AI and Dark Stores among key e-commerce trends to watch out for in 2020

By Vikram Bhat, Chief Product Officer, Capillary Technologies

According to an industry report by IBEF, the Indian e-commerce industry has been witnessing tremendous growth and is expected to surpass the US to become the second largest e-commerce market in the world by 2034.While it presents a massive opportunity for retailers, the industry has been characterized by rapid transformation in terms of product innovations, new channels and augmentation of emerging technologies.

This prediction report aims to uncover the technological and customer trends that are likely to make the biggest impact on e-commerce in 2020 and beyond.

1. Rise of Hyperlocal Commerce

While books spurred the initial ecommerce momentum, fashion/apparel and electronics, the next phase of growth – especially in emerging economies like India and the Middle East. This growth will be fueled by hyperlocal-based SKUs like grocery, personal care, beauty services, food and FMCG product sets. And for a good reason – Asian consumers prefer to shop at their local neighbourhood stores, due to multiple factors, mostly related to trust and emotional reasons.

For instance, in India, 96% of the commerce still happens at mom and pop stores and in the coming years, India and China are poised for explosive growth in the hyperlocal space. Several hyperlocal startups (BigBasket, Zopper, Swiggy, Dunzo) along with ecommerce giants like Amazon and Flipkart are investing heavily in logistics and mobile technology to capture this massive opportunity.

2. Innovations in Mobile Commerce
Mobile Commerce or mcommerce is merely a natural subset ecommerce. However, it’s turning out to be a significant extension with the potential to outgrow its parent in terms of sales, engagement levels and conversions.

Here are the major mcommerce trends and innovations that will gain traction in 2020 and beyond:

• The Need for Speed: Mobile users expect sites to load almost instantly, if not they will move on to the next one. Brands will need to think mobile-first and adopt newer technologies like PWAs and server-side compression to reduce bounce rates and improve conversion rates

• Deeper AI Integrations: From automated chatbots to image recognition and personalization, Artificial Intelligence is expected to play a larger role in mcommerce.

• Focus on User Experience: Msites and apps will continue to be optimized for a better experience on the small screen through simpler navigation, dynamic product pages, autocomplete features and one-click checkouts.

• Hyperpersonalization: While personalization in the desktop realm has seen some traction, the trend is likely to cascade to mcommerce as well in the form of personalized product recommendations, dynamic content, offers, and loyalty rewards.

• Geo-targeting: As much as privacy is a major discussion point today, 88 percent of consumers are okay with sharing their location if they get something of value in return. Retailers with physical stores are likely to invest in beacons and other proximity-based marketing technologies to target customers who are within a certain radius of their stores.

• Augmented Reality: While AR technology has existed for some years, its likely to mature in the coming year and more brands will start embracing the technology to help customers to virtually try out and interact with products using AR-capable apps.

3. AI and ML will see a greater play in Ecommerce
One thing that has helped ecommerce giants like Amazon gain a competitive edge above other ecommerce businesses is their ability to leverage AI and other cutting-edge technologies to enhance and improve all aspects of their business. From using Natural Language Processing to power Alexa to leveraging Collaborative Filtering to personalize recommendations and enhancing its logistics using predictive rerouting, Amazon has managed to expand the use cases for AI and ML.

Here are top expected applications of AI in Ecommerce:
• Personalized User Journeys
• Predictive Product Recommendations
• In-store Insights & Customer Engagement
• Dynamic Pricing
• Predictive Behavior Modeling
• Visual Search

4. Social Commerce will become a key revenue channel
Social commerce has been slowly gathering momentum in the last few years, and 2020 is expected to be its ‘flywheel’ moment. It’s a great way for brands to acquire more customers at a lesser cost besides simplifying the purchase journey. In the coming years, it’s expected to become the third major sales channel, taking its place alongside ecommerce and traditional retail.

The major factors that will fuel its rise are spike in video/visual content, Progressive Web Applications, cheaper data, greater smartphone penetration, improvement in user experience in terms of native checkouts and payment security and the continually increasing amount of time spent by millennials and the younger generations, on social media apps.

5. Dark stores will gain greater prominence
Dark stores are essentially retail distribution centers that resemble a typical supermarket but is used primarily to fulfill online orders. While the concept started out as a way to fulfill grocery orders, several brands are testing out the dark store concept for apparel and food deliveries.

For several brands, dark stores have become strategically important in matching the ever-shrinking shipping time and superior customer service levels of major etailers like Amazon and Alibaba. The proliferation of dark stores is a direct consequence of the rise of hyperlocal commerce and the rapid growth of the online grocery market.

They also fuel the growth of cross-border commerce by making it easier for retailers to expand their operations into new regions and markets.

6. Cross-migration of innovations between Ecommerce & In-store retail
The last few years saw traditional retailers adopt innovations and best practice from ecommerce counterparts like interactive websites, PWAs, and mobile point-of-sale solutions. As more brands realize the benefits and advantages of physical and digital retailing, expect the divide to further break down in the coming years. Once pegged as rivals, ecommerce & brick and mortar stores will become closely intertwined to create a collaborative, integrated and interconnected retailing.

Going forward, expect the migration of advanced ecommerce innovations into the brick and mortar realm like highly personalized recommendations and customer engagement using AI-powered computer vision technologies and staff enablement apps. On the other side, pure play ecommerce brands are expected to continue their offline expansion in the form of pop up stores, experience centers, dark stores and other O2O innovations like order-online-pickup in-store.