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11 e-commerce predictions for 2013

December 27, 2012

Each year we polish our crystal ball, meditate on the audacity of Nostradamus and swing for the fences with our annual e-commerce predictions. The big trends are continuing to be social, mobile, and local, with a healthy dollop of curated commerce with a free shipping cherry on top. But there are some other big trends that we see a lot of users experiencing.

Predicting the future is fun because nobody really gets ruffled when you miss it a bit. Last year I put together some e-commerce predictions for the last year, hit a few, missed a number. Feel free to take a gander and let me know how I did.

1. E-commerce #WINNING

“Did you know that in the past few years they have added an additional 36 hours to the last shipping cut off date for online orders to arrive before Christmas?” was the question posed to me my stepfather, Bailey, at the Christmas dinner table. I’m rarely surprised by a shipping quote; but, this one made me raise an eyebrow. I haven’t been able to find the data point; but, his point is pretty valid – you can order later, carrier cut-off times are later, and delivery is faster for best-selling items. It pretty much sums up why e-commerce is winning. Today it is a better experience and more convenient than offline. And Bailey isn’t even an Amazon Prime subscriber. Three people at the table (of 6) subscribe to Prime, they accounted for 75% of the consumer spending and a rough poll of their holiday spending habits shows almost all non-foodstuff being bought online with a huge percentage coming from Amazon. All digital goods came from Amazon and two Kindles were gifts. Is it game over for traditional offline retailers in 2013? Or will they live a few more years? The impact is going to be huge and it’s not just for retailers. Jeff Jordan (A16Z.com, eBay fame, very in the know) just wrote Why Malls are Getting Mauled, where he discusses the impact on commercial real estate.

2. The world won’t end in 2013… but it will be volatile.
Plan accordingly. The Mayans predicted that they would need to etch another calendar sometime around 12/21/12 to plan for the new epoch. Great, new calendar for a new year… makes sense. In the present we get to look back at the last 5 years, tighten our seatbelt a little, and strap in for another wild ride. The markets are volatile, economies are heavily subsidized, countries are touchy about manufacturing, and taxes and the big online players are hungry and sitting on war chests. We’re also seeing consumers getting increasingly well-informed, e-commerce sites getting more intelligent, and capital markets looking for winners. Expect to see the Titans continue to clash and e-commerce is going to be a scorched earth battle ground in 2013. It will be awesome and consumers will be the winners.

3. Target and personalize to me, don’t bury me with options… oh and make that deal sweet right now because I’m a VIP member.
New online-only retailers that have garnered a lot of sales over the past few years have been curated commerce companies. We all know about Fab.com, OneKingsLane, and Gilt. But vertical-specific companies like The Clymb and Huckberry are carving out their own vertical niche. In 2012 we saw a few new ones like sneakpeeq.com sprint out with new flavors of crowdsourced and socially-driven curated commerce. Part private-sale, part curated-commerce, part flash-sale, and part social commerce, sites like these are innovating quickly and attracting product brands to their distribution channels. The key is motivating buyers to look for deals on great pre-selected inventory and motivating immediate buying at the cross section of limited inventory and great deal with free shipping. The more personalization in the catalog, the better. Shoppers want sites to know their past purchases, know what their friends bought, and the initial page looked at to have the right product for them… followed by quick checkout. They won’t buy until they know others have liked the product with reviews and social reinforcement. Sites like Fab realize the value of curated e-commerce and so do others, which has even led to the recent lawsuit of Touch of Modern by Fab. The real future here is anticipating my needs based on past buying behaviors and inspiring me to think I want it…"Inception Commerce" anybody?

3D printing growth

4. Custom, on-demand, and just for me… now you’re talking.
One size doesn’t fit all and one style just isn’t for me. People don’t often talk about Shapeways, Bonobos, and Indochino in the same sentence, but there are similarities around inventory risk that makes for a better business model. Bonobos has a catalog that is niche and targeted with exceptional value-add with Zappos shipping speeds, costs, and support. Vertically integrated from design to manufacture. Shapeways and Indochino take it a step further: they are growing e-commerce sites that allow the buyer to dictate exactly what they want and the company has ZERO inventory risk with just-in-time manufacturing to fit the desires of the buyer. Shapeways prints on-demand using 3D printers (How cool is that!). Indochino custom-makes me a suit and shirts in 28 days. Neither company invests in inventory (other than materials). I like them both because I get to specify what I want in exchange for a small delay to get it.

5. Sell it, then build it… and lets get all of our friends to pay for it.
In a similar vein to custom on-demand commerce, if your inner entrepreneur has a great product idea, you no longer have to gamble all on your own to bring it to life. Welcome to crowdfunding with Kickstarter, Indigogo, and RocketHub. Ideas are becoming global brands before they ever get built. Take Pebble and Elevation Dock, two products that have raised millions of dollars in funding, and gained huge renown for creating great products. This model will only keep gaining traction. Product innovation is no longer only in the hands of huge multinationals. Don’t think this will be huge? Think again, the Federal government just passed special legislation in the Jobs Act to loosen securities and exchange requirements for startups to attract funding from groups of individual investors. Crowdfunding is here to stay and I for one am really thankful that Kickstarter tightened their requirements for projects so risks are more apparent. Crowdfunding is growing up fast and going global.

Forrester online commerce growth

6. Local isn’t just for food and services. I also support local “small business” brands.
Local deals were all the rage a few years ago (just think Groupon, Living Social, etc.) and marvel at the velocity of the local deals growth. But local is also very important for product sales. Just look at the huge press given to Amazon, eBay, and Google Same Day Delivery. Local Curated Commerce is more than just “products near me”; it’s products with a local flavor that are niche, special, curated, and reinforced with trends like social reinforcement and curation that I mentioned above. Enter Scoutmob.com and the daily deal sites going local (see Giltcity.com). I open Scoutmob emails because they have an eye on the trends that are going to run me over on my block. I also really like what my friends over at GoodEgg.com have going to create a platform for local food to go right to my taste buds. Local will always have a part in commerce, it’s nice to see it getting attention and investment.

Hubspot research... buying on Facebook not there yet

7. Social and mobile commerce is in its infancy and it’s already huge.
F-commerce wasn’t a failure… it’s just sitting there waiting for somebody to figure it out. Same with Instagram, Twitter, YouTube, and Pinterest commerce. The eyes and wallets are hanging out there like a school of fish waiting for a lure to bite on. Soldsie.com is turning every comment into a sales opportunity. Payvment tried a mall, now they are trying a wall with Lish.com. The shopping carts are feeding catalogs, images, and Buy Now buttons into social networks. Want to see explosive growth with social and mobile? Check out PoshMark.com – they just turned every woman’s closet and iPhone into a giant clothing swap. Mobile commerce isn’t huge, it’s freaking gigantic. Every retailer in the game has got a play and even the word ‘mobile’ is changing faster than you can say “iPad sales this year crushed all expectations.”

8. Buy today, get it yesterday… aka, I forgot I subscribed to that.
A few years ago for April Fools we announced we had invented predictive commerce – buy today and get it shipped with second day before yesterday shipping service. Hilarious, except it’s now here. Look beyond the same-day-delivery being tested in major markets by retailers and you see subscription commerce. Amazon has subscribe and save. There is also Shoedazzle, Birchbox, Dollar Shave Club, Beachmint, Foodzie… the list just goes on and on. Special shout out to my neighbors TheThingQuarterly.com who give the whole subscription model an artistic publication flair. So what is the trend? “Outsource my thinking.” I thought I wanted something today but my subscription service put it in the mail two days ago and I just need to open the door and check the mail (bonus points for not tripping on it as I get out the door in the am).

9. Wait, I’m paying tax on that online purchase?
States are broke and e-commerce is taking a lot of revenue from sales taxes. A collision has occurred and the states want a cut of what gets bought online. We’ve watched Amazon be a skillful boxer over the past few years as they bobbed and weaved around online taxes. Last year, they didn’t give up – they went all in. They traded taxes for local commerce and delivery times. Local retail will never be the same. Lockers to pick-up goods, Amazon Prime, Kiva robots, and massive warehouses full of product right outside of most major metropolitan areas all mean there is a sea of change about to happen in local commerce. Walmart, Target, BestBuy, and every local retailer sees it coming and probably still won’t know what hit them. Who will be the winners? Consumers.

2011-2017 Global e-commerce growth is huge.

10. There is a whole world of sales out there and it’s actually right next door.
Brands will continue to realize their customers are everywhere, even if there's a different language getting in the way. Barriers to entry for more and more smaller brands are being eroded by availability of cloud-connected storage and fulfillment locations all over the world. Case in point: Fruit Ninja is created by an English-speaking firm in Australia, but more than 2/3 of all their merchandise customers are in China. If they hadn't explored internationalizing their products they wouldn't be where they are.

11. Brands and retailers deepen their coopetition.
They need each other. One innovates for products, the other innovates for distribution. They both want to push risk and costs back and forth. Direct-to-consumer e-commerce continues to evolve and retailers are hacking at each other and asking trusted product partners for unique products and variants. Just look at Target asking its product suppliers to offer unique product variations so walk-in customers stop storefronting. For the last few years we’ve consistently emphasised that brands should throw their weight around more by developing better direct-to-consumer experiences and rely less on retailers. It’s happening… slowly.

Nate Gilmore

Nate is the Vice President of Marketing & Business Development at Shipwire. He oversees channel development and the developer network, as well as our marketing and public relations. Previously, Nate spent six years at Concentric (acquired by XO Communications), where he ran product management, sales, and marketing. Nate has also held various legal positions in intellectual property and business law. He holds a B.A. in History and a J.D. from Santa Clara University.