Commerce Trends 2023

Shopify’s annual report on the latest trends shaping commerce, pulled from proprietary data, insider experts, and top global brands.

Unexpected is the new normal

The only constant in commerce is change. And the only way forward is to adapt. In the past year, we’ve seen millions of businesses display resilience in the face of the unexpected, contributing to over $27 trillion USD of retail sales worldwide. But 64% of global businesses are still recovering from the negative impact of the pandemic.*

Economic obstacles from the pandemic were compounded further in 2022, when the Russia-Ukraine war led to sanctions that delayed or halted trade altogether. The fiscal instability is driving the highest inflation in 40 years.

Online shopping jumped 77% year over year just months into the pandemic, accelerating the innovation and adoption of digital commerce by half a decade. Shopping, working, and socializing online became commonplace.

But after years of lockdowns and restrictions, people now crave meaningful connection across all facets of life—including commerce. Physical spaces make those points of connection between merchants and customers possible, including online and offline commerce.

As brands grapple with the challenges in 2023, they'll need to respond by adding flexibility to their products, plans, and policies. With an economic recession on the horizon, being agile has never been more important. This report outlines the global trends equipping brands to confront the unexpected.

All values are in U.S. dollars

The economic outlook forces ecommerce businesses to brace for a sluggish economy

While commerce growth is slowing, total retail sales in 2022 have climbed 15% since 2020, and they're projected to reach more than $31 trillion in 2025. But it will be a slow climb.

Projected retail sales growth worldwide from 2020 to 2025

Global retail sales shrank by 2.9% in 2020 then grew by 9.7% in 2021. Growth will slow from 5% in 2022 to 4.1% by 2025. Global retail sales shrank by 2.9% in 2020 then grew by 9.7% in 2021. Growth will slow from 5% in 2022 to 4.1% by 2025.

Sourced from Statista

The World Trade Organization became less optimistic about trade growth volume as 2022 progressed. The organization's estimate for 2023 was a growth rate of 3.4% in April. By October, the forecast for the year had plummeted to a dismal 1.0%.

As commerce growth slows down, worries around inflation are ramping up.

How inflation is impacting businesses

83% Are very concerned about the risk inflation poses to company growth
82% Say high inflation is forcing them to reduce company costs
81% Have plans to increase product prices due to inflation
71% Say their company is preparing for a recession next year

Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022

Business owners aren’t the only ones with higher costs on their minds. The average person is 102% more concerned about inflation than the coronavirus, which has dropped down the list of global worries while inflation rose to the top. Worry about rising prices isn’t likely to go away in 2023.

Although some say the recession fear is overdone, let’s face it—even the possibility of a recession affects how businesses spend, how venture capitalists invest, and how people shop.

Expectations of brands grow as consumer behavior changes

Consumers have more options than ever, and in today’s economic climate, they’re ready to exercise that freedom of choice. More than seven in 10 consumers bought from the competitor of their go-to brand between May 2021 and May 2022. And, if spending power decreases as expected in 2023, consumers will continue to shop around for better deals.

But shoppers aren’t just aware of the price tag. Environmental, social, and governance concerns influence about half of global consumers. Buyers want to support more ethical businesses with more sustainable supply chains—even though consistency in freight, distribution, and especially fulfillment are nearly impossible for many businesses to control. That’s why product shortages motivate nearly half of all brand switching: 46% of consumers move to competitors who have the products they want in stock.

Discovering new brands to try is also easier for consumers—and most are ready to buy. More than seven out of 10 like the convenience of instantly purchasing products where they're browsing. And they’re browsing on social media: 60% of the globe is already on social media, so they need only go to the platforms they're already on to find new brands and products.

That same expectation for seamless immediacy is seeping into physical retail too. "While we see customers really interested in coming back into the store space and having a personal approach, they've also gotten used to having everything immediately,” says Shaza Mahmoud, head of retail at Daily Paper. “They want it now. This is just the era we're living in. Everything available at the click of a button."

Consumers want their shopping to be personal, instant, and responsive—and they want that high-value experience anywhere.

Commerce is everywhere. The purchase journey is non-linear. It can happen from seeing an ad on Instagram, an influencer on TikTok, a drop on Twitter. You might be window shopping in person, or a friend might send you a link.

Arpan Podduturi Director of Product Retail and Messaging, Shopify

That's why, aside from growing revenue, improving customer experience is the top priority for global businesses.*

This attitude of ultimate flexibility and interconnectivity is hitting all aspects of commerce—including employment. Employees are moving their talents to the companies that will benefit their wallets, lifestyles, and values. For one out of five employees, flexible schedules and locations are keys to retaining them, something that brands with a strong retail presence will need to keep in mind.

The Commerce Trends 2023 report is a compilation of some of the most powerful insights that emerged from our research across five areas: supply chains, inflation, marketing, social commerce, and retail.

Methodology

We partnered with global market research firm Ipsos to explore where the commerce industry is, where it's going, and how leading brands are pivoting to keep up with the ever-changing commerce landscape. The study includes responses from 900 business owners and commerce decision makers based in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Spain, Japan, Singapore, India, China, Australia, and New Zealand.

We combined survey results with third-party data, proprietary research about brands that sell on Shopify Plus, as well as qualitative insights from two dozen interviews with industry leaders, investors, and subject matter experts. Together, these findings form the foundation for the trends report. Here’s a snapshot of what each chapter will cover.

Top five customer acquisition and retention strategies brands are using to drive growth

Brands are using customer acquisition and retention strategies to drive growth, with 28% marketing more on social media Using social channels more for marketing and promotions
28% Offering more premium products and services
27% Using ecommerce marketplaces more
26% Offering more payment methods (like Apple Pay)
26% Using customer data for better targeting, customer segmentation, and personalization

Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022

The commerce and technology landscape is in perpetual motion. Brands need to respond in real time just to stay relevant.

Powered by data from millions of Shopify brands, our proprietary report provides the tools and insights businesses need to drive growth in the next year.

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Tony Drockton

Founder, Hammitt

Shaza Mahmoud

Head of Retail, Daily Paper

Julie Mathers

CEO, Snuggle Hunny