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Rachel Hobble
Rachel Hobble 8 February 2019

Retail Recap: 2018 eCommerce Developments

2018 was a year of change for the retail industry. New advancements in technology, shifting customer expectations, and increased competition forced retailers to re-evaluate their priorities and find new ways to grow. Here were some of the major developments eCommerce solutions provider Virid observed in 2018:

GDPR

Perhaps the biggest change in the retail industry this year was the implementation of the EU General Data Protection Regulation (GDPR). Although it was designed to protect the data and privacy of EU citizens, the GDPR affected more than just businesses in the EU. US retailers that operate in Europe or hold data on individuals from Europe had to make adjustments to achieve compliance or risk being penalized with massive fees. The handling of personal data by businesses has been under increased scrutiny, particularly after the Cambridge Analytica scandal in early 2018. Furthermore, news of breaches from large retailers like Macy’s, Saks Fifth Avenue, and Forever21 throughout the past year have shaken consumer confidence–currently across the general US population, average trust in business is recorded at just 43%. The effects of the GDPR have left many wondering if a similar regulation will be coming to the US; and while that is still up for debate, there is no doubt that retailers will need to work hard to bolster brand trust with consumers in 2019.

Customer Experience

As predicted by many experts, customer experience was king this past year. “Experience per square inch” became a new KPM for retailers, and CX overtook price and product when it came to retail success. As Senior Vice President for Google Ads, Sridhar Ramaswamy, put it, “Consumers have never been so hard to please and marketers have never had as many opportunities to please them.” And according to Adobe’s Digital Trends 2018 report, organizations committed to CX are shown to outperform their competitors. CX is expected to continue to be a top priority for retailers in the new year.

Artificial Intelligence

Artificial intelligence is becoming increasingly commonplace in retail transactions. In fact, Gartner predicts that 85% of all transactions will be AI-based by 2020. Utilizing AI has been increasingly important for retailers in the battle against Amazon, who has already launched cashierless Amazon Go stores and incorporated AI along their supply chain. Additionally, voice search was impossible to ignore in 2018. Gartner predicts that voice-activated searches will account for 30% of web-browsing sessions by 2020. And a report by OC&C Strategy Consultants reported that voice-powered commerce accounted for $1.8B in US retail revenue in 2017. This is expected to rise to $40B by 2022. More and more retailers have incorporated AI into their customer experience, reaping the benefits from improving customer communication to preventing theft in brick-and-mortar stores. Use of AI is only expected to grow in 2019.

Augmented Reality

Retailers made strides in augmented reality this year. Wayfair, for example, introduced a new AR feature in its mobile app that allows customers to visualize furniture in their own home before purchasing, simply by holding up their smartphone. Even historically traditional brands like L’Oreal began incorporating AR in their customer experience. In March, L’Oreal acquired Modiface, which helped the brand launch its Style My Hair mobile app, which lets users virtually try out different hairstyles. By giving customer greater flexibility in their shopping experience, and by allowing more shoppers to “try before they buy,” AR could help improve CX, reduce returns, and increase overall customer satisfaction.

Hyper-personalization

Along with the rise of AI and AR have come increasing focus on personalization in the customer experience. Using the data collected on shoppers from their interactions with a brand across multiple channels, retailers are able to create a tailored shopping experience to match their individual interests. Some of the retailers leading the pack in personalization include Sephora, The Body Shop, and Walmart, who topped Sailthru’s Annual Retail Personalization Index, which ranks the retail industry’s top brands according to how well they personalize the customer experience.

Supreme Court Tax Ruling

In June of this year, the US Supreme Court ruled that all states and local governments are now allowed to require online retailers to collect sales taxes, even if they do not have a physical presence in the state. By November, at least 27 states had applied economic nexus statutes that followed the South Dakota model, and many states began applying penalties and interest on businesses that did not comply. The additional costs to retailers in achieving compliance has proven to be a significant burden, and many are scrambling to address the tax changes. If you haven’t already, we advise you to speak with your eCommerce platform provider to help you make the necessary changes to your site. 

Rise of Omnichannel

Omnichannel proved to be more than just a buzzword in 2018. According to a study by Harvard Business Review, 73% of shoppers used multiple channels during their customer journey. True omnichannel commerceinvolves a seamless customer experience across multiple channels, including digital and brick-and-mortar. Retailers strove to improve the customer journey with offerings like Buy Online Pick Up in Store, Shop by Store, and by selling on marketplaces to reach customers when and where they wanted to shop. Additionally, beyond simply optimizing eCommerce sites for mobile, retailers began building their site with a mobile first mentality to meet growing consumer demands.

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