2023 Predictions in Retail eCommerce

Supply chain pressure issues ease

The world opens up again. The challenges many businesses faced in offshore production and moving stock around the world eases as supply chains settle down, the EU becomes more accessible and China becomes fully operational having finally got to grips with coronavirus.

Profit Profit Profit

Rising costs and weakening demand will put greater emphasis on e-commerce profitability. This will drive a reduction in low value product assortments and more large format e-commerce enabled catalogues. A need to deliver profit margin on both sides will lead to prolonged negotiations with Amazon and other e-commerce retailers, tighter budgetary control on trade spend and more attention to individual ASIN product performance.

Sustainability will be a differentiator

Consumers will expect brands to act sustainably. More brands will ship in own container (SIOC), reduce excess packaging and repair & re-cycle products. Re-commerce platforms will gain in popularity (e.g. eBay, Craigslist, Threadup) and new players will emerge. Amazon and other marketplaces will distinctively label sustainable brands in search creating a 'sustainability divide' impacting growth rates for non compliant businesses.

Category specific marketplaces

In 2022 we saw new category specific marketplaces open up (e.g. B&Q, Superdrug) as retailers looked to find new revenue streams and e-commerce enablement solutions, like Mirakl, make it easier for them to expand their platforms. This trend will continue in 2023 providing shoppers with greater choice and tailored shopping experiences. The big question is whether this will be a sustainable model given the dominance of Amazon and other global players. Can they convert loyal customers to use their marketplaces and can they invest enough to steal traffic from Amazon?

Amazon social

In a drive for more advertising impressions and retail sales, Amazon will build closer links with social platforms, particularly TikTok, and further develop their own social functionality. Amazon Posts and Live streaming will launch across Europe driving more frequent and dynamic content experiences. Amazon will further expand their influencer network, particularly in health and beauty. And with more price conscious shoppers going online to find the best deals, high quality customer reviews and a 4+ rating score will be critical to omnichannel brand performance.

Omnichannel retail

Inspired by the success of Walmart in the US, other mass retailers will invest in bringing together their channels to compete with Amazon - enabling customers to pick up, deliver, schedule and reserve. In response, Amazon will strengthen their omnichannel presence with more stores and more delivery locations. Drone delivery will be live in some US locations for Amazon and Walmart.

Retail Media Networks expand

In Europe, Retail media has been slow to take off. There has been a considerable media hype, but in reality there is limited inventory and poor ad solutions. This will change in 2023 as retail media rises from the shadow of Amazon advertising. Retailers will provide more options to influence shoppers in search and in aisle. Retailers with strong loyalty programmes (e.g. Tesco and Boots) will provide deeper access to data, enabling marketeers to see retail customer journeys for the first time. Perhaps by the end of 2023 we will start to see retailers sharing data to provide a unified view of brands' retail shopping behaviour.

Amazon Advertising booms

The recession will drive more digital spend into Amazon advertising as marketeers seek better value (Amazon ads are 68% cheaper than Google*) and more return. Consequently, competition on Amazon will steadily rise, driving up CPC's for Sponsored Ads. Whilst Sponsored Ads will continue to be the primary sales driver, we believe that the most sophisticated advertisers will be driving incremental growth & new customers by harnessing the audience potential of Amazon, both on & off its platform.

Further Amazon Advertising growth will be fuelled by a Non-Endemic Push. There are some large advertising marketing budgets that Amazon aren't seeing at all currently - predominantly in CPG, services & Travel. The end of 2022 saw some US-based beta features for non-endemic Amazon advertisers. We are certain this will be the start of a much larger scale up and global roll out of advertising options for non-endemic Advertisers.

Our prediction is that by the end of 2023 Amazon will make more money from advertising than 1P sellers.

*Sellics Amazon Seller Benchmark Report

Amazon Applied Analytics

AMC, Amazon Stream & API development have largely focused on a central theme; more data in the hands of advertisers, enabling more effective insight to action. This is clearly a big Amazon play & in 2023 we believe we'll see greater insight development together with further synergies between cloud & advertising. With CPC's rising, the advertisers that use Amazon's data better will win a greater share of search.

Amazon becomes the leading store-tech platform provider

History will repeat itself, in the same way that AWS spun out of Amazon retail and became a more profitable division of the business. Amazon's revenue from selling just walk out technology will surpass their sales via their Amazon Fresh and Go network. Rendering the bricks and mortar stores a 'training wheel' for better check out free technology. The scalability of their solution combined with AWS integration will give them an edge over competitors like Aifi and Trigo.

Retail Media Content transforms

With Amazon as the blueprint, retail platforms will provide more options for brands to express themselves with content. Brand stores will have richer features and multiple pages. Product specific video will become a mandatory asset for product pages and advertising. Open AI will provide more agility and quicker copy development across multiple retailers and markets, but won't replace the need for humans to add brand expression and local nuance. With more shoppers going online to research products, there will be greater emphasis on detailed execution and cross channel consistency to capture demand. All of these factors will mean that brands will need to spend more on e-commerce content and consequently will expect retailers to provide data on content performance. Perhaps new metrics will arise like 'Return on Content (ROC)?

I hope you enjoy this round up of my 2023 predictions in retail e-commerce. If you would like to speak to us about how we can support you in any of these areas please get in touch or email me directly.

I hope you all have an incredible 2023!

Paul Adams, Tambo CEO