Year in Review: Take a Ride on the 2016 Ecommerce Time Machine

Year in Review: Take a Ride on the 2016 Ecommerce Time Machine
Before you can say “Holy Hyperloop Batman!”, another year has come and gone.

As we near the end of a prosperous 365 days in the life of a thriving ecommerce industry, it’s time to reflect on just how far we’ve come together.

From sustained global industry growth, to new advancements in chatbots, AI, mobile UX, augmented and virtual reality, there is a lot to look forward to in the years to come. 

Join us on a journey back in time, and let’s take a look at some of the key technologies and trends that shaped ecommerce in 2016.

Strong Global Growth, Especially in Mobile

According to emarketer, global ecommerce has grown 23.7% year-over-year and will peak at $1.9 Trillion dollars in 2016 (8.7% of overall retail sales) -- driven significantly by U.S. consumers to date. However, SmartInsights predicts that the U.S. market is reaching its saturation point and that Asia Pacific countries will be the next major driver of global growth in the years to come.

Image via eMarketer

In the world of mcommerce, eMarketer predicted in May that US retail mcommerce sales will reach $123.13 billion by the end of 2016. That’s a 39.1% increase over 2015 and more than double the amount in 2014. The bulk of this growth is coming from smartphones. But at the moment, tablet mcommerce sales are still higher -- this is expected to change by the end of next year.

Millennials are a leading driver of that growth -- partly due to their smartphone addictions and also their comfort with buying products online. That’s why many food and beverage consumer packaged goods companies are beginning to experiment with direct-to-consumer online sales channels. And Shopify has been working with brands like Mondelez (makers of Oreo cookies) and Nestle to connect with millennials through ecommerce as a brand channel.

Expect mobile commerce growth to continue its fast-paced trajectory into next year. And although there are new branding opportunities associated with ecommerce, the question remains: are mobile visitors converting?

According to SmartInsights, smartphones and tablets drive the most user sessions on commerce sites, but 63% of the 2016 revenue was still driven mainly by desktop users. Some of the biggest reasons for that include a preference to purchase on a desktop, issues around privacy and security, and a poor mobile UX that makes it hard for customers to purchase on a mobile device.

Image via SmartInsights

So what can you do to increase your mobile site conversions into 2017?

“Marketers need to stop thinking of 'mobile users' and 'desktop users' as different people. Because they're not,” explains Robert Allen, blog editor at SmartInsights. “The average household has 7.4 internet connected devices. A 'mobile user' one minute is a 'desktop user' the next. The distinction is entirely artificial. A focus on brilliant mobile UX may help a few more mobile customers to convert without switching to a desktop, but for higher value items the focus should be providing a seamless experience across devices so users can browse on mobile and convert on a desktop."

Still, this was a big year for improving mobile UX as Gartner predicted: “89% of companies would compete on the basis of user experience in 2016.” Here are some resources for you to consider to improve your mobile UX and omni-channel retail experience in the coming months:

 

Mobile Video Content Viewership & Engagement Dominated

Mobile content consumption (especially in regards to video usage and sharing) has grown significantly over the past 12 months.

According to comScoremobile now represents 65 percent of all digital media time.” And “48% of all video views in the first three months of 2016 were on mobile devices.” Those numbers are expected to grow even more in the coming years -- driving up advertising and content creation investments in the medium.

Here are some great examples of Halloween video campaigns and content that retailers and consumer packaged goods companies created this year.

While we said goodbye to Vine and Meerkat in 2016, Facebook Live, Periscope and Snapchat saw a very successful year of growth. These channels all provide great opportunities to connect in real-time with your audience in engaging ways and incorporate your products into branded entertainment. That’s why Facebook recently announced that it is “all in” as they say on video for the future of the platform.

Plus, as I mentioned in a recent post about upcoming trends for holiday shopping, mobile users are relying more heavily on mobile video reviews to make purchase decisions in-store. Here’s a story we shared in February about how to make your video content engaging and compelling for your customers.

Lots of Chatter About Chatbots and Artificial Intelligence


From student hackathons, to feature articles on key tech and startup blogs, chatbots and artificial intelligence (AI)  topped the list of “future forward” discussions in 2016. As this Guardian post implies, “chatbots are the new app.” And leading tech companies were either launching or announcing plans to launch new AI-enabled bots this year.

Steven Kojouharov from VentureBeat explains,

“One day soon, you will have a personal bot that will be able to do things like set up appointments, help with tasks, check your email, pull data for you, and even give conversational updates to your friends, family, and coworkers. It will integrate your entire digital life in one place, making it easily accessible and then automatically handling certain tasks for you.”

And both Facebook and Google are working on “Master Bots” which will “seamlessly summon services from other bots.” In other words, “assistants like Siri, Amazon Echo, Facebook M, or Google’s Master Bot will have access to all of the bot services you use and be able to process orders [and payments] on the back-end seamlessly.”

While it’s going to take a while for that become a reality, and for conversational AI to improve significantly, tech companies are currently building the infrastructure. Here are some of the bots that the industry tech leaders launched (some with bizarre results) and enhanced in 2016:

Facebook Messenger Bots

Earlier this year, Facebook and Shopify announced a partnership to enable merchants to connect with customers instantly and even sell products directly via its messenger platform. Plus blog contributor Aaron Orendorff explored what this means for the future of conversational commerce. And Ott Niggulis explained how text-based assistants offer a new frontier for digital shopping in a post-app era.

Microsoft’s Tay(bot) and Cortana Integrations

While Microsoft had very good intentions to launch and promote an AI chatbot on Twitter last March, the experiment was taken offline within 16 hours after it went live when Tay(bot) started tweeting racist and sexually explicit comments because it was mirroring offensive language from other users.

Cortana, Microsoft’s answer to Siri (which isn’t on this list because it’s been around for a while) for Windows 10 users, on the other hand, has achieved greater success this year. But the personal assistant has some catching up to do with its rivals. In 2016, the company announced an integration with Skype which is Microsoft’s attempt to compete with Facebook Messenger where “third-party companies can create chatbots to connect with customers.”

Google Assistant Allo Chatbot

In May of this year, Google announced the launch of Google Assistant which, as Mark Hatchman, Senior Editor at PC World puts it, “injects Google Now with an eager-to-please personality that finally provides the give-and-take other digital assistants lack.” However, this assistant is only available via text messaging at the moment. Read Hatchman’s full review of the product here.

Amazon Alexa + Echo Enhancements

Amazon’s Alexa recently launched as a voice-based assistant that resides inside the Amazon Echo home device. While it came with limited features out of the box, 2016 was a major year of enhancements for the chatbot. Today, Alexa can connect with Amazon TV to help users control video streaming, and not only can you now place orders online, but you can control internet of things operations in your home. It’s certainly one to watch in the next 12 months as competition heats up among all of the big players in this space.

AdAge has compared all of these emerging AI-powered assistants, and it’s worth a read here to see which one will work best for your personal or business needs in the future.

Instant Delivery Services Competition Heats Up

Thanks to Amazon’s success with hooking customers onto its super fast same-day and one-day delivery services, other major players like Google, eBay and UberRUSH have upped their games as well this year.

The ultimate goal is to make ordering online as convenient as stopping off at your local store to pick something up. However, right now most services are only available to customers in large urban areas.

Shopify now offers partnerships with both UberRUSH and Postmates to enable merchants to offer fast and convenient last-mile delivery services to its customers. Here’s a great 2016 case study about how Shopify Plus merchant Spikeball used on-demand delivery services like UberRUSH to grow its business 2700% since launching in 2008.

As this market heats up, expect new solutions and additional market growth as the top on-demand delivery players compete for your business.

Big Bets on Augmented & Virtual Reality

Top technology and media companies were all placing expensive strategic bets in 2016 that Augmented Reality (AR) and Virtual Reality (VR) technologies are the future for consumer connectedness and consumption.

In October, Facebook announced that it would be investing heavily in its Oculus Rift VR content which has yet to take off in a major way. But the company is very bullish about how it will connect its users via gaming, video communications, and shopping in the years to come.

Around the same time, Google announced that its new headset would offer a blend of AR/VR capabilities -- similar to Microsoft’s AR Hololens headset.

With the successful launch of AR mobile game Pokemon GO this past summer, it’s no surprise that many thought leaders and futurists predicted in 2016 that AR will hit the mainstream much faster than VR in the near-term.

Retailers, ecommerce merchants and marketers stand to benefit greatly from these new technologies as well. That’s why Shopify launched its first virtual reality app, Thread Studio, this year. Watch the video below to see how it works.

For insights into what the future has in store for both augmented and virtual reality, check out these posts on our blog by contributors Ott Niggulis and Dan Virgillito. Plus, this one from guest contributor Hassan Ud-deen about how virtual reality shopping will revolutionize ecommerce.

More Flash Sales and Extended Holiday Sale Periods

Despite arguments that flash sales sites are on their way down, and the fact that many global retailers acquired ailing sites like Gilt Groupe in 2016, flash sales hosted by major ecommerce retailers continued to grow in popularity this year. The benefit of flash sales is that they provide a way to get rid of overstocked inventory and drive increased sales and traffic during heavy online shopping days like Black Friday and Cyber Monday.

The increased focus on limited-time online discounting is being driven again by millennials who “favor discounts over brand loyalty.” This generation is also helping to keep the digital couponing market alive.

That’s why it’s no surprise that ecommerce heavyweights like Amazon put a major emphasis on flash sales for the 2016 Black Friday and holiday season. At the beginning of November, Amazon announced a countdown to Black Friday Deals Week promotion -- offering 20 deals of the day, with a new deal every five minutes. Also, its Prime members had the opportunity to earn more points if they ordered online using Alexa.

To learn more about how to successfully run your own Flash sale, check out this post by Shopify Plus blog contributor Nick Winkler.

Final Thoughts

While this is just a high-level snapshot of key trends that impacted ecommerce in 2016, it’s encouraging to see that the groundwork has been laid for an even more prosperous industry next year.

Stay tuned for a follow-up post on where Shopify ecommerce experts predict where merchants should place big bets in 2017 and beyond.

About the Author

Andrea Wahbe is a freelance B2B marketing strategist and corporate storyteller who writes about Canadian SMEs, marketing, and digital media trends. Follow her on Twitter.

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