The e-commerce market has grown exponentially over the last decade, becoming more complex as business models advance and new trends emerge. However, after significant sales growth in the early COVID-19 years, many companies experienced declining margins.
This decline is partly due to market saturation, the complexities of shipping and logistics, and ever-increasing customer preferences for convenience. Today's online shoppers want the ability to easily order items they need and have them delivered quickly to a selected location.
To embrace long-term change and explore new growth prospects, online retailers must stay ahead of the key e-commerce trends reshaping the industry. Contrary to what you might think, you can profit from deliveries despite economic challenges by embracing disruption and evolving with customer expectations.
Let's explore the top six e-commerce industry shifts you need to watch to drive growth and innovation — now and in the coming years.
Table of contents
- Artificial Intelligence (AI);
- Sustainable Commerce;
- Online-to-Offline (O2O);
- Augmented Reality (AR);
- Social Commerce;
- E-commerce Subscriptions.
1. Artificial intelligence (AI)
Generative AI is revolutionizing online shopping by creating highly personalized customer journeys, from product discovery to checkout, delivery, and even returns and exchanges.
By analyzing vast amounts of market trends and customer data, AI can deliver tailored product recommendations for every shopper. AI-driven shopping experience enhances customer satisfaction and increases conversion rates by providing consumers with exactly what they are looking for.
Research shows that half of all consumers trust AI to provide accurate product recommendations, and this number will continue to climb as familiarity with with ChatGPT and other AI-driven applications grows.
So, consider incorporating and experimenting with AI-driven solutions for your e-commerce operations to win what IBM refers to as the fourth industrial revolution, or Industry 4.0.
Our favorite example
AI-driven product recommendations are the new black. This technology analyzes customer data, such as browsing and purchase history, to offer tailored suggestions that resonate with your customers and encourage purchases.
It's an effective way to increase the average order value (AOV) through upsell and cross-sell, as well as promote direct customer exchanges instead of returns.
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2. Sustainable e-commerce
It's hard to argue against the idea that a cleaner planet benefits everyone, so it's more of a fundamental shift rather than a trend. However, the ongoing question has been whether the costs of adopting sustainable practices are truly feasible for retailers.
Experts say yes, there's no long-term profitability without doing sustainable business. Moreover, there's a wave of sustainability legislation underway in the EU, requiring online retail to increase supply chain due diligence and reporting to achieve an all-European climate neutrality by 2050.
There's also a growing consumer demand. Millennials and Gen Z, the torch-bearers of sustainable consumption, are more likely to buy online based on personal, social, and environmental values.
They'll be first to voice a social media backlash against the dirty little secrets of fast fashion influencer marketing, overproduction, and waste. Instead, many of them want to see more brands and products with minimal environmental impact — think sustainable packaging, ethical sourcing, and carbon-neutral shipping.
The gradual demise of e-commerce greenwashing
Greenwashing has been a hot topic for a while, with businesses often exaggerating their eco-friendly efforts. Now, legislation is cracking down on these misleading claims, and average consumers are having a hard time understanding what 'sustainable' or 'greener choice' actually means.
Make sure your environmental claims and labels are backed by relevant documentation and clearly understood by your customers. For example, depending on your carrier integrations, use specific terms like 'carbon-neutral' or 'fossil-free' shipping instead of 'green' shipping.
The rise of brand-owned resell
Re-commerce, or reverse commerce, the practice of selling pre-owned or refurbished goods, continues to gain traction. In 2022, Forbes even declared it the 'star of retail.' Savvy consumers, feeling the economic pressure of recent years, buy and sell on second-hand marketplaces like Depop and Vinted.
E-commerce brands are now contemplating adding resale to their product catalogs, fearing it might cannibalize new sales and reduce profitability. Others embrace the circular mindset, partnering with innovative vendors and using smart technology and efficient shipping to profit from resale. Either way, it seems to be a common topic for discussion among retailers and industry observers.
Our favorite example
Djerf Avenue, TikTok's favorite brand and Matilda Djerf's community-driven passion project, has taken the fashion industry by storm, challenging the traditional standards of sizing, retouching, and waste.
In late 2022, Djerf Avenue introduced a re-commerce component to its online space, allowing loyal customers to explore the brand's pre-loved items and find something for themselves. It wasn't unheard of at the time, but the seamless website integration, marketing, pricing, and practicality continue to set it apart.
3. Online-to-offline commerce (O2O)
Online-to-offline (O2O) retail refers to a retail strategy that attract prospective customers from online channels to make purchases in brick-and-mortar stores.
O2O versus omnichannel
First, let's differentiate online-to-offline commerce from omnichannel sales. Some equate both industry terms to one and the same strategy — a holistic customer journey spanning multiple online and offline channels across physical stores, e-commerce, and social media platforms. Examples include a QR code that can be scanned in-store to discover hundreds of products online.
More commonly though online retailers regard O2O as an entirely separate strategic initiative. While an omnichannel strategy engages customers across multiple online-offline platforms to boost total retail sales, online-to-offline marketing tactics aim at converting online visitors into physical store shoppers.
What makes online-to-offline an emerging trend?
Retailers have limited opportunities to generate more revenue from online shoppers, who usually have specific items in mind and are less likely to browse compared to physical store shoppers.
In-person shopping, on the other hand, naturally leads to larger purchases. O2O business model encourages online shoppers to put down their mobile devices and visit the brand's local stores. It increase customer loyalty, audience reach, and logistics savings.
Learn how NA-KD used a free shipping threshold to boost shipping revenue by 82%
Typical incentives include options like Buy Online Pick Up In-store (BOPIS), known as Click & Collect, and Buy Online Return In-store (BORIS). Physical showrooms for online-purchased products also drive this trend. Expect to see more O2O options as shoppers recognize the benefits both types of stores have to offer.
Our favorite example
Axel Arigato, the Swedish sneaker and streetwear brand quietly revolutionizing luxury fashion, offers customers the opportunity to order products online and pick them up in uniquely designed physical stores across several European locations.
Available delivery options depend on the customer's geographical location and are listed at Ingrid-powered Delivery Checkout, while In-store solution helps the brand turn physical stores into more efficient, greener e-commerce hubs.
See how Ingrid Delivery Experience platform can help you scale your online retail
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4. Augmented reality (AR)
In e-commerce, augmented reality (AR) overlays digital information onto the real world when users point their mobile devices at a specific spot in their space. The technology, also known as 3D commerce, allows online shoppers to visualize products in their own environment before checking out. It's an interactive shopping experience that increases customer loyalty, boosts conversions, and reduces potential, and highly expensive, returns.
Get more practical insights into reducing and simplifying your online returns
Online retailers in the furniture and home decor industry face a unique challenge of selling items that are typically bulky, high-priced, and occupy a significant space in everyday life. Compared to other product categories, this creates a higher psychological barrier to online shopping.
E-commerce furniture companies must put in extra effort to convince buyers to complete their purchases. Augmented reality can help by allowing customers to visualize how furniture will look and fit in their space before buying.
Research shows that 3D product visualizations lead to a 27% increase in conversion rates, with 60% of shoppers wanting to use AR for buying furniture online.
Our favorite example
AR in furniture shopping isn't a new concept. IKEA, one of the first home furnishing brands to embrace the technology, launched IKEA Place in back 2017, the app that lets consumers see what true-to-scale 3D models look like in their spaces and ensures that every online purchase fits perfectly in size, design, and function.
IKEA was ahead of the curve, and today, AR is considered the future of online furniture shopping.
5. Social commerce
Omnichannel retail strategies are increasingly incorporating social commerce — online shopping through social media platforms. From 2021 to 2025, social commerce is projected to grow by over 50%, driven largely by Gen Z.
Social commerce transcends social media's traditional role of product discovery channel. It simplifies online shopping journey by removing extra steps like product pages and multiple checkout fields and helps consumers successfully complete their orders without leaving the app.
Platforms like Facebook, Instagram, and Pinterest were pioneers in social shopping, and now YouTube and TikTok are taking center stage with their own features. Using tools like Facebook and Instagram Shops, TikTok Shop, and Pinterest Pins, you can create your brand's online store to expand reach, reduce friction, and boosts online sales.
Our favorite example
Leading beauty brands like Kylie Cosmetics, Fenty and Glossier merge social media with in-app checkout experiences. These brands use viral drops, influencer marketing, tutorials, and user-generated content (UGC) to drive engagement and sales directly in everyone's favorite apps.
6. E-commerce subscription models
The direct-to-consumer (DTC) retail subscription model continues to grow in popularity as consumers seek convenience, personalization, and cost savings. Increasingly, they want retailers to demonstrate their investment in the relationship, not just in one-time transactions.
Subscription-based commerce can take the form of curated box subscriptions or blend one-time purchases with automated replenishment deliveries. Remember — a seamless delivery experience increases the value of your subscription and takes brand loyalty to a whole new level. Flexible delivery options, accurate delivery promises, and transparent tracking help reinforce customer lifetime value (CLV) and encourage positive word-of-mouth referrals.
Our favorite example
Europe’s viral razor brand and the David to Gillette’s Goliath, Estrid offers affordable, quality body care products without gender bias, all based on a subscription business model. Customers can make a one-time order and opt for automated refills delivered to their location as often as they like.
Join the future of e-commerce
To thrive in today's chaotic and highly saturated e-commerce landscape, your business needs to embrace agility and innovation. By keeping up with emerging trends and understanding their impact on consumer behavior, your brand can develop strategies that not only meet but exceed customer expectations. This means investing in cutting-edge technology, prioritizing sustainability, and creating genuine connections with your customers through personalized experiences.
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