E-Commerce Trends 2022: What The Future Holds
Choco Up, one of Asia’s premier revenue-based financing and growth platforms, is co-founded and led by him.
It’s not an option to keep up with e-commerce developments; it’s a requirement.
Keeping up with industry trends is especially vital for e-commerce business owners who want to stay competitive and spot new chances.
As the year comes to a close, here are three e-commerce trends to keep an eye on in 2022. I also talk about upcoming obstacles and how to overcome them. Let’s get going.
Trend 1: The e-commerce landscape is getting more competitive.
E-commerce will account for 20.4% of worldwide retail sales by the end of 2022, up from only 10% five years ago, according to a new industry research. To put it another way, the e-commerce market is growing increasingly congested.
Many factors contribute to the rapid rise of e-commerce, one of them is Covid-19. Fears of the virus and stay-at-home regulations have influenced customer behavior in uncertain times, driving offline traffic to internet retailers. As the times demand, a large number of e-commerce enterprises emerge.
The Challenge: Increasing Advertising Costs And Reduced Campaign Effectiveness
E-commerce veterans and newcomers are competing for customers’ attention. As a result, advertising expenses have climbed and the return on ad expenditure has decreased (ROAS). Advertising on Facebook, for example, is already 47% more expensive than it was last year.
However, the situation does not end there. Cross-app data sharing is forbidden unless users opt in following Apple’s privacy improvements in iOS 14.5. The policy’s ramifications are significant and immediate: Facebook and Instagram advertising has become significantly less effective than previously.
The Way Forward: Maximizing Your Customer Lifetime Value To Customer Acquisition Cost Ratio
Apple’s privacy advocacy and Covid-19 aren’t going away anytime soon. In light of this, e-commerce enterprises have begun to investigate new and untapped marketing avenues. In this regard, Snapchat and TikTok are popular choices.
Another way out of this difficult circumstance is to increase customer retention efforts. As customer acquisition expenses climb, maximizing customer lifetime value helps your organization retain healthy margins.
Trend 2: More e-commerce businesses go global to overcome growth bottlenecks.
The total addressable market (TAM) is a typical growth constraint. More e-commerce enterprises will extend into the global stage when businesses approach their growth limits in the home market.
Consumers are joining the globalization movement. According to a recent survey, 76% of internet customers have made purchases on a site outside of their home country.
The Challenge: Navigating Through Obstacles Of Foreign Expansion
The road to worldwide business growth will not be smooth. For one thing, a lack of money would limit growth options.
Furthermore, management would face obstacles in terms of competition and talent acquisition in an unfamiliar market. Cross-border supply networks can also be difficult to manage.
The Way Forward: Planning Ahead To Prepare For Growth
There are numerous approaches to expanding a firm. You could also concentrate on product development and market penetration in addition to globalization.
Whatever path you choose, keep the following points in mind: When will you expand? What method will you employ? What materials will you require? These are major considerations.
Trend 3: Conventional financing methods will take a back seat.
Alternative finance is becoming increasingly common among e-commerce businesses. Many businesses are turning to revenue-based financing (RBF) and inventory financing as alternatives to taking out loans or swapping equity for money from investors.
The paradigm shift did not occur by chance. My company’s clients gave the following perspectives when asked why they shifted from loans to revenue-based financing at Choco Up:
- Bank loans are time-consuming to apply for.
- They don’t have eligible assets (e.g., cars or property) to pledge as collateral for loans.
- Loan repayments in fixed installments would put pressure on their companies’ cash flow.
Dilution of equity is another prevalent issue among founders who did not seek angel or venture capital funding. It is, after all, costly to give away equity.
The Challenge: Weighing The Pros And Cons Of Alternative Financing
Over the last decade, a wide range of financial instruments customized to the demands of new-age firms have arisen. E-commerce owners will need to spend some time learning about these financing options.
Revenue-based finance, for example, does not require repayment in regular installments. Rather, until the loan is fully repaid, RBF platforms will share a defined amount of your company’s revenue.
This method has both advantages and disadvantages. Repayment is flexible, which is a positive. However, in order to use revenue-based financing, your company must have recurring revenue. These are some things to think about before deciding on a financing option for your business.
The Way Forward: Exploring Alternative Financing Solutions To Fuel Business Growth
According to market research, e-commerce companies received US$16.8 billion in capital in the second quarter of 2021. When compared to the same period the previous year, this is a five-fold rise.
E-commerce enterprises are clearly set for future development and challenges. Alternative financing is here to stay because traditional means of funding are unable to meet the needs of these businesses.
Some Last Words
“Know the opponent and know yourself; in a hundred fights you will never be in trouble,” says a statement from China’s ancient treatise on combat, The Art of War.
The 2,000-year-old business knowledge still holds true today. If you don’t know yourself and your competitors, you risk losing the e-commerce war.
ARTICLE: Forbes website