On May 30, Mary Meeker unveiled her highly anticipated internet trends report at the annual Code Conference in Rancho Palos Verdes, California. The presentation included 294 slides of densely packed information, and offered a number of interesting insights about the direction of ecommerce in 2018 and beyond.

In this article, we zoom in on the most important takeaways from the report, and explore how ecommerce companies can use them to take their business to the next level.

 

Ecommerce Continues to Steal Market Share From Traditional Retail

It’s no secret that ecommerce is growing at a rapid clip, and the trend shows no signs of slowing down. U.S.-based ecommerce saw 16% year-on-year growth in 2017, and continued to gain market share over traditional retail, ending the year at 13% of total retail sales.

This is a strong signal that customers are increasingly coming to appreciate the benefits of digital retail over going to a physical store. Ecommerce businesses should capitalize on this cultural shift by doubling down on the strengths of the online model, which include:

  • Lower costs due to the elimination of a bricks-and-mortar distribution infrastructure
  • The ability to effectively reach a global customer base – even as a smaller business
  • 24/7 customer service available through phone, email and chat
  • The ability to offer personalized experiences by leveraging detailed customer data

These unique attributes will continue to set ecommerce companies apart from their offline counterparts, and propel growth for a long time to come.
 
Ecommerce Sales + Year Over Year growth chart
 
Ecommerce verfsus Physical Retail Graph

 

PPC Advertising Gets More Competitive

Over the past few years, pay-per-click advertising has established itself as a proven avenue for driving ecommerce sales. Ecommerce-related advertising revenue has been rising at Google, Amazon and Facebook, as more businesses rush to take advantage of this powerful, measurable marketing channel.
 
Ecommerce-Related Advertising Revenue Graph

As PPC advertising techniques have evolved over time, marketers have also gotten better at creating compelling ads, and clickthrough rates (CTR) have also risen significantly. However, greater competition for prime ad placement has also driven costs up at an even faster pace. In 2017, Facebook PPC had an average CTR increase by 61%, while average CPM rose by 112%.
 
Return on Ad Spend Graph

This means that customer lifetime value (LTV) will become increasingly important as customer acquisition costs (CAC) rise. Companies with higher LTVs will be able to pay more for ads, ensuring prime placement which in turn leads to higher revenues. This virtuous cycle will compound over time, creating a wider gap between companies who can afford to advertise effectively on PPC platforms, and those who cannot.
 
Customer Lifetime Value Graph
 

Social Media Facilitates Product Discovery

Social media has developed into a major driver of product discovery. 78% of respondents say they have discovered products on Facebook, while 59% say they have done so on Instagram and Pinterest. And yes, those encounters are driving real ecommerce sales – 55% of respondents bought the product online after discovering it on social platforms.
 
Social Media Graph

This data provides compelling evidence that word of mouth marketing not only works online, but can actually have a more accelerated impact than in the offline world. And even more interestingly, these beneficial effects are pretty broadly distributed, and not restricted to the lucky few products that manage to go viral.

Apart from simply sharing new products, social media users are also becoming more comfortable with the idea of direct ecommerce referrals. In 2017, such referrals increased to 6%, from 2% in 2015. This highlights the importance of cultivating a passionate tribe of brand advocates, who will actively share your brand with their personal networks.
 
Share of Ecommerce Referrals Rising Graph
 

Mobile Ecommerce is Key

Mobile ecommerce continues to see exponential growth, with a 54% increase in mobile shopping sessions for 2017.
 
Mobile shopping usage

If you haven’t developed a strategy for mobile yet, now would be a good time to do so. Start by ensuring that your website is mobile-friendly – and that doesn’t just mean having a responsive site. At a minimum, your website design should:

  • Offer fast mobile loading speeds, including mobile-only optimizations like AMP pages
  • Honor common image zoom gestures, such as double-tapping and “pinching”
  • Allow for easy, comfortable navigation within the thumb zone
  • Include numpad-style inputs for numerical form fields to minimize typos
  • Accelerate checkouts with digital wallets like Apple and Amazon Pay

Despite the size of the mobile market, a surprising number of ecommerce sites are not yet fully up to date with the latest best practices, so simply providing a superior user experience will put you far ahead of the pack.

 

Online Shopping as Entertainment

Coinciding with the rise of mobile, many of today’s customers view online shopping as a form of entertainment to be enjoyed in short, engaging sessions. This has led to the rising significance of video and gamification in the discovery process.

If you’re selling a product with strong visual appeal, such as fashion items or even a software solution with an attractive interface, video can be a very powerful marketing channel. Even if you don’t produce any videos yourself, you can be sure your customers are watching your product in action on platforms like Youtube and Taobao.
 
Product plus Price Discovery Chart

Gamification is also evolving into a powerful way to drive sales. For example, online marketplace Wish offers a daily Deal Dash, where customers can get extra discounts for a limited amount of time. The duration of the promotion is determined by spinning a virtual wheel, after which the customer does a mad dash across the site adding items to his cart. Items that are added to the cart within the time limit are available at the discounted price for another 30 minutes after the timer hits zero.

Mechanics like these can result in much higher levels of customer engagement over time.
 
Product and Price Discovery Chart

 

Subscriptions Are Eating The World

Subscription services have seen exponential growth in recent years, and 2017 was no exception. The model has seen success across a wide range of industries – including fitness services, video games, news sites, legal services and streaming video.
 
Subscription Service Growth Chart
This really shouldn’t come as a surprise to anyone who has been paying attention. Subscription models offer the advantage of regular recurring revenue, and opportunities for upselling to a loyal, stable customer base. This results in higher LTVs, which can then be invested into more advertising, resulting in the virtuous cycle described earlier.

It has also become increasingly accepted that almost any type of business can benefit from a subscription model, since there are so many variations available. Some common examples include:

  • The all-you-can-eat library model: Unlimited access to a large content library (e.g. lynda.com)
  • The membership website model: Membership in a gated online community centred around a specific subject (e.g. FounderCafe)
  • The consumables model: Regular replenishments of a consumable product (e.g. Dollar Shave Club)
  • The peace of mind model: A service providing some sort of downside protection (e.g. Avast Antivirus)

Offering your customers a subscription service can be a great way to achieve smooth, predictable growth – no matter what business you’re in.

 

Ride These Trends to Ecommerce Success

The ecommerce landscape is undergoing rapid change, and that brings both challenges and opportunities. By staying alert to trends like these and effectively leveraging them over time, companies can set themselves apart from the competition and claim new ground before anyone else can get there.