Unexpected is the new normal
The only constant in commerce is change. And the only way forward is to adapt. In the past year, we’ve seen millions of businesses display resilience in the face of the unexpected, contributing to over$27 trillion USDof retail sales worldwide. But 64% of global businesses are still recovering from the negative impact of the pandemic.*
Economic obstacles from the pandemic were compounded further in 2022, when the Russia-Ukraine war led to sanctions that delayed or halted trade altogether. The fiscal instability is driving the highest inflation in40 years。
Online shopping jumped77% year over yearjust months into the pandemic, accelerating the innovation and adoption of digital commerce by half a decade. Shopping, working, and socializing online became commonplace.
But after years of lockdowns and restrictions, people now crave meaningful connection across all facets of life—including commerce. Physical spaces make those points of connection between merchants and customers possible, including online and offline commerce.
As brands grapple with the challenges in 2023, they'll need to respond by adding flexibility to their products, plans, and policies. With an economic recession on the horizon, being agile has never been more important. This report outlines the global trends equipping brands to confront the unexpected.
All values are in U.S. dollars
The economic outlook forces ecommerce businesses to brace for a sluggish economy
While commerce growth is slowing, total retail sales in 2022 have climbed15% since 2020, and they're projected to reach more than $31 trillion in 2025. But it will be a slow climb.
Projected retail sales growth worldwide from 2020 to 2025
Sourced fromStatista
The World Trade Organization became less optimistic about trade growth volume as 2022 progressed. The organization's estimate for 2023 was a growth rate of3.4%in April. By October, the forecast for the year had plummeted to a dismal 1.0%.
As commerce growth slows down, worries around inflation are ramping up.
How inflation is impacting businesses
Are very concerned about the risk inflation poses to company growth
Say high inflation is forcing them to reduce company costs
Have plans to increase product prices due to inflation
Say their company is preparing for a recession next year
Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022
企业主并非只有较高的costs on their minds. The average person is 102% more concerned about inflation than the coronavirus, which hasdropped down the list of global worrieswhile inflation rose to the top. Worry about rising prices isn’t likely togo away in 2023。
Although some say therecession fear is overdone, let’s face it—even the possibility of a recession affects how businesses spend, how venture capitalists invest, and how people shop.
Expectations of brands grow as consumer behavior changes
Consumers have more options than ever, and in today’s economic climate, they’re ready to exercise that freedom of choice. More thanseven in 10consumers bought from the competitor of their go-to brand between May 2021 and May 2022. And, if spending power decreases as expected in 2023, consumers will continue to shop around for better deals.
But shoppers aren’t just aware of the price tag. Environmental, social, and governance concerns influence abouthalf of global consumers。Buyers want to support more ethical businesses with more sustainable supply chains—even though consistency in freight, distribution, and especially fulfillment are nearly impossible for many businesses to control. That’s why product shortages motivate nearly half of all brand switching:46% of consumersmove to competitors who have the products they want in stock.
Discovering new brands to try is also easier for consumers—and most are ready to buy. More thanseven out of 10like the convenience of instantly purchasing products where they're browsing. And they’re browsing on social media:60% of the globeis already on social media, so they need only go to the platforms they're already on to find new brands and products.
That same expectation for seamless immediacy is seeping into physical retail too. "While we see customers really interested in coming back into the store space and having a personal approach, they've also gotten used to having everything immediately,” says Shaza Mahmoud, head of retail at Daily Paper. “They want it now. This is just the era we're living in. Everything available at the click of a button."
Consumers want their shopping to be personal, instant, and responsive—and they want that high-value experience anywhere.
Arpan PodduturiDirector of Product Retail and Messaging, ShopifyCommerce is everywhere. The purchase journey is non-linear. It can happen from seeing an ad on Instagram, an influencer on TikTok, a drop on Twitter. You might be window shopping in person, or a friend might send you a link.
That's why, aside from growing revenue, improving customer experience is the top priority for global businesses.*
This attitude of ultimate flexibility and interconnectivity is hitting all aspects of commerce—including employment. Employees are moving their talents to the companies that will benefit their wallets, lifestyles, and values. For one out of five employees, flexible schedules and locations are keys to retaining them, something that brands with a strong retail presence will need to keep in mind.
The Commerce Trends 2023 report is a compilation of some of the most powerful insights that emerged from our research across five areas: supply chains, inflation, marketing, social commerce, and retail.
Methodology
We partnered with global market research firm Ipsos to explore where the commerce industry is, where it's going, and how leading brands are pivoting to keep up with the ever-changing commerce landscape. The study includes responses from 900 business owners and commerce decision makers based in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Spain, Japan, Singapore, India, China, Australia, and New Zealand.
We combined survey results with third-party data, proprietary research about brands that sell on Shopify Plus, as well as qualitative insights from two dozen interviews with industry leaders, investors, and subject matter experts. Together, these findings form the foundation for the trends report. Here’s a snapshot of what each chapter will cover.
Supply chain
The supply chain crisis forces brands to accelerate long-term growth plans
Experts had predicted supply chains wouldnormalize in 2023, but the Russia-Ukraine war has further pressured supply chains still in the squeeze of the pandemic. Some studies show disrupted supply chains can cause a62% financial loss。
Effects of the supply chain crisis on businesses vary widely, but brands should recognize the vulnerability of their own supply chains and prepare for uncertainty—especially as 60% of global consumers expect same-, next-, or two-day delivery.^
Business owners are responding to supply chain challenges by rethinking single-sourcing and how much inventory they keep on hand. Such shifts might cost more in the short term, but they create more robust supply chains that can adapt to a turbulent logistics landscape. Brands are also digitizing more of the supply chain so they can catch disruptions as soon as, or even before, they happen.
Money
Strategies to cut costs during inflation also raise customer loyalty
Global trade hit a record high of$28.5 trillionin 2021, an increase of about 13% from before the pandemic. But commerce growth slowed in 2022. And as the war in Ukraine contributed tosurging oil and gasoline prices, the cost and time associated with transporting small packages went up—and not just in the region.
Several countries like China, The Netherlands, Germany, and Italy import staples like fuel, oil, wheat, wood, and metals through and from Russia, so prices are going up along with lead times worldwide. Product shortages are putting greater financial strain on an already-weakened economy. Interest rates and borrowing costs are also rising, along with commodity prices.
Exaggerated growth during the pandemic also contributed to overzealous investments in hiring by some direct-to-consumer brands. Now higher costs and slower business is making it difficult to keep up with expenses. The result:significant layoffs。
Fears of recession loom large, souring investor sentiment, which will be a challenge for 73% of brands that are planning to rely on external investors this year.*
As brands and buyers continue to see their spending power decrease in light of inflation, both are finding ways to reduce expenses. Shoppers are doing that by seeking cheaper options—which means the 81% of brands that plan to raise their prices (or already have)—need to emphasize their value to keep customers.*
的年代ome brands, raising prices has meant introducing new products at a higher price, instead of making existing products more expensive. Others are making plays for long-term loyalty by freezing prices or introducing budget-friendly product lines. Savvy brands are betting on their customers by investing in them now, in the hopes it pays off in a future recovery.
Marketing
Brands overcome third-party data woes through collaboration
Unstable markets are pushing consumers to try new brands. During the pandemic,three out of four consumerstried a new brand, product, or purchase method. Once lockdowns eased up and borders opened,41%of buyers broke with brand loyalty in favor of new options.
But converting these potential customers is challenging: Already-high customer acquisition costs are on the rise as return on ad spend (ROAS) declines. On top of this, tighter privacy regulations are forcing brands to rely less and less on third-party data to or get in front of the people most likely to buy. In response, brands are turning to collaborations.
Brand-to-brand collabs, where non-competing brands co-create products or experiences to tap into each other’s audiences, allow for reciprocal exposure at a low cost. Collaborating with influencers will also benefit brands in 2023 and beyond.
Lockdowns catapulted thepopularity of influencer marketing。在缺乏能够触摸,感觉,和test products in store, consumers watched livestreams of unboxings or product reviews to experience products by proxy. Now, more than seven out of 10 businesses expect online influencers to become even more important in the future.*
Ecommerce
Social ecommerce gets more interactive
Ecommerce might be growing at a slower pace than during pandemic times, but it's still taking anincreasingly larger sliceof total retail sales worldwide. By the end of 2023, one in every five retail sales will be made online.
Although these numbers are significant, commerce has always been more than a transaction. And there's no place we're seeing that more than in the world of social selling.
Nine in 10 peoplebuy from brands they follow on social media. Social commerce reduces friction between discovery and conversion, simplifying one-on-one engagement and potential sales. According to our global survey results, using social channels for marketing and promotions is the most important customer acquisition and retention strategy for businesses to drive growth in the next few years.*
Top five customer acquisition and retention strategies brands are using to drive growth
Using social channels more for marketing and promotions
Offering more premium products and services
Using ecommerce marketplaces more
Offering more payment methods (like Apple Pay)
Using customer data for better targeting, customer segmentation, and personalization
Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022
Brands are using old platforms along with innovative tools to create the connections shoppers want across channels. But it's not just about doing the same thing that’s been done for the last 10 years. We’re on the cusp of a new era of digital connection: the metaverse. Augmented and virtual technologies have just started making the next biggest space for social commerce a reality.
And future-forward ecommerce brands are already thinking about how to meet with customers in the internet of tomorrow.
Retail
Brands diversify and differentiate their in-store experiences
The job market is in flux. Retaining staff has been a struggle for many employers, and 59% of brands attribute their challenges to human resources.*Four in 10 workersaround the globe say they might leave their jobs in the near future. Half say higher pay might persuade them to stay, but as brands tighten their belts under today's financial pressures, layoffs are becoming more likely than pay raises.*
Still, stores need teams ready to serve today's customers who are used to blending multiple channels—and often expect retailers to do the same. Such expectations are changing the role of the retail worker, and the role of the retail store.
Arpan PodduturiDirector of Product Retail and Messaging, ShopifyThe more we can connect online and offline, the better the customer experience. And that ultimately gives retailers and main-street brands a chance to survive and thrive going forward.
Brands are learning from the audiences they're attracting to redefine their store objectives. That also means differentiating their in-store experiences from the growing competition.
Shopify Retail senior product marketing lead Kevin MacGillivray points out a recent trend of making in-store experiences truly experiential. “Let's assume it's a soap store,” says MacGillivray. “Try the soaps, smell them, use them—do what you can only do in store and add that bit of magic you can't get from buying on a website.” He adds, “You can now shop from exercise equipment, the car, the couch. All things you can't replicate in a digital world. There's no good way to do that yet because it's so tied to your personal experience as you use it. More and more successful in-person retailers are doing this."
Value can't just be a buzzword in the future of retail. It’s more and more important for store owners to understand consumers at a local level. If they want more lifetime value from and for customers, it starts with incentivizing them to buy in on the brand experience, not just the products.
The commerce and technology landscape is in perpetual motion. Brands need to respond in real time just to stay relevant.
Powered by data from millions of Shopify brands, our proprietary report provides the tools and insights businesses need to drive growth in the next year.
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Tony Drockton
Founder,Hammitt
Shaza Mahmoud
Head of Retail,Daily Paper
Julie Mathers
CEO,Snuggle Hunny