After a Decade of E-Commerce, Convenience Just Isn’t Enough

Buying paper towels, a toothbrush, or even a new mattress online ten years ago may have seemed like a silly idea, but a decade later, more people than ever are going online to buy just about everything.

Global e-commerce was estimated to be a $3.535 trillion industry in 2019, marking a gain of 20.7% from the previous year, according to eMarketer. It’s still a fraction of the total global retail market, which was estimated to be worth $25.038 trillion in 2019.

Not only does online shopping now cover just about every conceivable need a person could have, but it also comes with more demanding expectations. Customers want their orders, and they want them today—or tomorrow, if it comes to that.

“I remember it would take a week or ten days when we first started buying things online,” said Steve Sarracino, a longtime e-commerce technology investor and founder of Activant Capital. “Fulfillment has been a big thing in the past ten years. Two day, one day, and now same-day shipping is a total game changer for e-commerce.”

There’s no denying that Amazon, the 800-pound e-commerce gorilla, has been an innovator when it comes to improving the online shopping experience and setting customer expectations across the board, experts say. In 2018, Amazon was responsible for driving 80% of e-commerce growth, according to eMarketer.

“One-click checkout made Amazon. Everyone else has to compete and they are figuring out fulfillment slowly,” said Sarracino.

Amazon has also made free, quick shipping a customer expectation that other brands have been forced to match if they want to compete with the giant.

“Fast two-day shipping, and transparency around the shipping location and expected delivery timelines have gone high-tech,” said Evan Walker, co-founder and CEO of Route, an online order insurance and tracking app.

Faster shipping times are making online shopping a convenient choice for most items, however online shopping has evolved into more of an “experience,” in the last few years, says Robin Sherk, director of consumer and retail at CS Insights.

“By that I mean the content is rich. It is more entertaining. We are starting to get our entertainment from social, so why wouldn’t shopping fit into that?” she told Fortune.

Brands have been focused on stepping away from Amazon’s shadow to create a more experiential online shopping experience that will keep brand-loyal customers coming back.

Nike is perhaps the most recent example. Just last month, the iconic brand announced it would no longer sell its products on Amazon and would instead focus on its direct-to-consumer business.

“As offline buying experiences continue to move online, brands are putting much more focus into their online presence and optimizing around user experience,” said Walker. “E-commerce has become much more experienced-based than it was previously. Customers are eager to connect directly to their favorite brands and buy direct.”

Increased trust has been another driver of e-commerce growth over the past ten years, according to the experts who spoke with Fortune. While everything is still hackable, customers are increasingly more comfortable using their credit card or a mobile wallet online to buy something from a retailer they trust. Additionally, hassle-free return policies make impulse buys easier, although Sarracino said many retailers still have work to do in this area.

J. Crew, Walmart, and Lululemon are among some of the big brands that let online shoppers return most, if not all, items in-store to make the return experience easier. However, older order management systems still make it a headache, which is why Sarracino says it has yet to be universally integrated by every brand that has an online and offline presence.

In the next decade, this is an area where he says brick and mortar can use its physical stores to its advantage.

“That is a scenario where brands can shine,” Sarracino said.

More on the changes in retail:

—The legacy brands that couldn’t keep up  
—Consumer demands drove apparel industry change 
—Find out how Instagram upended the beauty industry
—Why the future is now in consumer electronics 
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