E-commerce is a fast-paced and dynamic sector that over the course of 12 months can change dramatically.
I’m not convinced that will be the case in 2022, however. Despite the emergence of the metaverse and several brands taking tentative footsteps into that world, 2022 will see a focus on a technology that has existed for decades – the online marketplace.
The battle for direct consumer access
The past few years have seen many businesses migrate their traditional wholesale business model to the online world, while also selling products via marketplaces such as Amazon. But they know that they can only truly thrive when they control access to consumers—and they cannot gain this access through third-party vendors.
In the US, 57% of B2C e-commerce sales flow through marketplaces so every brand is going to want some of that business. A principal theme for 2022 will be found in this battle for direct consumer access and there will heavy investment in direct-to-consumer business models.
Getting B2C marketplaces right
While this investment will be huge, many of the B2C marketplaces that emerge will fail. Macy’s has already announced a marketplace initiative to expand its business model in the US, while in Europe, the sporting goods retailer Decathlon, has announced plans to expand its business model and offer a platform with more choice for customers.
Senior management perceive that such initiatives will save money on marketing, as more products means bigger basket sizes and higher buying frequency. But online marketplaces are not plug-and-play solutions.
Many businesses fail to understand that becoming a marketplace company and changing the business model from owning the inventory to owning the customer access, is a big shift. Moving from a model, where you own the inventory, to owning the customer access is a complete transformation.
Vendors will see very little revenue out of new marketplaces and their customers will experience a mediocre fulfilment practice where they will receive a box from one seller and then, separately, a box from another – similar to the early days of Amazon.
The problem is that this is an outdated marketplace philosophy that fails to consider the e-commerce journey from a customer perspective. New consumer marketplaces will fail in 2022, because they are planned from an internal perspective, only optimising the retailer’s view, not optimising the customer’s experience.
Metaverse – more hype than substance so far
If you measured the column inches or believed a fraction of what you’d read about the metaverse over the past few months, you would be forgiven for thinking that it had already become one of the dominant e-commerce battlefields.
And it’s true, a number of high-profile brands have taken their first steps into the metaverse. Coca-Cola, Louis Vuitton and Selfridges all embarked on metaverse adventures in 2021, and in 2022 are set to be joined by others including Walmart and H&M.
Yet how much tangible return this will bring is debatable. Google and Facebook have both tried to enter the e-commerce market before, unsuccessfully in both cases. Now, Facebook is looking at ramping up its e-commerce hopes with its Metaverse vision and has already said that its Horizon Marketplace will allow creators to sell and share 3D digital products. Mark Zuckerberg himself has stated: “Our hope is that this will enable a lot more commerce and help grow the overall Metaverse economy.”
But there is a massive elephant in the room here. As it stands right now, the metaverse is akin to Second Life – addressing a problem that no-one actually has. In the future, there might be use cases that will emerge for the metaverse, but metaverse will not change e-commerce in 2022. Many of the experiences I’ve seen look clunky and unappealing to the consumer, so the metaverse as a force in e-commerce is a long way off.
The on-going rise of Amazon
One e-commerce trend that has been around for many years now, is the on-going rise of Amazon, and that will continue in 2022. Amazon looks likely to continue its growth and maintain its marketplace dominance. I anticipate Amazon could triple or quadruple its business in the next three years, a scary prospect considering how elevated a position it already has.
But if other organisations can get smarter about how they approach B2C marketplaces, then there is cause for optimism for anyone in the industry that feels cowed by Amazon’s on-going dominance. Marketplaces – set up and managed correctly – can be a powerful driver of growth, and I think 2022 will be a vital year for businesses to reassess traditional models of digital commerce.