Last month, I attended eTail London, an e-commerce and omnichannel conference for European retailers. Hundreds of retailers descended on London for two days of insights and innovation ideas.
Panellists discussed digital innovations ranging from leveraging new technologies and tailoring digital marketing solutions to optimising supply chains. The content was highly relevant for the Australian retail industry as it grapples with similar challenges.
Marija Milasevic from Euromonitor shared the leading consumer trends defining the industry, starting with how digital-savvy customers are demanding a more tailored experience. Retailers are responding by investing in “hyper-personalisation”, using generative AI to develop campaigns and shopping suggestions in real time.
Second, social media has now evolved into social commerce, with upwards of 80 per cent of social media users engaging in shopping-related activities. Growing numbers of consumers cite social media channels as their preferred means of product discovery. And platforms are now pivoting from being pure social media players to becoming retailers in their own right.
Third, cost-of-living pressures have shifted consumer attention toward platforms that use hacks to explicitly help users save money, despite these solutions not always being endorsed by brands.
Shopback offers cash and rewards to customers who make purchases through their platform, paid for by sharing the commissions received.
Fourth, younger generations are prioritising value and sustainability and driving a resale revolution. Millennials and Gen Zers are 50 per cent more likely than Baby Boomers to buy used or second-hand items multiple times per year. Sites like Beni help these consumers by prioritising the best second-hand deals across more than 40 resale sites.
Finally, a seamless product returns experience is pivotal to driving customer loyalty. This is challenging given different consumer preferences. Gen Zers prefer to return products to stores, whereas Baby Boomers prefer mail. Partnering with experts can help – ShopBazar is a sustainable seller that re-sells collected returned products, and Happy Returns provides box-free, label-free solutions across thousands of physical locations.
I sat through dozens of presentations across the two days of eTail, but there were scarcely any which did not mention artificial intelligence. We are seeing many new applications for AI in digital commerce, ranging from enhanced customer service tools, dynamic pricing solutions, task automation and predictive logistics.
AI powers chatbots which act as a filter for customer service teams, handling basic queries automatically in order to free up team members to deal with more complex customer engagement calls.
Dynamic price optimisation is increasingly managed by AI – from automatically increasing prices when competitor stocks are low to reducing prices when a competitor is on sale. Amazon is already using AI to adjust prices by up to 20 per cent depending on rival pricing.
Generative AI – that is, using AI to create actual content – is now being used to create complex tailored marketing campaigns. It can even identify and target new customer segments based on correlation in different customers’ data.
Basic administrative tasks like email scheduling, automation of workflow tasks such as personnel hiring, and product recommendations are now regularly performed by AI code.
Retailers are materially reducing overall supply chain costs by streamlining logistics processes using AI applications. Predicting transit times, anticipating shipment delays, and forecasting product demand are now commonly performed by AI.
Richard Lim, CEO of Retail Economics, chaired multiple sessions across the programme. His firm has just released a report titled “The Power of Social Commerce” which provides a deep dive into the emerging TikTok economy.
‘Traditional’ social media platforms like Facebook and Twitter are predominantly about communication between friends and communities. By contrast, people access TikTok for entertainment and discovery, a perfect environment for brands to get their products in front of curious potential customers.
Users actively participate, rather than passively observe, allowing innovative brands to connect and engage with users on a deeper level, enhancing purchase intent. Whilst 17 per cent of UK Facebook users have purchased during the past 12 months, this rises to 29 per cent for TikTok users.
Different generations of users prefer different channels when looking for inspiration to buy new products. Whilst Boomers prefer online marketplaces and Google searches, more than half of Gen Z users head straight to TikTok. The following chart highlights some stark differences by user group:
Source: Retail Economics, TikTok
With younger consumers clearly preferring TikTok to shopping retail websites or even visiting stores, retailers are clamouring to get their products into this space. In the UK, social commerce is already worth £7 billion (A$13.4 billion) and is projected to double in the next four years.
Each of these insights is directly applicable to the Australian market, where retailers can take the lead from how some Europeans are innovating to meet shifting customer demand. Younger consumers are driving the change, and retailers need to adapt. And quickly.
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