Every year, we’re hit with countless articles predicting the breakthrough technologies that never quite seem to “make it” come year end (hello, virtual reality!). The e-commerce space has featured few big breakthroughs throughout the years, instead seeing a number of micro breakthroughs; that is unless of course, you’re Jeff Bezos. For retailers who aren’t Amazon or Amazon-focused, it’s been about creating shopping experiences that are special through aspirational products, community building, and personalization to make customers feel the love. These brands aren’t competing with Amazon as much as they are sidestepping the behemoth.
The emerging crop of technologies poised to hit the mainstream will meet the intersection of “experiential e-commerce” in 2018 with a bang. Large incumbent retailers are shutting down numerous physical locations, and with direct-to-consumer brands creeping slowly into the brick-and-mortar space, there’s a converging point on the horizon. That convergence point, we predict, will happen in 2018: experience-based brick-and-mortar shopping will meet personalized digital experiences for a new world of omnichannel retail. We that 2018 will be a rebirth of the e-commerce experience, where an influx of technology hitting the mainstream will allow both the incumbents and the david’s of the ecommerce world to be on a level playing field.
How It’s Starting: Personalization Taking Hold
Personalization makes people feel human when shopping again. The latest wave of personalization software leverages technology to bridge a human (feeling) experience. The words ‘artificial intelligence’ tend to bring up feelings of robots replacing human tasks in sensationalized Hollywood movies, and 2018 is a step closer to a version of that becoming a reality. Machine learning algorithms are giving way for AI to predict intent more accurately than ever before. According to Forbes, retailers have a mass amount of data to power AI and deliver personalized, customized, and localized experiences to surprise and delight customers. “More data beats better algorithms every time, and retailers continue to generate significant amounts of data both online and offline.” says Deborah Weinswig, managing director of Fung Global Retail & Technology. Smart personalization will fuel the new face of e-commerce technology. AI will deliver strategies that will transform into better sales with less work. Investing in AI now will help brands gain a competitive edge which will be hard to catch up to by newer brands in the future.
But what exactly does that mean for e-commerce? Oliver Tan of ViSenze believes that the shopping experience of the future — both online and in-store — will be dominated by AI tech for years to come. For example, data is available. Lots of it. How you utilize the data you are given is what’s most valuable. The Linnworks Blog highlights 19 powerful ways to use AI, with the most notable for e-commerce being:
- Create a customer-centric search, which extends beyond Google search words, and use video and image recognition.
- Create a new level of personalization across multiple devices. Boomtrain is one AI engine, which monitors all devices and channels that a customer uses, and allows the retailer to customize a cohesive customer experience.
- Chatbots (more of that later in this post).
- Improve recommendations for customers through algorithms to predict customer needs and behaviors. Dynamic Yield is one AI tool, which deepens engagement by taking into account a customer’s past purchase history, and also allows retailers’ to increase Average Order Value (AOV).
- Generate sales through wearable technology.
Additionally, AI opens doors for visual listening and expands to automated voice capabilities – consumers will now have the option to use a virtual assistant to assist them throughout the purchasing process. Listening tools such as Alexa and Siri are currently integrated into many peoples everyday lives. Voice technology is getting easier for customers use and leverage, and online retailers are incorporating it into an e-commerce experience for consumers. NLP voice commerce tools will have voice commands that will let consumers search and purchase in place of a computer or touchscreen. Basically, your voice will give way to online decision making rather than typing with the tip of your fingers.
The combination of voice activation within the personalization sphere will connect and resonate. Voice-activated hardware will continue to become much more ubiquitous this year.
The Era of Technology-Driven Customer Service Takes Hold
Customer service is the new marketing, and automating a personalized customer service experience will allow companies to focus more on their product and brand experience. The year ahead will be transformative for customer service with the help of chatbots, who are finally hitting the mainstream with a plethora of chat platforms and messenger platforms (i.e. Messenger and WhatsApp) opening up doors for chatbot builds. These automated service reps are taking the place of human customer service representatives through smart data algorithms, thus minimizing human interaction from the equation to only fringe questions / cases.
In addition, chatbots don’t sleep! A customer in New Zealand that’s shopping on an American e-commerce site won’t have to wait for answers because of a time difference. Imagine getting help anytime, anywhere, and having it be 90%+ as helpful as a human (in 2018). Brands aren’t taking nearly as much advantage of this technology as they should.
But does that mean the day will come where all customer service representatives will be replaced with bots? To answer, Tiago Paiva, CEO of Talkdesk states in Forbes that front-end chatbots have two major weaknesses compared to humans: they lack empathy and are not capable of problem-solving. Customer service jobs for humans will shift into managing the chatbot solutions to make them more robust as more data comes in, and answering special fringe cases for customers.
There’s currently no replacement for solving complex needs, or having a real human with empathy help you. Many, and maybe even most, have felt the need for a human being while calling an airline on the phone for example, and pressing buttons to get the right kind of personalized service that a bot simply isn’t built out to solve (yet). With that in mind, chatbots are positioned to enhance the customer journey and serve as a tool, and they’re only getting smarter.
Bringing Augmented Reality Into Reality
The entrant into the growth portal within the e-commerce space with the most likelihood to fly in 2018 is Augmented Reality. Ikea is early to market with the Ikea Space App., which creates an opportunity to browse for furniture and virtually see items placed in your home at scale. Arati Sharma, Director of Marketing at Shopify, states that AR lets consumers experience products in as close to “real life” as possible before buying.” This will include “virtual dressing rooms and in-room product visualizations” shared Tradesy founder, Tracy DiNunzio.
Ikea isn’t the only brand to dabble into AR. Last year, Amazon published a patent on Augmented Reality Presentation, giving us a sneak peek of what’s to come. In the presentation, a user is “trying on” watches in AR while shopping online. Perhaps most importantly, Apple recently launched ARKit for the new iOS; an open source platform, it allows developers to build a multitude of AR products on iPhones and iPads, such as solutions for e-commerce, games, and more.
But will all the new tools for AR actually affect conversion in 2018? Will customers be fully adapted to these technologies? Macrumors.com illustrates that there was a decline in iOS developers, with those developers jumping to use ARKit at the end of 2017. Apple CEO Tim Cook is adamant about a big future in the AR space. If done well, augmented reality solutions can personalize an in-home experience; combined with AI and Personalization software, the possibilities are endless. Imagine having searched online for a red sofa, and wanting to see how it looks in your living room. With phone in hand, you can hit an “AR” button, and the red sofa can then be virtually placed in your room – voila, it’s (virtually) in your space! Now that’s a powerful e-commerce experience! We’re looking forward to seeing a plethora of AR solutions and platforms that will really stand the test of time.
Wait. What About VR?
We believe there’s still a large amount of fine tuning to do before VR really takes off into the mainstream. We don’t think it will hit in 2018. Entrepreneur.com notes that according to CB Insights, VR received 52% of venture capital funding, and AR has received 22%. Even with VR trending on the tech scene since Facebook bought Oculus, we feel that AR will surpass VR in 2018 as more often used by customers in the ecommerce space with a host of new apps coming out.
That being said, we will of course see some big steps this year that will help propel the future of VR. As the Google Cardboard “headset” helps VR become more accessible to the masses, Net Perimitive believes it is expected that 171 million people will use VR technology for retail purposes, such as virtual tours of shopping centers.
We’re expecting to see retailers truly lean on VR post 2018, simply dipping their toes into the water this year if they haven’t yet already. Because of limited access to headsets that are used mainly for gaming, it’s relatively expensive for marketers. Nearly every consumer has a smartphone, making AR a lot more accessible for e-commerce. The actual technology to make both VR and AR is still developing, so it’s limiting for companies to use it to its full potential until it’s more sophisticated and available. We also like to look at AR as the tool that eases the market into easier adaptation of VR. AR will allow consumers and brands alike to easily digest the world of an alternate reality.
Moving Towards an Endpoint?
After years of swearing not to do so, Direct to Consumer industry darling Everlane has opened its first locations in San Francisco NYC in December 2017. Glossier, a hip online-only makeup and skincare line, launched its first location too. So why the shift from a business model which swears off brick and mortar to a physical presence?
“The physical store turns visitors into new customers,” he argues. “To increase the lifetime value of these customers, they are then redirected to the e-commerce site where they will be invited to make other purchases, for example by requesting information from customers, which is then used for contextualized emails and specific ad campaigns.”
Investing in physical stores also allows brands to have a local impact and provide services such as courier delivery or in-store pickup. Physical stores also offer an opportunity to have a real-life experience that has yet to be replicated online. A physical store will allow customers to have a well-rounded experience and continue to fuel loyalty and repeat purchases. Holding a piece of product in your hands, such as an Everlane cashmere sweater, allows a customer to feel the softness and try it on. Those are experiences that will only support online shopping in the future. Perhaps most importantly, brick-and-mortar converts at a significantly higher rate than e-commerce. If done well, it can be an incredible asset as the Digitally Native Vertical Brands grow up into adulthood in their business life.
The Renaissance of E-commerce as Commerce
Given the state of the industry and the technology integrated into it, we feel that we’re experiencing a rebirth within the e-commerce space. This is the year where it all comes together: Incumbents have closed many of their doors, and now they’ll re-invent themselves as digitally native brands. Direct to Consumer brands will continue to crack the brick-and-mortar nut. All the while, the personalized and technology-driven experiences will fuel the rebirth of what it means to be a consumer. It’s going to be a fun 2018, and we’re looking forward to the ride.