The COVID-19 pandemic has forced many businesses to go digital. What started as a crisis response has now become the new normal. In addition, digital transformation has accelerated the development of the online marketplace industry. According to Statista, the pace of digital change in the E-commerce and retail sectors has accelerated by 70% post-pandemic.
People are increasingly purchasing products online, and the number of online marketplaces is growing every day. This trend is expected to continue. NASDAQ predicts that by 2040, 95% of all purchases will be made through E-commerce platforms. At the same time, business owners may face challenges like economic uncertainty, changes in customer behavior, and many other social and cultural issues that may affect the industry.
In this article, we'll look at the future of the industry and identify the most important online marketplace trends that will likely have an impact in 2023 and beyond. We hope that this information will help you get ready for upcoming changes, be able to adapt to them, and offer your customers more flexible operations in the future.
Without a doubt, the coronavirus pandemic has fueled the growth of online marketplaces. Self-isolation and restrictions on travel have all led to a rise in online sales, which are still going up and will reach $6.5 trillion by 2023.
More and more businesses are getting involved in creating online marketplaces. A recent report by Mirakl says:
At the same time, the industry is not only growing but also changing. Some even predict that the domain of online marketplaces will enter a new era. It's all because we witness a lot of changes in the customer's behaviors as well as their requirements. Technology has a big part to play in this change, but it's not the only thing that's causing it.
It is impossible to ignore the fact that economic instability is affecting a lot of domains right now. More specifically, businesses have to deal with the aftereffects of the global pandemic, russia's armed invasion of Ukraine, economic issues, and the reality that technology is constantly improving. While we don’t know to what extent exactly these and other factors will affect E-commerce, we need to keep them in mind to face a new reality.
By analyzing the current state of online marketplaces and doing research, the Wise team found key trends that are likely to change the way the industry operates. Let's take a closer look at what will become the defining characteristics of the domain moving forward.
In the next few years, cutting-edge technologies like artificial intelligence (AI), algorithmic merchandising, the internet of things (IoT), augmented reality (AR), virtual reality (VR), cloud computing, blockchain, voice search, and more will be widely used in the online marketplace industry. All of them, relate to digital transformation, which revitalizes old processes and enables new innovative opportunities.
Basically, digital transformation is going to make E-commerce more engaging. By 2023, $53.3 trillion of the world's nominal gross domestic product (GDP) is expected to come from businesses that have changed because of digital transformation. Digital transformation and automation are also helping to make processes run more smoothly, which has a positive effect on the global economy and is very important for dealing with possible economic uncertainties.
Looking ahead, the reliance on AI is set to grow immensely. The revenue from the AI software market is expected to reach more than $100 billion in 2025. The McKinsey Global Institute predicts that by 2030, more than 70% of companies will have used at least one type of AI technology.
There are two ways AI can be used:
With AI algorithms, data from APIs and user data can be analyzed and insights gained that were not possible before. By knowing how customers behave, what they choose, and what they like, businesses can offer more relevant products and a feeling of personalization. Besides, it is possible to find the product that sells the most, the marketing campaign with the highest return on investment (ROI), and so on.
Merchandising algorithms are created with the use of advanced data and analytics. These algorithms help optimize the store’s inventory based on the location’s demands and select the price and promotion methodologies effectively. As a result, you can be sure that inventory is managed correctly, which can greatly improve sales, profit margins, and customer satisfaction throughout the process.
Online shoppers can't try before they buy so augmented reality is a great way to help them make decisions. With the help of AR, you can imitate the real, physical world through computer-generated visuals or sound. Research shows that 61% of consumers prefer buying from brands that allow them to experience their products with AR, and by 2024, the AR market will be worth more than $50 billion.
We are already seeing some excellent examples of AR integration. For instance, IKEA allows you to select a piece of furniture and see how it will fit into the room and decor. Customers can choose and buy the right furniture without having to switch between platforms to make sure they buy the right thing right away.
The Metaverse to mimic shopping in real life is becoming closer to us, and now we are seeing the rise of a separate vector of technology called V-commerce. Using a special headset, a virtual reality simulation puts the user in a computer-generated world that looks and feels real.
There are a variety of ways in which virtual reality benefits online marketplaces. For example, it allows customers to make social purchases together with their friends. Customers can interact with their friends and try on outfits without having to leave the site. Moreover, they can ask their friends to vote on what they should buy or not. As a result, online marketplaces may evolve into brand communities that connect people with shared interests.
Chatbots are becoming more sophisticated. The global chatbot market is forecasted to reach $3.99 billion by 2030.
Using chatbots is a great idea because the need for immediate responses is growing by 64% every year. Personal assistant chatbots help streamline online shoppers’ journey from acquisition to retention: they can let shoppers know about sales, provide service 24 hours a day, handle complaints quickly, answer FAQs, pull up user reviews, and give recommendations to encourage a purchase.
According to research, 62% of millennials and Gen Z prefer to use visual search, yet just roughly 8% of E-commerce firms provide this feature. AI-powered site search uses machine learning and natural language processing (NLP) to define what a customer is trying to find and show the most relevant results. AI development has also led to visual search, which lets shoppers do searches with pictures instead of words.
One of the examples of adopting image search in E-commerce is ASOS, which introduced its own feature called Style Match. Customers may use Style Match to upload a photo of an item they want to buy online. They will then receive a list of goods that are most comparable to the provided image. Customers who are unsure of what keywords to use while looking for an item benefit from this functionality a lot.
The social+ movement, which is based on integrating online stores with social networks, is another important trend that plays a big role in how marketplaces are changing. By 2026, social media platforms will bring in $2.9 trillion, which is a lot more than the $992 billion that is expected to be made this year.
Some of the biggest companies and tech giants are already taking steps to use the social+ idea.
The social+ strategy works the following way: the store can involve creating shoppable video ads (TikTok, Instagram, Facebook) to engage the audience. Customers can buy the items shown in these videos right away by clicking on links that are built into the videos. At their core, most social+ stores offer chat, voice, and video, along with ways to interact, like reactions, stickers, and filters.
Right now, the E-commerce landscape is becoming increasingly dotted with narrow-focused platforms – brand or vertical marketplaces. Customers can get more value from vertical platforms because they meet their unique needs and wants. That includes personalization, growing communities, and providing customized service with online shopping. Certain products are targeted at particular customers and create a one-stop shop.
Whether it is a single or multi-vendor marketplace, if it offers everything for everyone in one place, the chances are high that it will fail to satisfy customers' demands. Instead, a more focused approach of offering specific products to specific audiences provides buyers with exact matches for their search queries.
Here are some inspiring examples of startups we’ve been working with that have developed vertical online marketplaces.
Another important trend we can't ignore is the change in customer behavior, which has many different components.
The customer now looks for better pricing, a smooth and hassle-free journey to checkout, timely delivery of orders, and an effortless returns process. These ever-increasing demands and expectations are pushing the organization to opt for newer technologies to keep up with the pace of customer demands.
Smarter HQ research shows that 72% of customers are willing to buy only from brands offering a personalized experience. By implementing person-oriented features, business owners can get better revenue and reduce the bounce rate by up to 45%.
Personalization can be done with the help of AI by analyzing customer profiles, their interests, and how they use a website. By finding out about the people who visit a website, it's possible to make it fit their needs and interests. One of the most vivid examples of providing a customized experience is Vans, which lets its customers brighten ordinary shoes with their favorite art or photo. As a result, the company allows customers to create a distinctive design.
Another shift in customer behavior will be determined by the omnichannel presence – selling products and services across different channels. Cybra research shows that companies with a strong omnichannel customer engagement strategy keep about 89% of their customers, while those with a weak strategy only keep 33%.
Determine which channels are particularly popular with your customers. Set a specific target for each channel. You might, for example, utilize one channel to communicate with your customers and another to share the news. Keep track of the results and evaluate them to make sure your omnichannel approach is working well.
95% of customers think that customer service is very important when they buy something online. Problems with a service can make people refuse to purchase, and it is the company's job to help.
41% of customers choose live chat over other ways to get help, like the phone or email, because it gives them the service right away. Therefore, investing in providing responsive live chat can be a good idea. For instance, chatbots can help answer simple questions and figure out if a customer needs more advanced help.
Giving customers different ways to pay, like credit cards, debit cards, and online wallets gives them more freedom and makes them buy more if they can use their preferred method. That’s why it is critical for any online marketplace to accept digital wallets such as Google Pay, Apple Pay, and PayPal.
Besides, many people in the future might want to use other ways to pay, such as cryptocurrencies and eWallet systems. For instance, Newegg has started using Blockchain technology and now accepts Bitcoin as a payment method. Also, in 2021, the new cryptocurrency Dogecoin became the official way to pay at New Egg. Meme coin prices have climbed dramatically in recent years. It's owing to the recent surge of cryptocurrencies in the online marketplace industry.
Giving customers the option to shop on their phones is no longer a perk, but something they expect. Customers pick M-commerce again and again as their preferred channel for shopping. By 2024, global retail M-commerce sales are expected to reach nearly $4.5 trillion and make up 69.9% of total retail E-commerce sales.
In the coming years, it will definitely be essential to build a marketplace app with a mobile-first experience. It also means offering phone-friendly payment options (like Apple Pay and Google Pay) and making mobile checkout a breeze. Here are great examples of E-commerce companies designing their own mobile applications.
Another option is to turn your current platform into a progressive web app that loads quickly, allows users to get push notifications, and works offline. With this technology, mobile shoppers can use browsers like Google Chrome and Safari to get an app-like experience on their phones.
In a few years, generations of zoomers (1997-2021) and millennials (1981-1996), from 18 to 34 years old, will be the two dominant consumer groups worldwide. So, retailers need to learn more about this target market and change their online marketplaces to fit their buying habits. Here are some of the key statistics about these groups.
As you can see, mobile shopping and integration with social media platforms are highly important for Gen Z. Social commerce and apps like Instagram, TikTok, Snapchat, Spotify, and Twitter play important roles in their daily lives. So, offer suggestions from influencers that people know and trust, as well as easy-to-use ways to buy.
Aside from that, Gen Zers would rather talk through instant messaging than over the phone. That’s why it is preferable to employ AI in online marketplaces trends as communication channels, such as messengers and chatbots.
Customer-centered and supportive DEI (diversity, equity, and inclusion) efforts, which are especially important for Gen Z, are another important part of market growth after 2023. In general, diversity means honoring differences while incorporating variety and fairness into the general population. Here is some advice on how to incorporate DEI for your business.
BOPIS, which stands for buy online, pick up in-store, and ROPO, which stands for research online, buy offline, are two modern buying habits that will affect marketplace app development in the coming years. Let’s see how they work.
User-generated content (UGC) is content contributed directly by customers. Most of the time, it's customer reviews and other stuff that displays genuine customers and what they've done. On TikTok, UGC videos managed to be 22% more effective than brand videos. No wonder why, because 72% of customers say user reviews are more reliable than a brand's own advertising. That’s why this tendency will definitely impact marketplace app development.
Trust matters and UGC can assist brands in earning trust while driving real engagement. UGC provides marketers with valuable feedback on how the audience utilizes things and feels about the brand. By adding user-generated content to your store, you may be able to get more customers to interact with your website or social media pages.
Responsible consumption does not appear to be a passing trend in the marketplace. In fact, more and more people these days prefer eco-friendly items – 65% of customers say they prefer to buy from companies that use nature and recycle technology in a smart way. The following is advice to make your brand more environmentally friendly and align with the current market trend.
Where are marketplace development trends heading in 2023 and after it? Digital transformation, new customer behaviors, and growing economic instability all have a role to play in the future of the online marketplace. Here are key tendencies that we've noticed.
Taking into account the great number of changes in the domain, online marketplaces will have to put in a lot of effort to adapt to new realities to stay competitive in the market. If you require assistance in marketplace development or need end-to-end marketplace MVP development, the Wise team is ready to help you.
As a marketplace development company, we will be happy to help you make a project that is easy to use, interesting, and technologically advanced. Contact us to discuss your ideas.