Like the mythological Phoenix that sets itself on fire only to be reborn again from its own ashes, 2020 has brought radical transformation —rather than sheer destruction— to the world of retail. While it is true that the COVID-19 pandemic has stunted worldwide physical retail growth, which topped out at approximately $25 trillion dollars worldwide, retail growth didn’t just disappear. Its volume has been reallocated to the e-commerce channel which has enjoyed an 18% bump in growth, landing at $3.5 trillion total.
That increase sounds impressive, and it’s tempting to say that it’s all due to the pandemic, but history may very well remember COVID-19 as a watershed moment for the retail industry. Over the last decade, a profound change has slowly been transforming the industry. In the aftermath of a year filled with social distancing and quarantines, the retail industry looks to emerge as a changed entity. But what exactly does the future hold for the world of retail in 2022 and beyond?
The State of E-commerce in 2020
The shift towards e-commerce is nothing new. Prior to COVID-19, the retail industry had been gradually shifting focus towards online shopping. The exact moment that e-commerce emerged is debatable; Whether you count the 1995 formation of Amazon, the 1999 creation of Alibaba, or even the 2004 advent of Shopify as the most important moment in e-commerce history, online shopping has grown up alongside the modern-day internet.
Since 2001, e-commerce has enjoyed anywhere from 5% to 45% annual growth. But now, with COVID-19 surging, rolling quarantines, and social distancing as “the new normal” going forward, the e-commerce channel has suddenly been thrust into the limelight.
Current growth can best be understood in the light of two different factors: people’s adherence to social distancing, and their fear of large-scale lock downs. With social distancing, people have sought ways to obtain the everyday items necessary to survive while adhering to public health recommendations out of a sense of obligation and for the health of their family. Fear is just as responsible for the bump in online sales volume. America in particular saw people panic buying necessities at the start of the pandemic. Regardless of the reason, e-commerce has seen business surge a whopping 18% as a result.
Upwards Trajectory: 2021 and Beyond
While growth seems to be the name of the game for the remainder of 2020, and into 2021, what about the further down the road? What does the future hold for the e-commerce industry beyond next year?
Voice Commerce will Spread to New Industries
Voice commerce, the next evolution in the world of e-commerce, will continue to grow. Voice commerce uses voice assistants, such as Alexa, Siri, and Google to give shoppers a hands-free shopping experience. In the world of COVID-19, hands-free shopping has been a boon for busy, multi-tasking millennials stuck in a work-from-home scenario. While we don’t necessarily know what the post-COVID economy will look like, available data suggests that voice commerce will continue to play an integral role in our lives. Over the next two years, v-commerce is expected to grow to a $40 billion a year industry; today it sits at $2 billion.
More exciting than the sheer growth expected is how v-commerce is expected to grow. Today, voice shopping is primarily used by merchants on the Amazon Marketplace. Over the next few years, v-commerce is expected to spread to a more diverse set of retailers. Smaller businesses, and businesses not associated with Amazon, will begin to utilize Alexa skills to carve out a new channel for themselves.
New Demographics will Finally Embrace Voice
Voice commerce has enjoyed the level of success that it has due in great part to millennials embracing new technology found on their phones and in smart home devices. Traditionally that’s the way new technology proliferates. However, the COVID-19 pandemic has disproportionately affected older demographics; early research shows that they are more likely to contract serious and fatal cases of the disease. Therefore, people 60 and older are more likely to adhere to strict quarantine measures.
Elderly people still need groceries and other essential items even though they are more likely to engage in social isolation. The pandemic may prove to be the catalyst that finally compels an older demographic to embrace e-commerce —and by extension— voice commerce. According to Deloitte, we should expect to see mass adoption of new shopping modalities by 2022.
People will Seek Increased Socialization with Their E-commerce Experiences
E-commerce has undoubtedly been a life raft for many families stuck at home during these past few months. It’s been both a survival tool and a way to stay connected to the world. And while online shopping is both expedient and convenient, at its core it is an impersonal experience.
Even the most reticent person craves socialization. For many people, window shopping and the act of physically visiting a location are a stress relief. Voice shopping provides a similar, yet simulated experience. As voice commerce becomes more integral, look for it to offer new avenues of socialization and virtual shopping over the next couple of years.
Look for AR Shopping to Emerge
E-commerce has become a significant retail channel; v-commerce is quickly following suit. But technology doesn’t stay static for long. The next big revolution may be augmented reality (AR). Many modern devices, such as smartphones and tablets, come integrated with AR capabilities right out of the box. AR uses the device’s camera to superimpose digital images into the real world. It is the midway mark between reality and virtual reality.
AR promises to give online merchants a new way to present their products to consumers. Think of it as a virtual shopping mall where you can actively demo virtual items. And although AR might be new to many customers, there are already some startling metrics around its retail integration. According to BigCommerce, 63% of online shoppers say that vendors using AR to supplement their voice and e-commerce storefront would be a game changer. 61% of online shoppers look forward to using it. Although AR is still in its infancy, look for it to be the next frontier in commerce by 2022.
Just Around the Corner
There’s no way to predict the future with 100% accuracy, but we can say with absolute certainty that voice commerce will play a huge role in retail across the coming decade. The Voicefront platform can help you harness the industry’s trajectory and use it for your own virtual storefront. Through Voicefront, your customers can utilize Alexa to browse your products, search for reviews across the web, and even compare multiple products. For more information or to request a demo of the Voicefront platform, please contact us today.