Power Retail looks back at 2015 to examine the online retail trends that flew and failed, and looks forward to speculate on what 2016 has in store.
As 2015 sails off into the distance we should all take this opportunity to look back — a year older and perhaps wiser — to reflect on what we’ve seen and consider what’s to come.
2015 was a banner year for online retail. Some trends shook up the industry (a round of applause for mobile) while others puffed and preened without delivering much (we’re looking at you beacons and drones).
So here, in no particular order, are Power Retail’s fly and fall online retail trends for 2015 (part 1).
The mobile explosion
While 2015 was the breakout year for mobile commerce, 2016 needs to be the year mobile is perfected. The ubiquitous emergence of mobile has shaken up the online retail industry, forcing retailers to re-evaluate nearly all aspects of their business and determine how to best integrate mobile into their business model. And few retailers have really nailed it.
For any serious digital retailer mobile is not longer a ‘nice to have’ but a ‘must have’. This kind of thinking has, however, led many retailers to dive into mobile without really considering how it best serves their business.
The full extent of mobile is tough to summarise (and this certainly isn’t the place to do it), but thinking of it as simply another sales channel is reductive. Yes, mobile is a relatively new sales channel, and yes it enables people to browse and purchase when and where they would not have been able to previously. But perhaps more importantly, mobile represents a way to complement existing retail channels. Apps can be used to drive people in-store, or to enhance customer service and upsell once in-store.
The evolution of mobile commerce will continue over 2016, as both shoppers and retailers experiment and explore to determine how mobile best serves their needs. The best retailers will look at how shoppers are using their mobile devices and respond with mobile features and apps designed to enhance the shopping experience. The very best retailers will lead shoppers by providing what they want before they even know they want it.
Aussies going global
In 2015, a range of factors coalesced to create incentives for Australian e-tailers to take it overseas. The low Australian dollar, various free trade agreements, an increasing number of third-party partners facilitating the move into foreign markets and China’s introduction of policies to ease cross-border trade have all helped to get Aussie retailers in the global market.
Following in the footsteps of China, South-East Asia is on the cusp of an e-commerce boom. Online shopping accounts for just one percent of retail, with the region expected to reach double-digit growth within the next five years. Given Australia’s proximity to and trade relations with South-East Asia, this represents a massive and untapped growth market right on Australia’s doorstep. As e-commerce in South-East Asia (as well as the Middle East— another of Australia’s major trading partners) continues to grow, retailers will see major opportunities in those markets over 2016.
Social commerce and buy buttons
While Facebook remains by far the most used social media platform, Pinterest and Instagram have emerged as the fastest growing, with both platforms more than doubling user numbers over the past three years. More than that, Pinterest and Instagram are emerging as legitimate retail forces. And 2015 was the year that both platforms really started developing retailer- and advertising-specific features.
While Pinterest had a big 2015, many believe it still has a way to go to really solidify its position as a long-haul social media player. Despite some current limitations, as a user-curated log of interests, inspirations and aspirations, the platform is ripe for targeted advertising. And Pinterest responded last year by rolling out new advertising tools, including Promoted Pins, which aid advertisers in creating product discovery, and Cinematic Pins, which offer online video promotion.
While Pinterest is doing a lot of things right, over 2016 it will need to grow to head off other image-based networks and adapt to keep advertisers happy. Pinterest does not yet have the advanced segmenting and targeting capabilities of Facebook and Google. Such limited targeting makes for unclear ad performance and the feeling among many advertisers that Pinterest does not yet generate significant audience traction, at least compared with its potential.
In 2015, Instagram started to offer Shop Now buttons and opened its doors to advertisers, with its advertising revenue skyrocketing as a result. It quickly rolled out a range of advertising options including 30-second videos, landscape photos and videos, and self-service carousel ads. Facebook-owned Instagram seems to be attracting the lion’s share of brand attention, largely due to access to Facebook’s advanced targeting tools.
The bricks-and-mortar renaissance
2015 saw a swing in online retail, with pureplay retailers embracing the power of bricks-and-mortar. In late 2015, Amazon opened a physical bookstore in its hometown of Seattle and long-time pureplay stalwart Kogan finally relented and opened a pop-up store in Melbourne. Fashion-tech innovators like Mon Purse and Shoes of Prey opened up physical flagship stores or partnered with department stores to capitalise on foot traffic and brand power. Other ex-pureplayers to open physical stores over 2015 include Birchbox, Rent the Runway and BaubleBar.
Pure online retailing simply no longer has the competitive edge it once did. A physical shop front offers brand exposure and credibility and a way for new shoppers to engage with product directly prior to purchase. Bricks-and-mortar is no longer a separate channel or a source of competition but a way to complement and expand online operations.
In 2016, expect to see more online retailers viewing bricks-and-mortar — whether flagship stores, department store partnerships or pop-up stores — in much the same as they would an app, as a way to complement and drive their business and grow their brand.
Click here for Part 2 , where we cover Millennials and marketing, logistics and fulfilment, personalisation/customisation and more.
Get onto the comments below and let us know what we missed!