BY Capgemini
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Capgemini IT: GROWTH ACCELERATOR

IT trends spotted and checked by experts

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What happens

Online retail is moving mobile as customers increasingly prefer to shop on the go from their smartphones, according to the recent IMRG Capgemini e-Retail Sales Index. This pattern is boosted by the trend among handset manufacturers to produce devices with larger screens. E-commerce growth in 2016 was powered by the increase in sales made on smartphones, with December phone sales alone surging 47% year-on-year (YoY). In response, retailers are driving investment into mobile-friendly websites, and artificial intelligence e-commerce systems to draw consumers and streamline the purchase process.

so what?

Editor of IMRG

Andy has worked in e-commerce for the last seven years. His role as editor entails analysing the many datasets compiled both in IMRG's indexes and from other sources to communicate key trends and information...

This shift among shoppers to mobile means retailers are having to adapt much of what they do to remain relevant to their requirements. Many things are changing - screen sizes, attention spans, contexts and situations in which they can access retail sites - so getting this right represents a challenge and one that retailers need to be able to overcome if they are to succeed in such a highly competitive market.

What have been the main trends for e-commerce over the past 12 months?

Ultimately, the market is doing well. This year it has grown a lot more than we thought it would. There are a couple of reasons for that, one of them is that it's a general trend, people are doing more stuff online, there is this movement of stuff that we used to do in the physical world moving into digital. That's no different for retail, of course. It has been happening for a while. Footfall on UK high streets over Christmas was the lowest since 1998. Black Friday in 2014 seems to have been a kind of watershed. There were fights over TVs. This seems to have influenced people's behaviour and for Black Friday 2015 shoppers really moved online. It was happening anyway and that trend seems to have got a bit of a push from Black Friday in 2015.

Are smart devices powering this trend?

We have seen over the last year to 18 months, a massive growth on smartphones. It really jumped up and stayed at a high rate for a long time. There are multiple reasons behind that. There is the fact mobile phones now have bigger screens. People are using smartphones for everything and are getting more comfortable using them. The conversion rates are going up on them. The result of that is that people are able to shop in a greater number of situations.  With the roll out of tablets, they allowed you to relax on the sofa and browse while watching the television. Now you can do it on the way to work, on your commute. 

On Christmas Day, the smartphone was the big device because people out visiting their auntie, for example, could use their phone and shop.

Why are smartphone sales increasing and tablet sales decreasing?

We are seeing a cannibalisation of tablet sales. They have really dropped off and went into negative territory towards the end of the year. When people would have previously used a tablet in front of the TV, they will now just use their phone.

Smartphones are used for everything now. You use it to hail a taxi or do your banking. You name it, and there is an app for it. Retail is naturally part of that trend.

How will the Internet of Things increase online commerce revenues?

People are happy to use the Internet of Things (IoT) as long as it is useful. One thing that seems to be really taking off is the Amazon Echo with its Alexa digital assistant. That has sold quite heavily and has potential to streamline parts of the online shopping process. Its voice activated so you can order things just by asking for them, in principle at least - it might take a while for people to get used to doing that.

How are payment technologies helping in online commerce?

There is a great emphasis on frictionless retail right now. What retailers are trying to do is prevent people from getting annoyed with the purchase process and halting the transaction. Now there are payment methods where you can tap to pay and you can do that through your smartphone. Where something is useful that's where you will see the growth.

But the issue with payment technology is people have got to be happy using it; that is always the problem. One technology that has been successful is contactless payment, which is a slight surprise because if you lose your contactless payment card and someone finds it they can use it. However, people have become comfortable using it and it has been responsible for an increasing share of sales.

Apple Pay is another system that has caught on well, with a loyal base of people who trust it and are happy to use their phones to pay for goods and services. With these advanced methods however, they can be popular among a certain demographic who are keen to use new tech, but they tend to have a job gaining traction on a truly wide scale.

Why is there a shift towards next-day rather than economy delivery in e-commerce?

Number one is that it is getting pushed a lot on retail websites. Quite often the website will say free next day delivery if you spend over a particular threshold, say £80.

Customers weren't banging on the door screaming for this, but what is happening is the web is speeding up everything. People aren't necessarily asking for it. If businesses can carry out operations faster, then they will because they see it as having an advantage over the competition. That forces everyone else to catch up.

What are the likely future trends that will shape online commerce?

There is a move towards AI systems with people talking to Amazon Alexa and bots. The useful thing about a chatbot is that it records everything that ever happens.

A human service employee won't write down everything the customer says and won't go back and say "Hey, I've put this chart together of everyone I've spoken to and here are the keywords they are using," whereas a chatbot will. Chatbots are ready to work 24/7, and don't get moody or hungover. There are a lot of advantages to having them.

The big unknown is how people are responding to that. I don't know how people would feel speaking to a robot all the time. 2017 is the period when you will start to see these concepts start to become a bit more accessible and we can get an early idea of people's reactions to them

Who cares?

 
Retail is set for terrific upheaval during the coming years as shoppers increasingly switch to online rather than bricks-and-mortar purchase platforms, although expect the key growth to come from the mobile rather than desktop sector.

Meanwhile, machine learning is set to play an increasingly large role with customers expected to rely on voice-activated assistants, such as Amazon's Alexa, to buy goods online, while retailers embrace the chatbot revolution due to the cost benefits and data-gathering potential.
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