Remember when we used to spend hours browsing in a book store in order to find our next read? What about the time we’d spend visiting different stores in-person so that we could comparison shop? Today, thanks to e-commerce, we don’t have to.
Companies now are all about easing the life of consumers. The more relaxed the consumer experience, the better chances you have of making them regular customers who are, essentially, a volunteer sales team for you.
A couple of significant shifts have occurred in consumer behaviors over the past few decades, especially when you look at the impact e-commerce has had. I have been a professional investor for the past ten years and have seen countless e-commerce businesses come and go. Through this experience, I’ve seen these consumer behaviors shift firsthand. Let me share a few insights with you:
From Brick To Click
Although some shoppers still prefer the experience of going to a physical store or being able to engage with the products in-person before they buy, e-commerce is thriving. In 1998, roughly 0.2% of all retail purchases were made online, according to the Department of Commerce. In the fourth quarter of 2019, online purchases comprised nearly 12% of all retail sales in the U.S. — or $158 billion.
So, what caused this change?
For starters, consumers are able to compare dozens of stores and products at once for both better prices and wider selections. Shoppers can also see the reviews and ratings of products within just a few clicks. Convenience plays a big role, too. Consumers now can access millions of goods from all over the world through their phones or computers.
We have been bullish on e-commerce sectors for over a decade now. However, it is unbelievably more competitive than ten years ago. That being said, e-commerce founders need to focus on two things:
1. Improving customer experiences;
2. Providing product quality above and beyond what the consumers are looking for.
Oftentimes, I’ve seen that founders bet all of their resources on finding the next best traffic sources and thinking that customers will magically come back and purchase again. In reality, that approach doesn’t work. It costs significantly less to monetize from your existing customers than trying to find new customers. Also, the better the quality the customers are, the higher their lifetime values are. This is why it’s critical to provide exceptional customer experiences if you’re operating an e-commerce business today.
From PCs To Mobiles
In 2015, mobile phones annd tablets surpassed computers and became the most popular device to use when shopping on Amazon. You might be asking, “What’s the difference? Isn’t it all e-commerce, no matter the device?” The answer is, there are distinct differences between shopping on your phone versus a computer.
First, mobile screen sizes are significantly smaller than PCs. Fitting lots of products onto one screen isn’t feasible. This is why digital marketers leverage data to display products based on consumer interests and intents. And later on, they can reuse this data to retarget consumers and further increase customers’ lifetime value.
Second, mobile consumers typically don’t have physical keyboards on their phones. This can make the checkout process challenging if there are many steps and form fields to complete. As a result, many companies have come out with improved electronic payment systems that use face recognition software, digital wallets, etc.
The biggest mistake that a founder can make is overlooking the importance of the mobile experience for consumers. Mobile commerce, or m-commerce, is on the rise. Not only are the user experience and checkout flow essential for mobile users, but it’s also crucial that founders understand why customers might opt for mobile over PC. One example shift is that mobile users enjoy the convenience and speed of mobile shopping, so you want to make the checkout flow as minimal as clicking just one button.
From Human To Algorithm
With the increasing demands of e-commerce, the need for better and faster customer services is also an essential thing for companies to succeed. In the U.S. alone, it’s estimated that companies lose $75 billion a year due to poor customer experiences. This is why the customer relationship management industry is booming.
CRM software not only allows companies to automate the workflow for better and faster customer experiences, but it also enables companies to study their customers’ unique personas. By analyzing their buyers’ personas, companies can then use this knowledge to further target advertising on similar audiences in order to reduce customer acquisition costs. And in recent years, companies have developed a new category of solutions to transform customer behaviors even further by using artificial intelligence.
However, I do not recommend that founders put too much attention on developing an algorithm before you have a successful brand. It’s like building a bigger engine without a car. Once you have a decent sales volume, you can develop algorithms that understand your customers better and provide relevance and highly personalized recommendations. For instance, Amazon now uses machine learning to study consumer search queries on its website, among other things.
How will the customer behaviors evolve from here?
With fast advancements in technological capabilities, companies are able to collect an enormous amount of data instances about their customers. But, this has sparked criticisms about privacy concerns, which is important for entrepreneurs to consider. However, digital shopping is here to stay, at least for now. For founders who want to be successful in building e-commerce brands, they need to study their customer personas, close the feedback loop and index the feedbacks. This way, you can ensure you understand the pain points of their customers and build customer loyalties consistently.