Cutting edge digitally native brands are experimenting with voice commerce, partnering
with luxury Las Vegas hotels on exclusive pop-ups, and testing augmented reality-enabled
online-to-offline (O2O) experiences. With headless commerce and progressive web applications (PWA),
the world is becoming a storefront as brands enable commerce via smart mirrors, video games, and
Second and third tier shopping malls are being reborn as experiential destinations with
theme parks, ski hills, and water slides. Legacy manufacturers and CPG companies are reinventing
themselves by selling direct-to-consumer (DTC) to accelerate growth.
Yes, an estimated 12,000 retail locations were expected to close last year, But
don't let the headlines skew your perspective—what dies in the mall is being reborn online, and what
was born online is increasingly crossing over to the physical world..
Commerce is being raised from the dead online, offline, and everywhere in
between. The future is bright, and is being shaped by the following trends in 2020 and
Ecommerce takes share but growth cools
Direct to consumer and private-label selling accelerates
PWAs and AMPs drive mobile commerce
Global ecommerce booms outside the U.S.
Automation powers productivity
Sustainable ecommerce goes mainstream
Fulfillment expectations and costs soar
Voice recognition changes the path to purchase
Marketers target new channels and devices
1. Ecommerce takes share but growth cools
Though the line between physical and digital commerce is blurring, the difference in
growth trajectories between retail and ecommerce is still stark (though not as stark as it once
Overall, the global retail market was expected to top $25 trillion USD in 2019. However, growth has
slowed considerably versus the prior five years and is not expected to pick up through 2023:
Image from eMarketer
On the other hand, worldwide ecommerce sales topped $3.5 trillion USD, an increase of
approximately 18% from the year before. Ecommerce is expected to nearly double by 2023 to more than
Some perspective is in order though. While ecommerce is growing much faster than retail, it’s still
a relatively small piece of the pie. In 2019, ecommerce share of total global retail sales was 14.1%
and analysts only expect it to increase 2% a year through 2023:
Image from Statista
Much of ecommerce growth is attributable to Amazon, which is growing at above-market
rates and was expected to account for 37.7% of online U.S. sales in 2019. While in-store sales still
account for nearly 90% of total retail sales, the total market share of online U.S. retail sales is
now higher than general merchandise sales for the first time ever.
2. Direct to consumer and private-label selling accelerates
With 16.1% of all retail sales expected to happen online in 2020, manufacturers and
traditional brands are increasingly bypassing retail partners and selling DTC. In fact, it’s
ecommerce growth that is helping legacy manufacturers offset stagnant in-store sales growth.
Selling direct yields three key benefits:
You own the customer relationship
With a direct customer relationship brands no longer have to rely on retail partners to protect and
promote your brand. Establishing a direct relationship with the end consumer also lets you continue
to give support after the sale.
Collect and use customer data
Selling direct lets you collect first-party data that you can use to personalize the customer
experience, and ultimately monetize that relationship.
Offer personalized products
Selling direct positions brands to offer experiences that can’t be had in traditional retail stores.
DTC brands are increasingly allowing shoppers to design custom packaging, mix and match custom
assortments, or participate in contests while becoming brand evangelists.
A key driver of the DTC trend is the rise of private-label brands.
Private label brands now account for approximately 20% of the consumables market. Driving much of
this market share growth are the retail partners on which legacy manufacturers have historically
relied on for distribution. They’re increasingly offering their own brands that compete against
those produced by legacy manufacturers. Selling direct is a response to increased competition from
retail partners offering their own DTC private-label brands.
Private-label products are the new challenger brands since consumers are willing to abandon brand
loyalty for what they perceive as better value. Importantly, private-label brands are taking share
in both online and in brick-and-mortar stores. Nearly one-third of Costco’s sales are private-label,
as are 19% of Walmart’s.
Importantly, consumers aren’t just turning to private-label brands to save money—they’re turning to
premium private-label brands. Premium private-label products, or those that are perceived as higher
quality than branded products that sell at higher price points, now account for 7.2% dollar share of
US private-label products, up from 5.9% three years ago:
Image from Marketingcharts
3. PWAs and AMPs drive mobile commerce
By 2021, analysts estimate 53.9% of all ecommerce sales will happen on mobile devices.
Worldwide, mobile commerce is expected to even more prevalent:
Image from Statista
But just because your ecommerce platform theme offers a responsive site doesn’t mean
you’re providing a great mobile experience. Mobile conversion rates are less than half those of
desktop. Research indicates 53% of consumers will abandon a site that takes longer than three
seconds to load. Research suggests mobile bounce rates are 10–20% higher than desktop.
To offer an optimal mobile experience across, some brands opt for a progressive web application
(PWA), which can live on a user’s home screen and are supposed to load instantly regardless of
whether the user is online. PWAs may be part of a headless commerce strategy that lets teams work on
the front- and back-end systems simultaneously to further improve mobile performance.
Rothy’s, which sells women’s shoes made with recycled plastics, relaunched its mobile site as a
progressive web app (PWA):
“Like many other brands, we see the majority of our traffic from mobile devices—a trend
that spiked during the holiday season as consumers were away from their desktops,” says Gigi
Teutli-Vadheim, Rothy’s Site Experience Manager. “In terms of the customer experience, we’re
shifting our focus to be mobile-first and prioritizing speed to ensure users are satisfied.”
One step further combining a PWA with an accelerated mobile page (AMP), which are mobile-first
stripped down HTML copies of web pages that load instantly. AMPs are the foundation of Google’s
mobile-first index, which prioritizes mobile optimization in search results. The combination can
yield better search results, more top-of-funnel traffic, and improved conversion rates onsite.
4. Global ecommerce booms outside the U.S.
Global ecommerce sales are expected to top $4.2 trillion USD in 2020 and reach more than
$6.5 trillion by 2023. More than 2.1 billion shoppers are expected to purchase goods and services
online by 2021. Increasingly, these online shoppers live outside the U.S.
By the end of 2020, 1.4 billion people are expected to join the world’s middle class, and most of
them (approximately 85%) will be in the Asia Pacific region (APAC). Ecommerce as a whole has already
shifted away from the West and will continue to do so even as China’s previously hot consumer
economy cools a bit.
In APAC, ecommerce grew 25% last year, topping $2.27 trillion USD:
Image from eMarketer
While more than half of the fastest-growing ecommerce countries are from the
Asia-Pacific region, Latin America also boasts of accelerated ecommerce growth, including the
world’s fastest grower, Mexico:
Image from eMarketer
But growth rates only tell part of the story—the king of global ecommerce is China. With
an estimated $1.9 trillion in ecommerce sales in 2019, online sales in China are three times that of
the U.S. In fact, China’s share of the global ecommerce market is 54.7% or nearly twice that of the
next five countries combined:
Image fromv eMarketer
Localization will be increasingly important when expanding internationally. A study by
the Localization Industry Standards Association (LISA) found that for every $1 spent on
localization, the return on investment (ROI) is $25. Offering customers local payment methods, local
currencies, and translating content into local languages is improving the chances of cross-border
For example, 100% Pure sells cruelty-free products directly to Chinese customers through
Tmall Global and delivers them via a third-party logistics partner. One reason the company
quadrupled sales year-over-year, is its decision to localize.
Part of its strategy lay in Juhuasuan, a group-buying feature within Tmall for flash sales that also
leverages live streams with Chinese influencers. “You don’t want to market in China the way you
market in the U.S., so I needed local people to help,” says co-founder, Ric Kostick. “You have to do
it the local way.”
5. Automation powers productivity
Businesses will increasingly put operations on autopilot in the coming year. Automation
will be particularly beneficial to brands expanding internationally which requires operating
multiple stores and larger inventory and fulfillment networks. On average, international businesses
ship to 31 countries, and brands are increasingly using ecommerce automation to scale faster and
Ecommerce automation eliminates many of the manual, repetitive, and time-consuming tasks
that reduce productivity.
Simplifying cross-border commerce, reducing the risk of human error in managing multiple stores, and
offering a best-in-class shopping experience are three ways ecommerce automation is powering
Pre-load storefront changes for major events
Rollback those changes automatically
Put flash sales and product drops on autopilot
List new products on multiple channels
Tag and segment customers for retention
Streamline tracking and reporting
Identify and cancel high-risk orders
Schedule inventory alerts for reordering and marketing
Standardize merchandising for discoverability
Integrate third-party apps to trigger workflows outside your ecommerce ecosystem like email win-back
Importantly, ecommerce automation is also protecting brands from a rising threat: fraud. Instead of
manually cross-checking orders with shopper purchase histories to determine if individual orders are
fraudulent, brands are relying on automated fraud protection natively embedded in their ecommerce
platform. Automation can prevent high-risk orders from being fulfilled and prevent costly
Brands operating their own warehouse will increasingly consider robotics to cut costs
and become more efficient. Worldwide, there are now more than 3,200 robot-enabled fulfillment
Worldwide spending on robotic process automation (RPA) is expected to top $3 billion by 2022. While
cost remains a top barrier to implementing RPA, 48% of the businesses that use new technologies like
automation expect it to help reduce their workforce.
Level 5 automation, or automation that manages itself with no humans involved, will
likely require the highest level of machine learning to produce artificial intelligence that can
replace human intelligence. Businesses expect to spend big on AI-powered automation. Worldwide AI
and process automation expenditures are expected to top $15.4 billion by 2021:
Image from Statista
6. Sustainable ecommerce goes mainstream
Consumers increasingly want brands to lead with their values. But aligning your brand
with a social cause is no longer enough. Consumers increasingly want companies to act as good global
citizens by using green manufacturing practices, eco-friendly supply chains, and reduced waste
Eco-friendly supply chains
Enterprises are turning to sophisticated technology stacks to cut waste and become more
efficient. Smart order routing combined with multi-location inventory, and automated rule-based
order routing can match orders with stock in warehouses that are closest to the customer.
Automatically routing orders in this manner saves time, expedites fulfillment, and reduces shipping
Likewise, consumer demand to know a product’s entire lifecycle also requires the ethical sourcing of
sustainable commodities and components. This includes minimizing the impact on the environment as
well as treating workers humanely.
Big box retailers are asking brands to set goals and measure progress toward reducing annual
corporate greenhouse gas emissions. To track this, and other links in the supply chain, Walmart has
created a sustainability index for its suppliers. The assessment checks each of their supplier’s
Create zero waste
Use 100% renewable energy
Sell sustainable products
Energy-efficient and resource-saving manufacturing is just the start. In the future,
customer satisfaction is likely to hinge not just on price and quality but how brands manufacture
To realize the environmental benefits of sustainable manufacturing distributed manufacturing systems
(DMS) are being considered. These are decentralized networks of adaptable and flexible
mini-factories. Putting manufacturing closer to the end consumer reduces emissions by cutting
transportation requirements. It can also stimulate regional economies that benefit from jobs
produced. Decentralizing the manufacturing process can also improve flexibility and position brands
to reconfigure faster if consumer taste or behavior shifts.
Zero Waste Packaging
Zero waste packaging is a packaging system where all materials are used, reused, or
recycled so there’s no waste product. Driven by consumer demand, it requires that brands do more
than simply use sustainable packaging supplies. Besides eliminating waste, the effort requires that
all packaging resources be recovered and none burned or buried.
Minimalist packaging, reduced package sizes, and redesigned shipping cases are also shaping the
future of ecommerce. To reduce packaging waste and its fulfillment costs, Amazon is now charging
fees to sellers that don’t comply with its packaging guidelines. Oversized or unnecessary packaging
results in a $1.99 charge. The requirements include replacing boxes with flexible mailers, using
fully recyclable mailers, and better matching products with appropriate sized boxes.
It all sounds costly but could prove lucrative. Research indicates consumers are willing to pay a
premium for goods produced in socially compliant ways:
Image from eMarketer
7. Digitally native brands go offline
Offering the consumer an experience that can’t be had online will drive digital brands
to increasingly experiment with offline experiences. While it may not be a brick-and-mortar
renaissance, it does follow in the vein of Amazon Go’s retail outlets in which there are no
Mobile retail experiences
Pura Vida Bracelets, a fast-growing maker of handmade string bracelets and accessories,
takes an omnichannel approach by bridging the digital and physical worlds. Born online, the brand
was built on the backs of social media platforms and has millions of followers and fans. However,
Pura Vida recently launched a retail experience through social media that allows consumers to
interact with the brand in the real world.
Pura Vida’s airstream trailer not only creates a new stream of revenue, but also lets
the brand engage with fans over food, music, and drinks.
The Emazing Group partners with the Luxor hotel and casino in Las Vegas for a LUX Rave
pop-up experience that spans tens of thousand square feet during 2019’s EDC Week in Las Vegas.
To promote the pop-up, The Emazing Group advertises on social media ahead of time:
Swap commerce for experiences
Instead of maximizing sales on Black Friday 2019, sustainable sneaker brand Allbirds
closed its Covent Garden location in London, U.K., to tout its commitment to conscious consumption.
Branding its offline experience, “Black Friday? We’re Not Buying It,” the Allbirds store may have
been closed for retail, but it was open for non-commerce experiences. Consumers were encouraged to
stop by for live music, and free workshops like crafting pom poms, and wreath making.
The idea stemmed from a desire to educate consumers and prompt them to question how footwear is
made. Shifting the focus from discounts to sustainability is a year-round priority for a brand that
uses eucalyptus and recycled wool to build products.
However, Allbirds didn’t disappoint consumers hoping for new products to purchase. Allbirds dropped
three new sneakers exclusive to Black Friday. But by offering an in-store experience of crafting,
for example, and a limited run of new products, Allbirds created an immersive holiday
8. Fulfillment expectations and costs soar
Elevated consumer expectations regarding shipping speed and costs are changing retail.
Entering 2020, analysts estimate 65% of retailers will offer same-day delivery, and it’s becoming
the norm. Two thirds of consumers say one of the main reasons they abandon digital shopping carts
include costly shipping and delayed shipping:
Image from Statista
Like consumer expectations, the costs associated with offering expedited shipping are
increasing. For instance, Amazon’s logistics costs, which include fulfillment and shipping, now
account for approximately 26.5% of sales. However, this figure was calculated prior to Amazon
launching one day shipping. Amazon spent $27 billion on shipping in all of 2018. Accounting for
sales growth and the launch of one day shipping, estimates indicate shipping will cost the company
$35 billion in 2019.
To meet consumer expectations and defray expedited shipping costs, brands are intelligently setting
free shipping thresholds to encourage consumers to add more items to their cart, which increases
average order values (AOV). Brands are also increasingly relying on inventory management systems
(IMS) to avoid stockouts that delay instant fulfillment.
Stationing inventory in multiple locations puts merchandise closer to the consumer which reduces
transportation time and costs. Brands are giving shoppers more shipping options to cater to those
who don’t need their products right away. They’re also displaying cutoff times that clearly
illustrate when orders must be placed for different shipping options.
This is another reason digital natives are experimenting or partnering with brick-and-mortar retail.
Buy-online-pick-up-in-store (BOPS) options can materially reduce shipping costs. Data suggests 68%
of consumers have picked up online orders in stores.
Don’t expect the trend toward faster shipping to abate as 61% of consumers polled by Afflink want
their shipments delivered within three hours.
9. Voice recognition changes the path to purchase
Estimates suggest 35% of all U.S. households are equipped with at least one smart
speaker, with many consumers owning more than one. So it’s not surprising that 26.1% of consumers
have made a purchase on a smart speaker in 2019.
Notice 3.9% of consumers say they buy through a smart speaker daily. Google appears to provide the
most accurate responses to questions about commerce, followed by Apple and Amazon:
Image from Statista
While data reveals everyday household items are the most common products to be purchased
via voice, buying apparel nearly just as common. Not only does this suggest the path to purchase is
increasingly starting via voice, but it also hints that consumers are inclined to purchase more of
what they need via voice in the future.
In response, brands are optimizing search results to include snippets as 40% of voice results are
currently pulled from search engine results snippets. Featured snippets, at least for now, is one
way to win the voice search wars.
The other way would be to explore the home assistant market with Amazon Echo Dot users. By creating
an Alexa “skill,” which are programmed commands like “Alexa, ask Umbrella Corporation what kind of
umbrellas are available,” or “Alexa, checkout,” the assistant can search your store for products and
even make voice-powered purchases. Amazon will also give you access to anonymized transcripts of
user speech data and intent request details so you can better understand how voice is used in the
consumer’s path to purchase.
10. Marketers target new channels and devices
Connected TVs (also known as smart TVs) and audio will emerge as two new hotbeds for
advertisers. While Facebook and Instagram will continue to be the bread and butter on which many
brands rely, expect significant growth in ad dollars targeting consumers who are streaming their
favorite streaming television or music services.
The Trade Desk, a programmatic advertising platform, illustrates the momentum new devices and
channels have heading into 2020. On Black Friday 2019, the company suggests the connected TV became
an essential digital media device for marketers, and audio was not far behind.
Image from The Trade Desk
According to The Trade Desk, the connected TV gives advertisers many of the same
data-driven benefits of social media advertising with the added bonus of targeting consumers with
highly relevant ads during their favorite streaming shows:
Data-driven targeting: Use first- and third-party data to reach your most valuable audiences on
every screen–just like with your digital campaigns
Better measurement: Track the impact of your CTV campaigns with digital and traditional metrics,
including video completion rates and gross rating points
Smarter retargeting: Re-engage viewers within households across streaming devices like computers,
tablets, and mobile which provides a more comprehensive picture of the customer journey
Premium inventory: Run your ads alongside popular TV shows and movies, in front of an audience
that’s fully invested
The Trade Desk’s CEO Jeff Green even believes Netflix will soon offer an ad-supported
subscription option that would let customers pay less for the service in return for watching a few
advertisements. Furthermore, this survey reveals streaming fatigue is setting in among consumers,
half of whom say they’re willing to view streaming ads to reduce monthly subscription costs.
Expect brands to increasingly bid on high quality streaming ad inventory as part of a well rounded
omnichannel approach in 2020 and beyond. The trend may even stretch into the middle of the decade
when you consider the many new streaming entrants as well as the expected growth in Connected TV
Predictions about the future don’t come with probabilities or precise timelines. But the
creative destruction happening in retail presents both threats and opportunities, the likes of which
merchants have never seen before.
You don’t have to seize every trend vying to shape 2020 and beyond. What your customers do expect is
that you’ll meet them where they are, providing a valuable customer experience regardless of whether
it comes offline, via voice, or the expectation that you operate in eco-friendly ways.
Nothing is for certain. But when one channel, device, or big idea in commerce becomes obsolete,
expect another to emerge in its place. Retail death loses its sting when merchants realize they can