The 5 Year Predictions Are In!
We polled our peers both from the e-commerce vendor and operator side, but we also surveyed consumers this year and the results were surprisingly consistent. Check out the results below and if you'd like to get on the list to take next year's survey sign up now. If you've got a point of view you'd like to share with the community then feel free to post a comment.
eCommerce Growth Predictions
By 2022, what percentage of total retail sales will ecommerce account for?
In the last 5 years US eCommerce sales as a percentage of total retail sales have gone from roughly 5% to 13% of total retail sales for 2017 as measured by the Census Bureau of the Department of Commerce. We asked what percentage of retail sales will eCommerce account for by 2022?
What a difference a year makes. Growth predictions between 2021 and 2022 grew significantly. Very few people think eCommerce sales as a percentage of retail will be less than 20% by 2022. Compare those predictions with last year's results for 2021 where people roughly 70% of respondents felt the number would land between 10% and 20%
What is driving this growth? Reduced friction of shopping online? A shift in the perception of online shopping? Generational differences? What effect will this have on the brick and mortar world? Will we continue to see high profile retail bankruptcies and abandoned shopping malls littered across the country? Or will we see a boom in omni-channel retail chains?
Average Delivery Time
What will the average delivery time for an e-commerce shipment be 5 years from now?
From 2014 through April 2016 the average delivery time for all non-Amazon retailers dropped from 8.3 days to 5.1 days according to a study by Slice Intelligence.
Over 70% of people think the average e-commerce shipment will take 2 days or less. How many e-commerce companies are actively working toward a 2 day or less target in the next few years? Where will these improvements come from? A more automated supply chain? Moving product closer to customers? Faster delivery times from the legacy carriers (UPS, FedEx, USPS or logistics upstarts.
If guaranteed 2-day shipping becomes the norm does this effectively remove one of Amazon’s biggest competitive advantages? Or could Amazon maintain that advantage by pushing their delivery times to something new, like guaranteed same-day (or better)?
Usage of Autonomous Vehicles and Drones
What percentage of packages delivered will have at least one leg of their shipment handled by an autonomous vehicle 5 years from now and what percentage of packages will be delivered by drones 5 years from now?
People are a little more pessimistic on drones than autonomous vehicles, with 0-10% being the most selected response, but still a large majority think it will be 10% or more. Also not necessarily actionable for the e-commerce businesses themselves, but both of these may highlight some of the “how” that would explain the faster delivery.
Prevalence of Cryptocurrencies and Payment Methods
We wanted to understand how payments may change 5 years from now and asked what percentage of e-commerce transactions will be made using some form of crypto currency i.e. Bitcoin, Ethereum, etc 5 years from now? We also were curious about emerging alternative payment methods and asked what percentage of transactions will be made using payment services like PayPal, Apple Pay, Android Pay, Checkout by Amazon, Affirm, Blispay, etc. 5 years from now?
Cryptocurrency response is surprisingly optimistic. What do you think that percent is right now? Probably less than 1%. How many e-commerce companies are currently working toward taking Bitcoin as payment? How many of us fully understand how Bitcoin even works? Would we feel comfortable storing that kind of currency or would we plan be to sell it off for dollars as soon as we received it?
Responses on the second question make sense. Most think the majority of transactions will flow through an alternative payment service. The days of entering credit card numbers could be coming to an end. Would this shift have a huge effect on mobile conversion rates?
Fraud related chargebacks increased on average from 1.32% to 1.47% of revenue in 2016 according to the LexisNexis True Cost of Fraud study; will fraud as a percentage of revenue increase, decrease or stay about the same 5 years from now?
The answers were not unanimous by any means, but more think it will increase than expect it do decrease.
Perhaps the more interesting takeaway discussion is, how actionable is this? If we truly believe fraud is on the rise, do people even know what they should be doing about it. If you knew fraud was going to increase to 3% or 5% or 10% in 5 years, what initiatives would you need to start working on now to prevent your business from landing on the high side of that average?
Influence of Augmented and Virtual Reality
Interest in virtual reality and augmented reality peaked in 2016 and since that time the hype has faded. Will these technologies play an important role in the future of e-commerce? We asked what percentage of transactions will be influenced by augmented reality (AR) and virtual reality 5 years from now?
People responded fairly pessimistically to both, but most think they will at least play a small part for some sellers. Do people think that useful application of the tech is more than 5 years away? Or do people feel we will just always prefer to use screens for visualization? Or perhaps people believe there will just be less human involvement in the shopping decisions, so visualization tools like these will be a moot point by the time we figure them out?
Prevalence of Voice Controlled Shopping
Amazon is off to an early lead in what appears to be an important foothold into voice commerce with over 70% share of the US smart speaker market compared to Google's 18% share. With nearly $2 billion in voice commerce sales already registered in 2017, what percentage of transactions will be made by a voice controlled device i.e. Amazon Alexa, Google Home, etc. 5 years from now?
There is certainly some division on this topic, but the data seems centered around 20-40%. If the trends continue and this prediction becomes a reality this is highly actionable.
How many of us currently have a voice commerce strategy? Do we actually understand the logic Amazon or Google are using for their voice search? How do we compete in a voice-controlled landscape? Will it be solely about product data quality? User reviews? Or will Amazon or Google try to turn it into a paid channel (voice search result goes to the highest bidder)?
3D Printing Predictions
As Amazon and other major e-commerce companies continue to grow their network of warehouses to get products closer to consumers we wonder will 3D printing technology allow us to print more of what we buy on demand? What percentage of the goods we purchase online will be printed in our home 5 years from now?
Will 3D printing have a significant impact in e-commerce 5 years from now?
The results were are overall pretty pessimistic about 3D printing with over 65% of people feeling that 3D printing won't play a significant role in e-commerce 5 years from now and over half of people believe that less than 10% of our purchases will be printed in our home. This is one of the most unanimous responses we have in the whole survey.
These results aren't surprising (well...maybe that the fact that 20% of people think we'll print more than 25% of our purchases in our home was a bit surprising) as general consumer adoption of the technology hasn't gotten past the hobbyist stage. The technology hasn't matured enough and while the lack of confidence for printing in our homes may be further out than 5 years maybe people are more willing to believe that industrial applications are more likely 5 years from now. Will Amazon own warehouses of industrial grade 3D printers in every city printing orders and delivering them within hours?
Robots Doing Our Work for Us
What functional roles in your organization are AI most likely to replace 5 years from now?
40% of responded believe AI won’t replace any part of their operations in 5 years. So maybe our jobs are safe for now? The jobs people felt most likely to get replaced were customer service and warehouse operations. These are certainly two functions where automation has already started to play a role. Amazon acquired a robotics company to automate as much of the warehouse operations as they can and chat bots are making their presence known more and more in call centers as we look to deliver great customer experiences without blowing up the payroll.
Personal AI Shopping Assistants
Will you have a personal AI shopping assistant making purchases on your behalf 5 years from now?
Nearly 70% of people don't believe we'll have robots making purchase on our behalf 5 years from now. Is this pessimistic view driven more by the fact that people think good "AI" is more than 5 years away or that they will never let robots make purchases on their behalf? Or is the feeling that people will never feel comfortable turning over that level of control to some company that has built the software to do that? Would people trust this service if it were coming from Amazon or Google? What about Facebook, Apple or Microsoft?
On the other hand, 30%of people feel that we will have personal shopping assistant making purchases on our behalf, clearly this is not an absurd idea to many. Maybe these are the Amazon Subscribe and Save customers. How would this change e-commerce? Is anybody even remotely ready for a future where we are no longer marketing to humans at all, but entirely to machines?
Internet Sales Tax Predictions
Will we have a national Internet sales tax in 5 years?
Will a national Internet sales tax hurt your business?
A little over half the respondents feel a national Internet sales tax is likely to happen in 5 years and that roughly the same amount of people feel it will hurt their business. In 2017 Amazon was collecting sales tax in 29 states and as of April 2018 Amazon is now collecting sales tax in all 45 states that have a sales tax. It doesn't appear that the addition of paying sales tax is slowing Amazon's growth? Consumers will pay for convenience.
Since Amazon controls nearly half of e-commerce sales will this take the pressure of any legislative attempts to create a national sales tax given that states are seeing a massive amount of sales tax revenue coming from Amazon and other large online retailers?
Prevalence of Sharing and Subscriptions Models
Since the early beginning of e-commerce entrepreneurs and investors have experimented with new ways of selling us stuff. A lot of people throw spaghetti at the wall and some of it sticks. Woot ushered in an era of flash sale sites. Before that marketplaces and auctions were a big deal and while marketplaces have flourished with Amazon's ascendance, eBay has seen it's share of e-commerce continue to slide.
What percentage of the e-commerce industry will shift to sharing-based business models i.e. Rent the Runway, Adorn, Lending Luxury, etc. 5 years from now?
What percentage of the e-commerce industry will shift to subscription curated services like Dollar Shave Club, Stitch Fix, Blue Apron, etc 5 years from now?
Responses were mixed, but people are more optimistic that subscription models will perform better 5 years from now. If 20% or more of the e-commerce industry were to shift to these models, how would that change the landscape? Would that mean existing leaders in industries are incorporating these strategies? Or that business is being consumed by entirely new startups?
Are any verticals safe from this? If you sell something that maintains long-term value (furniture, snowboards, books, etc.) it’s open season for sharing models. If you sell something that only has temporary value, if it expires or degrades in value (food, flowers, certain kinds of tech, etc.) then its a product that has to be purchased repeatedly by design, and there’s an market opening for subscription models.
Prevalence of Brands Selling Direct to Consumer
What percentage of the e-commerce industry will shift to brands selling direct to consumers rather than through traditional retailers 5 years from now?
Answers are somewhat divided but a large percentage of people believe traditional retail will continue to remain under siege. This isn't too surprising given the high profile bankruptcies we've seen recently from Toys R Us, Radio Shack, Gymboree, Payless ShoeSource, Gander Mountain, The Limited, Wet Seal, and others.
If these trends hold what is the formula for success for retailers? Will the growth of e-commerce in general offset the erosion of shift of brands selling direct or is this the beginning of a slow death for traditional retailers in e-commerce?
Amazon Predicted Share of eCommerce
It's reported that Amazon was responsible for about 44 percent of all U.S. e-commerce sales last year, what % of e-commerce sales will Amazon be responsible for 5 years from now?
Only a few people said that the share would go down (and we admire their optimism). Otherwise, over 65% of people feels Amazon's share will land somewhere in the 50-75% range. If you don’t have a strategy to combat amazon, or at least to make sure you’re a seller on a big portion of that amazon growth your 5 year survival rate could look pretty bleak.
Google's Influence in eCommerce in 2022
Will Google's influence in e-commerce increase, decrease or stay about the same 5 years from now?
So, this was surprising to us to see that great than 50% of people felt Google's role would increase and less than 10% felt it would decrease. How is it that Amazon continues to gain more share of e-commerce and Google continues to stay relevant or in fact become more relevant?
What does this mean for us in e-commerce as Google becomes even more of a gatekeeper? Will see more competition in costs per click in paid search? Will there be an even greater importance on content development, user experience and general search engine optimization to feed the Google Bot?
Facebook's Influence in eCommerce in 2022
Will Facebook's influence in e-commerce increase, decrease or stay about the same 5 years from now?
Not surprising that people are likely to have a strong opinion on the direction of Facebook, but still, more say it’s influence will increase than said it would decrease. So, overall, people are feeling somewhat optimistic that Facebook will stay relevant. If Facebook's influence increases over the next 5 years, how would we in e-commerce be affected? Should we need devote more resources to understanding Facebook’s algorithms as they continue to tweak them as they deal with public opinion and user satisfaction? Or put more research into our audience targeting strategies? Will people prefer to make purchases natively through Facebook or Instagram?
- Start experimenting with payments to reduce checkout friction; work toward the one click checkout
Figure out how to build a faster supply chain
Begin thinking about a world where you don’t have a Web site and people interact with you through voice and eventually bots
Can your business be disrupted by new business models i.e. sharing/curation/brands going direct