In the past, there were no trends, no e-commerce, people bought whatever was available and if they could afford it, and no one cared about the customer’s purchase path. Now, well, everything is more complicated.
That’s why we often use reliable reports that help understand customer behavior, provide expertise, and help deal with this ever-changing market.
Today we’re throwing on the main wall 10 Ecommerce Trends for 2022: Growth Strategies, Data & 17 Experts on the Future of Direct-to-Consumer (DTC) Retail, so stay tuned!
DTC Overtakes DNVB
The product is what makes people buy Direct-To-Consumer (DTC) even if they’ve never heard of it before. People come back only when that product feels bigger than another product.
Traditional Digitally Native Vertical Brands (DNVBs) are moving beyond DTC as an operational model to overcome scale challenges. Marketing and retention will increasingly become a philosophy based on one-to-one relationships but not governed by manufacturing and distribution ownership.
Direct sales channels aren’t the only thing uniting disparate verticals, but also “brand equity” and “brand purpose.” The value that customers attach to a brand. Since they own their relationships, people and products are more critical to DNVBs than price and location.
A marketing and retention approach is based on one-to-one relationships but is not controlled by manufacturing and distribution companies. This shift affects legacy wholesalers and DTC. One of the best examples of the first is Nike.
Through its advertising, social content, and product development, Nike embodies the best of DTC’s ethos: emotionally charged storytelling that enters its audience’s world without imposing its own.
Source: 10 Ecommerce Trends for 2022 report
A single channel is insufficient to stay visible and generate revenue in DTC. Therefore, the future of DTC will be omnichannel.
Post-Pandemic Times
Despite new growth, in-store retail leads online sales by over $15.21 trillion. Despite the Coronavirus’ acceleration of ecommerce adoption, brick-and-mortar has rebounded quickly. There are still places where people like their products.
The “retail apocalypse” bankruptcy count now stands at 135-landmark chains. The market share for legacy manufacturing is flat. Consumer packaged goods sales are declining. The lion’s share of new gains has been devoured by ecommerce.
Source: 10 Ecommerce Trends for 2022 report
Source: 10 Ecommerce Trends for 2022 report
Coronavirus catapulted five years of growth into one quarter in the US. In addition, COVID’s push towards online shopping marked a step-change in consumer behavior, despite a slight decline during 2021 (19.6%).
Source: 10 Ecommerce Trends for 2022 report
Facebook Remains the Social Media King
Over-indexed on Facebook and awash in rising costs, diversification has become DTC’s buzzword. And there are no channels that generate the same or better returns than Facebook and Instagram at the same or better volume.
Over the past year, worldwide ad spending has increased by over 200%, while Facebook active users have only increased by 41%. In addition, Facebook advertising costs have risen 53.9% YoY for especially ecommerce brands.
Source: 10 Ecommerce Trends for 2022 report
Besides the options mentioned above, DTC is expanding into traditional media (print, OOH, TV, and radio) and other discovery channels, including Snapchat, Pinterest, and YouTube. On less saturated networks, impressions and clicks are cheaper, and organic reach is higher. Yet, if measured in terms of “same or better returns than Facebook,” such channels don’t exist.
In human history, Facebook and Instagram have been the most effective and efficient sales channels. Why? Data, in a nutshell.
The Facebook pixel has been a part of virtually every website on the Internet for years, tracking in-app behavior across owned and rented properties. Unlike any other, a map of purchase intent has been created using that data.
Retention Accelerates Because of CLV
Lifetime is a long time when calculating a customer’s value. This is far too long for any business operating under real-world cash flow demands. Customer Lifetime Value (LTV) is one of the most important business metrics in ecommerce. It has no meaning. Due to this paradox, the cash multiplier provides a better conceptual model: based on your products’ reorder, repurchase, and upsell cycles.
Under a cash-multiplier reframe LTV, customer acquisition costs (CAC) will take center stage as a growth metric.
But LTV isn’t a built-in metric on any native ecommerce dashboard. So CTC developed the first iteration of this method for Bambu Earth. The analysis completely transformed the understanding of the business. For example, a 29x revenue increase was achieved by tracking LTV by first-product-purchased.
One ‘Future’ Formula for Ecommerce Businesses
There are four metrics that drive ecommerce growth: visitors, conversion rate, LTV (your cash multiplier), and variable costs: (V x CR x LTV) – VC = $
Source: 10 Ecommerce Trends for 2022 report
Without a doubt, that single equation is the future of ecommerce.
It will become increasingly crucial for brands as they transition from revenue-based models to profit-based models – from market share to dollars in their pockets – to identify the variables that will have the most impact.
“In the early days of Stitch Fix,” recalls Mike Duboe, “Katrina [Lake, Stitch Fix founder] found it difficult to raise capital, so she said, ‘We’re gonna become profitable and control our destiny.’”
In the eyes of many, Duboe represents a shadow cast over DTC. Having served as Stitch Fix’s Head of Growth, Duboe is now a venture capitalist at Greylock Partners.
AOV Optimization Compounds Gains in Online Shopping
Do price and optimization have a future? Surely! The majority of DNVBs hosted holiday promotions in a way that drove conversion rates and AOV without sacrificing brand value. An abbreviated summary of holiday deal structures and offers reveals how varied these tactics can be:
Source: 10 Ecommerce Trends for 2022 report
Source: 10 Ecommerce Trends for 2022 report
Even though that breakdown is telling, it points to a larger truth. Tactics that work aren’t significant. However, their combined effect is greater than the sum of their parts.
Multi-Channel and Demand
Two challenges arise from the proliferation of channels: structural and tactical. In the first case, marketing channels must be aligned with your business goals and competitive advantages. In the latter, social, search, and point-of-purchase are all rolled into one funnel.
Customer journeys today may begin on Amazon and end at a physical retailer or through an embedded buy button within an Instagram feed. By using organic search results, retargeting sequences, or paid distribution, online shoppers may be guided along the way.
Multichannel ecommerce model
Source: 10 Ecommerce Trends for 2022 report
Omnichannel ecommerce model
Source: 10 Ecommerce Trends for 2022 report
From a structural perspective, multi-vs-omni isn’t a wordplay. Especially when retailers merge O2O through too-often disjointed tech stacks, differences matter. It is more critical for DTC brands to connect demand generation with demand capture.
Source: 10 Ecommerce Trends for 2022 report
Additionally, DTCs must consider capturing demand: namely, the margin between creating awareness, interest, and desire through social and the final action through branded search.
Content Anchors the Funnel’s Analytics
AIDA analytics and a creative strategy that repurposes storytelling and aesthetics in paid media are what unify retailers proving content’s worth.
The power of ecommerce content lies not so much in its ability to sell directly – although it can. Instead, a well-told, consistent story that focuses on people rather than products is what makes content powerful.
There is no doubt that not all content is created equal.
Historically, B2C companies have produced so much B2C content without paying enough attention to results.
Source: 10 Ecommerce Trends for 2022 report
What’s more, content has become the leading competitive advantage for ecommerce brands due to two factors.
Source: 10 Ecommerce Trends for 2022 report
And what are the best ways to measure your content?
With AIDA’s model!
Source: 10 Ecommerce Trends for 2022 report
Intimate Customer Experience with SMS > Social Commerce
“SMS and mobile messaging will overtake all channels as the primary source for people to reach out,” says Vanessa Skaggs, Marketing Manager at Pura Vida Bracelets. “It’ll all take place on little, tiny keyboards on the phone.”
Despite all the hype, consumers aren’t buying in-app purchases on Facebook and Instagram.
Customer intimacy won’t be achieved via social platforms but through tiny keyboards. According to every big-picture metric, social media and in-network commerce should be a match made in heaven.
Global penetration, active accounts, and time spent are all up. Shortening the sales funnel, enabling customers to buy instantly, and reaping the rewards of intimate relationships have long been promised. However, it is not necessarily working. Thus, social users aren’t buying despite releasing numerous “native” purchasing features.
Source: 10 Ecommerce Trends for 2022 report
Instagram and Facebook are rumored to be developing their own ecommerce sales platform, and Zukerberg hinted at it during last year’s earnings call. After Amazon posted two consecutive years of +50% growth in advertising revenue and Apple’s ad revenue jumped from $500 million to $5 billion in 2021…
Marketplaces and platforms aren’t about sales; they’re about ads.
International Ecommerce as New Normal
The world is now within reach for the first time in history. But the process of navigating beyond borders is not without its challenges. However, medium retailers can directly sell across the globe with the flip of a switch, once the domain of global conglomerates.
Source: 10 Ecommerce Trends for 2022 report
Source: 10 Ecommerce Trends for 2022 report
The ads ran between January and May with no attention – minuscule impressions of around 100-500. In June, a 3.5 ROAS was achieved out of the gate for Coddou and CTC’s Senior Media Buyer Trent Kerth.
They turned it up, and both Supply’s international and domestic returns held:
International ecommerce is not a fairy tale with a happy ending but hard work that brings impressive results after a lot of effort. For example, you need to remember to translate your site. Once you do that, you will start getting emails in that language, and then you will start having people expecting instructions and support in that language.
Coddou does not exclude this type of consideration. Depending on the region and size of the operation, the company may need more native efforts.
Over to You
You already know the most popular ecommerce trends, so you might wonder if you’ll be able to adjust to the prevailing market conditions. Well, there is a world of opportunity for DTC leaders to evolve or perish, and success comes from both big and small steps.
Therefore, don’t let global opportunities pass you by. Find creative workarounds and trusted partners instead. Be prepared for many challenges, and don’t give up.
