While growth will be tempered this year relative to 2021, Shopify forecasts ecommerce sales to top US$5.5 trillion worldwide, up from US$4.9 trillion in 2021.

This year, more global consumers report they will spend less on gifting this season compared to the previous year (33 percent versus 15 percent in 2021). While consumers have indicated the economy and their financial situations are of major concern, brands must not succumb to the annual peak time deep-discounting game. Acquiring new customers will likely be challenging in Q4, so marginal returns due to excess discounting in an effort to win shoppers on price simply aren’t worth it—and brand price matching strategies can essentially equalize all prices anyway. Instead, brands must win shoppers on value, staying true to who they are and competitive based on their differentiators and the consistent, high-quality shopping and customer service experiences consumers expect.

The authenticity imperative isn’t just about offering value, however. When considering loyalty, brands must have a clear understanding of what loyalty means to shoppers. Understanding what drives your customers’ purchasing decisions can help brands stay focused on their growth initiatives and key value propositions.

As a brand, you’re not only competing against the other brands in your category (and, of course, Amazon) but you’re also competing against every other brand, app, and website available on the internet that is vying for a consumer’s attention. Every online experience is compared to the next, and if your brand’s experience doesn’t measure up, it’s just a matter of time before shoppers move on to your competitor. This is why getting the customer experience right is so critical.

According to data compiled from more than 40 research studies by the online user experience (UX) research company Baymard Institute, the average online shopping cart abandonment rate is 70 percent. There is no single issue that causes site abandonment—there are a litany of reasons.

However, abandonment data illustrates shoppers’ expectation of a digital experience that is fundamentally frictionless; otherwise, they will move on to the next site that offers an experience that, at the bare minimum, provides search functionality that returns the intended search results and a checkout process that is easy to navigate. Brands must identify critical UX pain points, both universal and unique to your particular purchase journey, to decrease abandonment and conversely increase engagement. Don’t let a bad user experience be the reason you lose customers.

Brands must look at which channels are favored by consumers when shopping for gifts highlights their propensity toward omnichannel shopping. On average, according to our research, global shoppers prefer the appeal of the physical store to get inspiration, make purchases, and connect with customer service. The mobile channel is most desired for research and engagement purposes. Brands can use this information to make improvements to those channels less preferred for particular behaviors with the aim of providing seamless omnichannel experiences.

Brands must not succumb to the annual peak time deep-discounting game. Excess discounting on price simply aren’t worth it. Instead, brands must win shoppers on value.

Brett Narlinger is head of global commerce at Blackhawk Network, a global branded payments provider. He leads and drives growth across the organization’s physical and digital retail business globally.

Impact of AI and ML on Holiday Shopping Experience

By: Manish Sinha, advisor to Wallaroo Labs &  former Corporate CTO of L’Oréal

The impact of the global pandemic and various travel restrictions have made the last two holiday shopping seasons very unusual. While COVID concerns seem to have waned from previous years, it is impossible to ignore the impact COVID has had on the entire shopping experience. Consumers are much more comfortable shopping online, and retailers are implementing new technologies to simplify and improve the virtual buying experience. According to Statista, ecommerce sales could potentially reach $8 trillion by the year 2025. This is great news for digital ready brands, but the traditional brick-and-mortar-heavy stores must quickly lean on technology to accelerate their digital presence. So, while the level of competition will certainly increase, so will the opportunity for new sources of revenue. With that in mind, here are three predictions to watch for in the coming months.

The pandemic has already taught consumers that they can shop online more conveniently than going to stores. This has already increased online shopping in every industry. One can already see this trend unfolding when they visit the stores and malls and find them emptier than yesteryears. This year, seeking personalized products will be another driving force behind more consumers choosing to buy directly from brands online instead of shopping at malls. Consumers are expecting extreme personalization in the products they use, or as we call it in the industry, hyperpersonalization. In makeup, for example, consumers want products that are personalized for their type of skin oil, skin tone, environment/weather, and other such parameters. Similarly, a customer may want a customized purse, fitting not just their personal style but also the specific event where it will be used. To meet the demand for personalization, brands will need to better know their customers, which brings me to my next prediction…

By selling directly to consumers (D2C) instead of through third-parties, brands will gain deeper insights into who their customers are and what they like. But data on its own won’t unlock incremental value for brands. It will be how the manufacturers use artificial intelligence (AI) and machine learning (ML) to uncover patterns in purchases, predict what their customers will order, and make recommendations, as well as offer more personalized services like catered shipping statuses. As consumer-packaged goods (CPG) see early success, they will shift most of their sales to D2C by 2025 instead of in-store. Current trends already show 5% D2C in 2018 growing to 30% D2C in 2021. This will cross 50% D2C in some brands as early as 2023.

Where we go from here is anyone’s guess… though with the right AI, you may take the guesswork out of the equation.

Along with personalization, being timely in delivery is also critical to be effective with consumers. That is, consumers will no-longer wait months to get their perfect shade of lipstick, but instead will substitute with a competitor if delivery of the product takes too long. CPGs and retailers will embrace AI to compress the entire development-to-production-to-consumption cycle in half. AI can be used during production to gain a better sense of supplier risk and automate quality control. It can also be used during distribution for route and picking path optimization. Leveraging AI, brands will be better prepared to deliver on changing consumer expectations.

As with all predictions, unseen factors will change how things ultimately play out, but it’s impossible to deny the impact technologies like AI and ML will have on our shopping experiences in the very near future. Some estimates note that global AI in retail marketing is expected to reach $24 billion within the next five years. Manufacturers that wish to remain competitive need to understand not only how their customers approach the shopping experience, but what they are looking for moving forward. Predictive modeling, smart data processing, and trend analysis are just a few of the potential uses AI/ML offer. Where we go from here is anyone’s guess… though with the right AI, you may take the guesswork out of the equation.