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The e-commerce market. Opportunities and threats.
1. Changes in the e-commerce market.
Over the past decade, the e-commerce market has undergone a tremendous transformation. Initially, sellers treated this type of activity merely as a small addition to their brick-and-mortar stores. No one even imagined that it would change so dramatically in just a few years. According to the report from the Chamber of Electronic Economy, during this period the number of people who shopped online has reached 9 out of 10, reflecting an increase from 45% to 87%.
It is undeniable that the COVID-19 pandemic had a significant impact on this change, forcing businesses to implement online solutions and their customers to quickly adapt to this highly digitalized environment.
Moreover, sellers gained the ability to reach a larger audience, regardless of their location on the world map.
2. Possible areas for implementing changes.
The biggest area for change and competition among companies is the speed and accuracy of order fulfillment. This necessitates significant effort in managing shipments and returns. Both the timeliness and correctness of order processing are crucial.
A rapidly growing trend now is ‘quick commerce,’ which in some areas offers lightning-fast deliveries within 10-15 minutes, or at least same-day delivery.
The increase in online orders also means that a company gains a large amount of customer data, which can be used for more precise profiling and targeting subsequent actions according to their preferences and interests.
3. Market analysis.
To analyze the e-commerce market, several factors need to be considered:
– inflation. Prolonged inflation encourages customers to shop online, where they can find lower prices and attractive promotions. Alongside this trend, it is easy to notice an increase in consumer awareness. People are buying more thoughtfully, carefully analyzing prices, and selecting the most attractive offers for themselves.
– the use of modern technologies. Innovations that support the operation of online stores drive the growth of online sales. Automation of logistics processes, increased availability of parcel lockers, and deferred payment options encourage customers to place orders. This improves the competitiveness of online offers compared to brick-and-mortar stores. Mobile transactions (“mobile first”) are also leading the way, as they can be made at any time and place convenient to the consumer. These transactions do not depend on access to offices or computers, as a smartphone is a device that almost no one parts with.
– the fight for customers through marketing campaigns. Well-conducted advertising has the power to influence consumers’ purchasing decisions.
– changes in customer profiles related to generational shifts and established consumer habits. Younger generations see online shopping as a completely natural activity, whereas older generations need appropriate encouragement and motivation to engage in it.
– unpredictability. One must contend not only with inflation but also with weak demand, increased tension on the international stage, and the proximity of military actions in Ukraine.
Consumers choose offers that are most convenient for them. Online store owners, wanting to keep up with trends and increase sales, must stay interested in available innovations and consciously develop new distribution channels.
The key to success is coordinated management of various channels in conjunction with an extensive supply chain.
4. Recognised threats.
E-commerce is not free from risks, however. The major ones include:
– security breaches and account takeovers,
– theft of data from store websites and passing it to competitors (including prices, product descriptions, etc.),
– fraud in payment card transactions and attacks on gift cards.
Intense competitive actions can lead to a price war, which significantly affects profit margins and business profitability.
Changes in data protection regulations can also be problematic. They impose numerous restrictions on digital marketing, weakening sales and promotion strategies.
5. Conclusions.
Many opinions suggest that it will be challenging to return to the stable and predictable times of the second decade of the 21st century. The most reliable business model will need to be based on operating in a volatile and highly uncertain environment. This requires implementing numerous changes and modernizations in current processes.
Analyzing data available on industry websites, it can be concluded that since January this year, a noticeable decline in demand has been observed across all sectors. Double-digit inflation and geopolitical factors play a significant role in this. Experts predict that everything will pick up once the war in Ukraine ends.
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