As the pandemic enters a third year, the prolonged growth of e-commerce sales permeates through an ecosystem of suppliers, sellers and customers. The global e-commerce market is predicted to hit $5.5 trillion in 2022, an increase of over 12 percent on 2021, with that number expected to skyrocket to $7.3 trillion by 2025.
The success of retail e-commerce provides a Launchpad for small and medium-sized businesses to expand their in-store offering to emerging online markets around the world through marketplaces and online store fronts. However, some may be mistaken for assuming the battle between brick-and-mortar stores, and online shopping, has already been fought and won, but this is not the case.
Brick-and-mortar sales in fact grew faster than e-commerce sales for the first time ever in 2021 with physical store sales growing at a rate of 18.5 percent, versus 14.2 percent for e-commerce. With this, e-retailers must diversify their offering in order to keep up with a growing customer base split between online and in-store shopping.
In-person versus online shopping
Whether the resurgence of brick-and-mortar sales growth is temporary or permanent is an unknown factor in a complex issue. Vaccine distribution is well underway, with nearly 64 percent of the world’s population at least partially vaccinated, numerous people wish to take advantage of the freedom that comes with in-store shopping, valuing experience over convenience.
Although the online marketplace of products is near infinite, the physicality of products is an important facet in the conversion of customers. Return rates of products bought online is also over 3 times higher than in-store, at 30 percent compared to 8.9 percent. There are barriers to entry for retailers wishing to develop an online presence, but with an abundance of new and innovative methods of winning new customers and expanding into new markets, the opportunity is there for those entrepreneurial enough to seize it.
Continued rise of Global Commerce
For online retailers to compete and capitalize on the opportunity presented by expanded international growth, a global strategy is necessary. 19.6 percent of global retail sales came from e-commerce in 2021, with that number expected to jump to 21 percent by the end of 2022, and 24.5 percent by 2025. These figures illustrate the market potential for vendors wanting to make the jump from domestic supplying and selling, to cross-border. Amazon (40.4 percent), Walmart (7.1 percent) and eBay (4.3 percent) make up over half of all e-commerce sales in the U.S., receiving a combined 7 billion views each month in over 200 countries, providing a well-known entry point for small or medium sized business.
However, for e-sellers to initiate global e-commerce growth, a robust payments strategy is paramount. The ability to make rapid cross-border payment to suppliers in low-cost destinations like China, Vietnam and India can improve seller-supplier relationships and diversify their supply chain. The diversification of online shopping channels is also paramount for business growth, targeting diverse demographics of age, geography and income.
Ingenuity of social commerce
35.9 percent of internet users in the U.S. made at least one social commerce purchase last year, and with 8 in 10 U.S. businesses hope to be selling on social media within the next three years, social commerce is fast becoming an indispensable means of selling.
Social commerce has created a new dimension to the online shopping experience by capitalizing on the shortening spans of a youthful consumer base. Accenture predicts that social commerce will grow 3 times faster than traditional eCommerce by 2025. This illustrates that although it is an emerging market within the payments ecosphere, it is among the fastest growing, and provides sufficient opportunity for SMEs to scale their business.
Facebook and Instagram were the most used social commerce channels last year, with 56 million and 32 million active buyers respectively, in the U.S. alone. Small and medium sized businesses can grow their online presence by selling their products through marketplaces to propel consumer interaction, using imagery and promotions to attract new customers, and encouraging user generated content such as product reviews, recommendations and endorsements. Companies like PingPong Payments help businesses looking to venture into the international market by transferring funds into local currencies, providing rapid cross-border payment and connecting sellers with suppliers to ensure dynamic working relationships.
Industry expert and Managing Director of FinTech Unicorn PingPong Payments, Kenny Tsang, addresses the brick-and-mortar vs e-commerce battle for consumers, and how online businesses can succeed in 2022.
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