Mary Meeker, the much-lauded and respected tech VC (having back companies like Airbnb, Houzz and Slack) has released her annual trend report.
Now the must-read across the industry, this annual deep-dive distills the year thus far and her predictions for where the space is headed.
At 333 pages long, the report certainly provides a hefty portion of food-for-thought – so we picked out the key takeaways for ecommerce marketers in a more digestible format.
Ecommerce now accounts for 15% of retail sales – up from 12.4% in Q1 of 2018. This is in stark contrast to offline retail which has only seen growth on 2% in Q1. Meeker however still notes this growth as being “solid”.
As online retail continues its path of domination, forward-thinking retailers (particularly those with bricks-and-mortar offerings) will do well to consider the customer experience across the online/offline divide. Our predictions for the future? The rise of the ‘experiential’ store that focuses on creating engaging experiences aimed at building rapport and loyalty rather than footfall and sales, with increasingly smart in-store tech joining up the customer dots to recognise individuals both online and offline.
Meeker notes that the top reason for a customer trying a new product is it being recommended it (23%). Word of mouth and referral marketing continues to gather steam, with customers seeking out recommendations and actively enjoying this element of the shopping experience.
What’s interesting is that this extends beyond being recommended an item by a friend – or even an influencer – to the rise of personalised recommendations from businesses themselves or machine-learning tools. She uses the example of online personal styling service ‘Stitch Fix’ who sell 100% of items based on recommendations (although, due to the nature of the brand, stylists’ clothing suggestions fall under this moniker).
Product recommendations will continue to increase and become a tool for customer retention. With advances in machine-learning, predictions of what customers may want to purchase next will become hyper-personalised. Brands will need to focus on perfecting the recommendation functionality of their platforms (so that they feel truly personalised) to maintain the loyalty of their shoppers.
After news of the Instagram in-app check out, it should come as no surprise that social apps will continue to be more shoppable. Before the development of this checkout, which is currently still being BETA-tested with select American brands, customers were using social media as an online catalogue to inform their next purchase. Facebook has also begun releasing payment functionality on Whatsapp Business. This creates another social-channel-cum-ecommerce-channel that retail marketers may be interested in turning their attention to drawing influence from Asiat where brands like Japan’s ‘Line Pay’ recently partnered with Visa to encourage easy mobile payments.
‘Stories’ have seen a steady increase across the year with Facebook now at 1.6bn users sharing their own. This is also similar across Instagram – who have now also added functionality enabling IGTV clips to be shared in stories and posts as previews – which are proving more popular than traditional posts, as noted by Zuckerberg himself.
The integration of social messaging, ecommerce and pay functionalities may continue to spread, considering the increasing amount of time spent on social networks. This could work to completely re-shift the customer journey as we know it, increasing impulse purchases and shortening the time between browse and purchase, and increasing social proof via sharing and discussion of items bought. WeChat in China already has a similar framework and has seen an increase in its number of users after introducing a payment functionality.
Brands will turn to marketing through social media stories to embed themselves within the customer experience or an increase of creating marketing messages that appear in-between customer stories.
Online ad spend continues to increase, up 22% from last year. As social continues to be the channel of choice for shoppers, this is reflected heavily in where ad spend is distributed. While Facebook and Google take up a large portion, other companies like Twitter, and especially Amazon (which has seen a 42% increase in ad revenue) are steadily catching up. In short, this means digital advertising is set to get expensive.
But what has led to these companies taking over the lion’s share of ad space? Relevance. With better targeting and machine-learning predicting customer tastes and serving them experiences (whether via product item, music playlist or online video). As noted by Meeker the formula for ‘effective + efficient marketing’ is one’s own product + happy customers + recommendations.
As social ads become evermore expensive for customer acquisition, marketers will spend more budget on targeted ads or have to become increasingly strategic with the specific paid ads they use. Spending is already up to 22% (a 1% increase on 2018) highlighting the battle for space.
Ensuring every marketing message is tailored and feels like 1:1 personalisation to the customer is the best way to encourage them to stay loyal to your brand. Key to this is ensuring a joined-up experience across all channels (email to social to direct mail and more) that makes sense in the context of the customer journey.