The trends driving the growth of e-commerce

As the UK secures second place in the global online shopping race, opportunities abound to target younger shoppers, provide personalisation and generate loyalty. 

4 March 2019
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image credit: Getty Images

The UK has been ranked second in the world for its digital commerce, driven by factors like 4G connectivity, app-based shopping and London’s high-earning millennials, according to Euromonitor International.

Retail takes the lion share of e-commerce due to the large influence of trending, voice-driven systems – Amazon’s Alexa, for example, can be used to order from Ocado and Morrisons – and the growth of mobile-based foodservice purchases, said Rabia Yasmeen, senior research analyst at Euromonitor.

Convenience and saving time was also driving this sector, said Valentina Vitali, another research analyst at Euromonitor.

“As people become increasingly busy and the pace of their life becomes hectic, the easy and quick access to non-physical stores is the main determinant of the consumers’ shift to online purchases,” she said. “The optimisation of retailers’ online stores for mobile phones and the development of app-based stores allow customers to shop from wherever they are and at any time of the day.”

Retailers should also look to recipe boxes to embrace this trend, added Vitali, as it not only allows them to address consumer needs but also market products of their choice, like private label ranges.

Meanwhile, retail insight provider IRI identified e-commerce as offering huge opportunities for food retailers and manufacturers to meet the needs of a new generation of shoppers.

“Millennial and Gen X consumers are more at ease with online purchases than older generations, and as e-commerce becomes more of a routine, those shoppers are migrating offline efforts to save money to their online practices,” said Joan Driggs, vice president of content and thought leadership for IRI. “Online offers a lot of additional outlets for smart shopping, including easy comparison shopping and keyword search for more informed purchases.”

IRI predicts that sales of food and personal care in e-commerce will jump by 54% in the next five years and the FMCG market is ripe for further disruption online.

In a report, the company identified eight emerging trends as influential in this area.

1. Numbers can help personalisation

Big data facilitates, detailed understanding of individual shopper journeys and buying habits, leading to personalised recommendations through design, convenience and loyalty.

2. One-click ordering

Amazon is the king of this invention, but its patent expired in 2017. The quest for online retailers to alleviate shopping cart abandonment will see players focus on a shorter path to purchase.

3. Targeted rewards

Instantly redeemable rewards will tap into the desire for wanting everything now and strengthen loyalty to win a share of people’s wallets.

4. Versatility, speed and convenience

The ability to pivot between click and collect and home delivery in less time is high on retailers’ agendas, according to the report.

5. Geo-marketing

It pulls in on-the-go consumers or encourages impulse spending for those in transit. Promotions could help prompt in-store footfall or impulse buying online.

6. Shopping by smartphone

Over half of UK shoppers prefer using retailer smartphone apps ahead of their websites. At the very least, websites need to be mobile friendly.

7. Voice ordering

As smart devices increasingly enter homes, they bring convenience for shoppers. Integration of new platforms will be essential to ensure seamless, omnichannel experience.

8. Direct to consumer

Delivery has ushered in fast-growing FMCG brands like Graze, along with other start-ups and players, which can remove the need for retailers and also drive loyalty, personalised offers and repeat purchases. Retailers need to take a look at how their own brands can innovate on these product offerings in order to compete.

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