In a series of previous articles, we have summarized the year 2023 in the e-commerce industry. We only focused on certain issues that were quite important for this form of online trade. In the last article, we focused on flexibility and globalization of logistics in e-commerce. The year 2023 brought steady growth despite global challenges. Now, with the beginning of 2024, it’s time to look to the future and analyze what awaits the online trade industry.
E-commerce is constantly evolving due to the major players in the market, who define customer behavior. Small and medium-sized companies must, if they want to exist in the market, adapt to these market changes and artificially created expectations of consumers, who have accepted these changes. Whether they are good, time will tell.
This dynamic environment, where technological innovations and targeted changes in shopping behavior open up ‘new possibilities’, at the same time poses new and not easy challenges for small and medium-sized companies to realize, which will decide whether to be or not to be in the market.
A bit of history to recall the results of the last year.
Before we discuss the challenges and strategies in e-commerce, let’s recall the value of the e-commerce market. The value of the market worldwide in 2023 reached $16 trillion, while in Poland the value of the e-commerce market reportedly reached an impressive 124 billion PLN [Allegedly, as various sources report differently. The estimates range from 119.4 billion PLN to 180 billion PLN. The most commonly mentioned amount is 124 billion PLN, which is why it has been included in this article], an increase of 17.5% compared to 2022. The highest turnovers were recorded in categories such as clothing and footwear (27.3%), electronics (25.6%), food and beverages (12.2%), cosmetics and perfumes (8.8%), books and magazines (7.8%). The average value of the shopping basket was 316 PLN. 79% of internet users buy online.
This growth trend has continued despite a number of global difficulties, such as the supply chain crisis or changes in consumer preferences created by the major players, which most customers completely do not understand. Now, as the industry prepares for the next 12 months, it is important to understand what factors will shape e-commerce in the coming year. What strategies should companies adopt to meet these challenges and take advantage of new opportunities?
As ECAT eCommerce, we aim to become a large company and influence the shaping of shopping habits and customer preferences, rather than constantly adapting to what someone else has already created. We strive to ensure that customers have access to good products that will serve them well and that they are satisfied with shopping with us in our ECAT eCommerce stores.
What will we consider in today’s article?
In this article, we will focus on analyzing trends that may dominate e-commerce in 2024. We will discuss in the first article: ‘What challenges and strategies in e-commerce are worth considering in 2024. #1’ (1) how global supply chain challenges will affect the industry, (2) what significance targeted shopping will have, considering the protection of our natural environment, so-called Green Shopping.
In the second article: ‘Evolution of electronic payments and development of Commerce Media in 2024. #2’ we will expand our knowledge about the following points – (3) how electronic payments will evolve and (4) what are Commerce Media and what is their purpose. These elements will allow us to delve into the future of online commerce, highlighting the most important strategies and innovations that will drive the internet sales sector in the coming 2024.
The supply chain crisis and related challenges in 2024.
The e-commerce sales sector relies on an efficient and reliable supply chain, with global challenges becoming a significant factor affecting its operation. Analyzing the impact of these challenges and strategies for dealing with them is key to understanding and adapting the industry in 2024.
International delivery delays are related to a forced global situation, which has affected the economic market. These delivery delays have a very negative impact on companies that base their operations on products or semi-finished products from foreign markets. Therefore, it may be worth starting to support local manufacturers and producers based on domestic products, which are produced locally, rather than looking for exotic products sometimes of unknown origin?
The impact of the supply chain crisis on e-commerce.
Disruptions in supplies: Over the past 3 years, e-commerce has experienced significant disruptions in supplies, mainly due to created geopolitical instability, artificial climate changes, and the alleged pandemic. These disruptions have had a direct impact on product availability, delivery timeliness, and overall operational efficiency, and consequently on sales and company results. Who earned the most from all this? Look for these data yourself to increase your knowledge and understanding of the topic. I encourage you to open your eyes and change your view of the world.
Rising costs: In the next year 2024, we may continue to feel the consequences of these artificial market turbulences, which are visible in delivery delays, increasing transportation costs, and irregularities in access to products and semi-finished products. This in turn affects the unnecessary increase in prices of products offered by online stores, but as they say, the numbers have to match for the business to run well.
Changing customer expectations: Small and medium-sized companies are forced to follow supposed trends created by giants. Recent years have shown that customers, accustomed to fast and reliable delivery, are becoming increasingly impatient with delays, and have become very picky and spoiled in terms of shopping online, as they have unknowingly succumbed to these trends created by big players at the expense of small and medium-sized companies. This forces e-commerce companies, usually small and medium-sized, to look for alternative solutions to meet these growing expectations.
Strategies for dealing with supply chain challenges.
In response to these challenges, e-commerce companies must apply flexible adaptive strategies for managing the supply chain of goods, products, and semi-finished products.
Supplier diversification: In the face of disruptions, e-commerce companies focus on diversifying suppliers to reduce the risk of dependence on a single source. Seeking local and regional suppliers can also shorten the supply chain and reduce the risk of disruptions. I believe this is a good direction, as it can support the local community, which often creates excellent quality regional products, often better than those from abroad.
Flexible inventory management: Flexibility in inventory management, including ‘just in time’ strategies – minimizing stocks in the warehouse and ‘safety stock’ – as a safety stock, helps companies respond faster to changes in demand and availability of goods, especially during holiday or sale periods.
What is the ‘Just in Time’ strategy?
The ‘just in time’ (JIT) strategy in supply chain and e-commerce is a method of managing the production and logistics process aimed at minimizing inventory in the warehouse and optimizing delivery processes so that goods arrive exactly when needed – neither earlier nor later. It is an approach focused on efficiency and waste reduction
What is the ‘Safety Stock’ strategy?
The ‘safety stock’ strategy, also known as buffer stock, is a method of maintaining an additional quantity of product in the warehouse to prevent the risk of stock depletion due to unforeseen events or demand fluctuations. It is a safety buffer that allows companies to maintain sales and production continuity in case of delivery delays or sudden demand surges. Safety stock is a key element of supply chain management, minimizing the risk of stockouts and maintaining customer satisfaction
Investment in technology: Using advanced supply chain management systems, such as artificial intelligence and predictive analytics, can help better predict future challenges and plan more effectively. Innovations in logistics, such as warehouse automation, advanced inventory management systems, and the use of drones and autonomous vehicles can offer new ways to cope with supply chain challenges and warehousing.
What is Predictive Analysis”?
Predictive analysis is a technique using historical data, statistics, machine learning algorithms, and artificial intelligence to predict future events, trends, or behaviors. It enables companies and organizations to make more informed decisions by anticipating various scenarios and potential outcomes. Applied in many fields, from marketing and finance to medicine and engineering, predictive analysis is becoming a key tool in strategy planning and optimization.
Resilience to future crises: Preparing contingency plans for future crises is becoming standard. Companies strive to build flexibility and resilience to better cope with unexpected disruptions. Can small and medium-sized companies cope with such challenges? Large capital is needed, as this requires access to a huge amount of data, then processing it, and drawing the right conclusions from it.
Ecological shopping trends and Green Shopping
Let’s explain first what Green Shopping is, i.e., ecological shopping. It is a conscious choice of products and services that are environmentally friendly and produced in a way that ensures safety for the environment and people. It involves preferring items produced with minimal negative impact on the environment, such as products made from recycling, biodegradable, organic, or local.
Ecological shopping also reflects support for ethical practices and socially responsible companies, contributing to promoting optimal use of the resources we have. Here, a nod especially to the large corporations that devastate the natural environment the most. I hope that with increasing ecological awareness, e-commerce will experience a significant change in consumer shopping preferences. This trend will steer the industry towards more conscious and responsible trading practices and significantly affect the way online business is conducted.
Ecological shopping trends and their impact on e-commerce
Change in consumer preferences: It is observed that customers are increasingly looking for environmentally friendly products, which translates into their purchasing decisions. This is a good move, as our entire earth is drowning in garbage. This change in preferences is driven by increasing awareness of the impact of consumption on the environment. It should be noted and considered whether these changes should only apply to small and medium-sized companies and consumers, or whether large colossi that have destroyed the environment will start caring about it. Or rather, will they shift all responsibility to the smaller ones?
Impact on assortment and price: Online stores must adjust their offer to meet these changes. Introducing environmentally friendly and ethically produced products may, however, be associated with higher production and certification costs, which ultimately affects prices for consumers. If people’s understanding and awareness increase, that how we live affects how we think and whether we are honest with ourselves and others. If this awareness is high, then certification will not be needed. Everything will then be as it should be, and the prices of products will be lower.
Actions of online stores in favor of ecological products
Expansion of ecological offerings: In response to growing demand, online stores are expanding their range of ecological products, such as items with an ecological certificate, local products, or goods made from recycled materials.
Promotion of transparency and consumer education: Online stores increase the transparency of their activities, informing about the origin of products, their impact on the environment, and ethical production practices. Not all sellers are honest in this matter yet, as profit counts for them. Educating consumers about the benefits of ecological shopping becomes a key element of marketing, as this will eliminate the dishonesty of producers, intermediaries, or sellers from the market. It is important to note that today ECO is fashionable, but not always what is ECO is ECO and is good for people. Think about it before you, the customer, make a purchase.
Use of ecological packaging and logistics optimization: These companies use reusable packaging, biodegradable materials, and aim to utilize ecological delivery methods to minimize negative impact on the environment. This particularly concerns the omnipresent plastic, which negatively affects not only human health but also the entire flora and fauna in nature. Everything is interconnected and one affects the other. Plastic leads to the degradation of the environment, humans, animals, plants, and the entire ecosystem of nature. It’s worth asking the question. Who introduced and continues to introduce plastic into circulation? Someone obviously allowed it.
Summary of the article: What challenges and strategies in e-commerce are worth considering in 2024. #1
I have presented an image of the e-commerce industry in 2024 as dynamically changing and posing new challenges especially for small and medium-sized companies, which have decided to sell their products via the internet. I have highlighted the challenges related to the supply chain and the growing ‘ecological awareness of consumers’. Strategies that companies should adopt include flexibility, innovation, and adaptation to changing market conditions and customer expectations. Here is a brief summary in points.
Overview of the e-commerce market in 2023: The value of the e-commerce market reached $16 trillion worldwide, of which in Poland it amounted to 124 billion PLN, meaning an increase of 17.5% compared to 2022. The largest turnovers were recorded in categories such as clothing, electronics, and food.
Challenges and strategies in e-commerce for 2024:
- Supply chain crisis: Challenges associated with international delivery delays and dependence on foreign markets.
- Disruptions in supplies: Issues related to created geopolitical instability, artificial climate changes, and the alleged pandemic.
- Rising costs: Increasing transportation costs associated with delivery delays and worse product availability impacting the rise in product prices in online stores.
- Changing customer expectations: Increasing customer demands for speed and reliability of delivery.
Strategies for dealing with supply chain challenges:
- Supplier diversification: Reducing dependence on single sources.
- Flexible inventory management: Adaptive management strategies.
- Investment in technology: Utilization of artificial intelligence and predictive analytics.
- Resilience to future crises: Preparing plans in case of unexpected subsequent disruptions in goods supply.
Ecological shopping trends (Green Shopping):
- Definition of Green Shopping: Conscious choice of environmentally friendly products.
- Impact on e-commerce: Change in consumer preferences towards purchasing ecological products.
- Actions of online stores: Expansion of the ecological offering, promotion of transparency and consumer education, use of ecological packaging and optimization of logistics.
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