Tomorrow’s technologies are about to collide...
Significant shifts in consumer preference, behavior, and geographic centers of affluence will influence how those technologies are used for commerce.
What will your industry look like when artificial intelligence, virtual reality, and next generation wearables created with 3D scanning technology collide to create a one-touch on demand purchasing environment unlike any in operation today?
Is your brand positioned to capitalize?
Or if you’re not using Shopify to power your business, a better question to ask may be; is the technology powering your ecommerce business today robust enough to scale, adapt, and pivot in ways that guarantee you’ll be able to leverage tomorrow’s technologies to create the unique customer experiences on which you’ll compete globally?
The stark choice you have today will materially impact your chances of success in the next five years and beyond; spend your time and treasure on technology and development or focus entirely on the future with a confidence that comes only from knowing the technology underpinning your business will run reliably, automatically, and will scale to meet your needs?
Rather than perceive the future as your next flash sale, email marketing campaign, or pop-up store, this post aims to stretch your perception of the future and how commerce is conducted in the next half of the decade and beyond.
Your Priorities During the Pivot
The next decade for fashion and apparel retailers is expected to be marked by double-digit growth and a pivot toward Asia where emerging middle classes and increasing smartphone penetration is likely to create tremendous opportunity and challenges:
However, the same opportunities available to you are also available to your competitors which poses significant risks for merchants, especially those pivoting toward Asia in an effort to capitalize on emerging affluence overseas:
While ecommerce only accounts for a little more than 17-percent of the overall fashion and apparel market, it is expected to grow faster than the overall market. The opportunity to grow online is even greater for those doing business in the cosmetics industry as just 6.5-percent of sales occur online.
Finding Hidden Opportunities Mined From Data
However, if the cosmetics industry is to continue taking share from large brick and mortar retailers where the majority of cosmetics purchases are made, the industry must not only consider better serving overseas markets as well as men who are spending more on beauty products but also with a narrow focus on the ingredients that comprise their products.
Notably, demand for natural and organic cosmetics is expected to grow faster than the overall industry. Ecommerce merchants selling natural and organic cosmetics uniquely position themselves to capitalize and accelerate growth:
However, merchants who cut out the middle men by selling direct while simultaneously sourcing higher quality ingredients that may increase costs will be forced to delicately balance inputs and outputs to protect margins.
Similarly, the jewelry industry, despite the opportunity to sell into growing Asian and Latin markets, will also be faced with newfound pressures on profitability brought about by a variety of factors including lower barriers to entry:
Discovering the World’s Newest Millionaires
The jewelry industry, while smartly focused on emerging markets with newfound discretionary income, must be mindful not to take its eye off of the United States, the industry’s dominant consumer. However, the future is even more complicated for jewelers that sell their wares as luxury goods of which China is the number one consumer:
Once again, ecommerce merchants interested in future growth will have to focus simultaneously on new markets and taking share from their brick & mortar counterparts; meaning tomorrow’s luxury goods merchant will be required to compete on multiple fronts at the same time. Those who do so successfully will position themselves to grow 3X faster than the overall industry:
While the U.S. and Europe are expected to decelerate, they are still major consumers of luxury goods. Likewise, industries like luxury, jewelry, cosmetics, and fashion will be dramatically reshaped demographically and grow to approximately 276-million consumers worldwide by 2020 fueled specifically by consumers between the ages of 25-34:
It’s not enough though to adopt a global perspective, intelligently source sustainable and natural inputs, and adapt marketing techniques to demographic shifts. Balancing all of this, for merchants narrowly focused on positioning themselves for the future, also hinges on capitalizing on the trends reshaping their industries.
- The pivot toward increasing Asian affluence offers growth opportunities but also risk of margin compression as sourcing, supply chain management, and fulfillment become more complex
- Consumer demand for more transparent and sustainable inputs and manufacturing processes can protect brands in an age of greater competition due to lower technological barriers to entry
- Shifts in demographics and the coming spike in younger consumers presents opportunity to address the risk associated with decreasing consumer loyalty
Powerful Trends Reshape Your Future
The challenges facing merchants today in verticals like fashion and apparel are issues that will likely have to be addressed on a global scale in the later half of the decade and beyond. If not, opportunity in Asia and other emerging markets will succumb to the margin-busting impacts of headwinds like online purchase returns.
Depending on the estimate, between one third and half of all purchases made online are returned, in part, because of the consumer’s inability to touch or interact with products prior to purchase. The trend toward fit technology and virtual sizing aimed at reducing ecommerce return rates will likely have to be adapted to meet the cultural differences and nuances inherent in new and emerging markets:
The technology necessary to prevent margin-crimping returns tomorrow and in new markets must also be accompanied by a curious business mindset willing to aggressively scrutinize long and closely held beliefs.
New Counterintuitive Markets Emerge
For instance, the cosmetics industry is being reshaped by a relatively counterintuitive trend regarding men’s grooming habits. In fact, men in both developing and emerging markets are increasingly using fragrances and cosmetics products and creating opportunities that don’t exist for merchants less willing to re-examine traditional beliefs or assumptions.
Similarly, the trend toward anti-aging products isn’t just for the old but one that is experiencing growth based on younger consumers hoping to delay the effects of time:
But identifying trends in consumer behavior isn’t enough.
Future-Proof Brand Building
Tomorrow’s successful ecommerce merchant must also intimately understand the macroeconomic influences reshaping industries. Case in point is the jewelry industry which is experiencing significant consolidation and accelerated store closures.
The result, according to research, is that branded jewelry which now accounts for 20-percent of overall sales is expected to account for 30-40-percent of all sales by 2020:
The importance of building a brand, an endeavor that cannot be executed upon if an entrepreneur is overly focused on technology and development, is exceedingly apparent when examining the trends bifurcating the luxury goods industry. Specifically, brands struggling with their true identities risk not servicing their unique niche.
In the luxury goods industry, that means clearly communicating where your brand is located on a burgeoning luxury spectrum:
- The technology addressing today’s challenges such as margin-crimping ultra-high ecommerce return rates must evolve in ways that also solve problems on a global level where cultural differences and nuance can result in even greater impact on profitability
- Merchants willing to regularly re-examine industry “facts” or closely held beliefs will position themselves to identify and capitalize on previously unseen niches such as the growing demand for men’s fragrance and grooming products overseas
- Industries being reshaped by consolidation and competition are likely to be dominated by those that establish and evolve brands that customers know, trust, and desire personalized customer experiences from
Imagining the Future: Seeing Tomorrow’s Technology Today
The trajectories and the trends…
While important in shaping your vertical, do not provide a full accounting of what’s to come tomorrow and beyond. Nor do they adequately prepare ecommerce merchants to differentiate or establish a first mover advantage.
However, simply adding the topic of technology to the conversation isn’t enough either as we know breakthroughs and advances don’t happen in vacuums. Instead, we’re interested in helping you imagine a future where technologies collide and, in some cases, create opportunities for commerce that don’t yet exist today.
For instance, it’s intriguing to think about on demand commerce powered by embeddable buy buttons in the context of virtual reality. It’s even more imaginative to consider the possibility- and how you might begin to position yourself for it now- to think about what may be possible when situational targeting intersects with next generation wearables:
Wearable technology is also something that will likely have a significant impact on the cosmetics industry and could one day turn 3D printed flexible skin-like cosmetics into something akin to medical devices that can monitor your vitals and alert you or your doctor immediately should something be amiss.
Such technology also means cosmetics merchants will likely be required to engage in ultra-segmentation to offer interactive and highly personalized experiences that show consumers a brand knows them intimately:
The AI-powered virtual assistants of tomorrow will also likely become increasingly crucial to commerce and converting prospects into customers. Consider as well how the customer experience may materially change when and if 3D printing, virtual reality, and intelligent wearables intersect:
The impact technology can have on conversions is rivaled only by the breadth and depth it may also have regarding an improved customer experience. In the luxury goods industry, tomorrow’s technologies may intersect in ways that make today’s efforts at personalization seem primitive:
Your Technology Takeaways:
- On demand one-touch commerce powered by AI and occurring in virtual or augmented reality will require merchants to accept payment seamlessly and across the globe
- Next generation wearables and flexible skin-like cosmetics printed at home that act as quasi-medical devices and monitor health will require merchants to responsibly protect and handle all this new data in ways that aren’t abusive or invasive
- AI powered virtual assistants combined with powerful new advances in segmentation will require merchants to offer ultra-personalized customer experiences in real time
Are You Ready For a Future Like This?
A better question might be whether your ecommerce platform is robust enough to successfully navigate the trajectories, trends, and technologies outlined thus far?
Unfortunately, if you’re focused on the technology of today you’re not likely able to narrowly focus on the technology that will power commerce tomorrow and beyond:
- If you’re a merchant growing quickly on Shopify
- Or a merchant using another ecommerce solution
You can easily scale on demand and focus on the future without spending your time and treasure on design and development:
If you simply want technology to get out of the way and allow you to focus on the things that really matter…
You can do so cost-effectively and immediately with the same software that powers major global brands like Nestle and Mondelez International; but also easily integrates with the third party applications and systems powering some of the world’s best startups:
If you’re ready to make the leap…
The one you know you must make to steel your business against an uncertain future but one ripe with opportunity for those able to move intelligently and rapidly, here’s what we have for you…
The trajectories, trends, and technologies outlined here are just a snippet of what you’ll need to obtain a deeper understanding of the state of your industry, the trends impacting its direction, and the technologies that will influence how you position, market, and sell tomorrow and beyond.
It’s why we’ve created an Industry Report just for merchants in the fashion & apparel, cosmetics, jewelry, and luxury goods industries. The industry snapshots, shifts in consumer behavior, and emerging technologies briefly illustrated in the report have been included solely to provide you with actionable insight you can use to make data-driven decisions that powerfully differentiate your brand and help you intelligently chart a strategic course for the future. It’s free…
We made it with you in mind…
Use it to invent the future you desire and deserve.Get your copy here