companies like Harry’s and Dollar Shave Club transformed into online powerhouses capable of competing with major global brands such as Gillette. Having disrupted the men’s shaving market, both Harry’s and Dollar Shave Club were acquired in big-money transactions. We expect the same fate to befall other leading subscription start-ups.
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Ambient commerce uses a combination of sensors and AI to help customers select and pay for their goods without the need for checkouts or cash registers. This is why Amazon and Alibaba have both invested billions in acquiring stakes in physical retailers. Cashierless stores have been criticised for discriminating against poorer members of society and those without bank accounts or smartphones. As a result, some US cities have banned them, forcing Amazon to accept cash payments in some of its Go stores.
Virtual reality (VR) and augmented reality (AR)
Developments in VR technology are allowing e-commerce sites to create unique visual shopping experiences for customers. AR is also being used by brands to help customers make purchasing decisions. Since relatively few households have access to the necessary technology, VR will remain a predominantly in-store experience, used mainly by luxury retailers. We expect AR to be highly disruptive to the e-commerce market.
O2O commerce is a business strategy that draws potential customers from online channels to physical stores. Supermarkets, department stores, and other retailers are using O2O strategies to compete with the tech sector. The two largest e-commerce businesses, Amazon and Alibaba, have responded by moving into offline commerce themselves.
The e-commerce market is dominated by Amazon and Alibaba. Amazon’s blockchain focus is on business-to-business opportunities. Alibaba has filed several blockchain-related patents to fight food fraud, secure medical data, and track cross-border shipments. The first fully decentralised marketplaces using blockchain technology have come online. These aim to replace the infrastructure of e-commerce giants with a blockchain-based solution.
The evolution of cryptocurrencies in the e-commerce sector correlates directly with its acceptance. E-commerce titans such as Amazon and Alibaba currently do not directly accept digital currencies as a source of payment. Some nations have banned cryptocurrency exchanges, whilst others have already launched a national cryptocurrency. No cryptocurrency is widely accepted and transacted. The number of retailers that accept cryptocurrencies as payment for goods and services is increasing but remains relatively small. However, there is market potential for a new hybrid cryptocurrency.
This is an edited extract from the Tech, Media, & Telecom Trends 2020 – Thematic Research report produced by GlobalData Thematic Research.