Challenges for online retailers in 2023
No one knew what would happen to the economy post-Covid and what effects it would have on the e-commerce industry. The effects of an end to world peace, inflation bubbles, imploding crypto markets, and energy crises only make this uncertainty greater. After a few years of exponential growth, the question now arises as to how e-commerce will change through these threats. In this article, we will outline the main trends and look at the challenges facing retail (platform) entrepreneurs in 2023.
The e-commerce industry has undergone unprecedented growth during the pandemic. According to research by McKinsey & Company, the pandemic has accelerated the "digital transformation" by 5 years. However, due to a disappointing year in 2022, it is uncertain what will happen in 2023. According to the Thuiswinkel Markt Monitor, this exponential growth has temporarily stagnated. We are again on the predicted trend before the pandemic. What has changed in recent years is who is buying online. For example, research by Sana Commerce shows that 58 percent of B2B buyers have chosen e-commerce more frequently since the outbreak of the pandemics. This means there are opportunities in sales to larger groups of business customers.
Crises and e-commerce
In the last quarter of 2022, we are in a housing crisis, a climate crisis, and an energy crisis. This all reflects on purchasing power and consumer confidence. The consumer spends less not only because of the higher inflation, but also because many are asking themselves what else is coming. E-commerce must therefore prepare for this. The sale of draft stoppers, candles, generators, and insulation material is an example of this. Similar simple sustainability solutions are usually a big hit in December, but this year the niche was more popular than ever in September.
Not on to the Stock Exchange
The cancellation of bol.com's plans to go public might be explained by the disappointing revenue the company had this year. After the boom years during the Covid crisis, it is also visible for bol.com that consumers returned to the terraces and shopping streets this year. For example, revenue in the first quarter was 7% lower than the previous year. This contrast should, however, be placed in a better perspective. Due to the growth in partner sellers, a growth in the assortment followed. This brought 27% more revenue to bol.com. The company barely managed this growth, but the trend weakened after the stores re-opened. A growth of 27% and a subsequent decline of 7% still means a net growth of 20% over the past two years.
Direct to consumer
This means that platforms have won the fight for the online customer once and for all? That they are more firmly in the saddle than ever before is clear, but there are also challenges. For example, Forbes predicts the trend that large brands will increasingly sell directly to the customer and will eventually leave platforms. This of course offers opportunities for smaller, independent entrepreneurs who still want to sell via platforms.
Also in 2023, Amazon is not the largest in the Netherlands
An article on Tweakers.nl analyzes Amazon's entry into the Dutch e-commerce market from the perspective of Tweakers' Pricewatch. The conclusions are not unambiguous. Within a reasonable time, after its entry in March 2020, Amazon has acquired market share in various product categories within the electronics industry (traditionally the knowledge market of Tweakers), but even in 2023 it continues to stagnate in third place, according to FashionUnited. The online retail has managed to achieve a growth of 27.5%. That is less than 2021, but certainly does not represent a decline in consumer spending. Notably, this year bol.com has even expanded its lead over Amazon in many product categories.
Actually, we can say that the battle between the platforms in the Netherlands has just begun, now that Amazon has also entered Belgium. The expectation is that it will also be a fair fight in 2023. Even if Amazon conquers market share from bol.com, it offers opportunities for platform entrepreneurs. When more sales are made on Amazon, that platform can attract more external sellers, making it more attractive to buy on Amazon in the long run, attracting even more external sellers. A classic self-fulfilling prophecy, so to speak.
Omnichannel is the norm
A trend that seems to continue is that sales will take place omnichannel at all levels. This means that not only do physical retailers want to differentiate themselves online, but existing webshops will also offer specific product selections on marketplaces to reach a wider target group. In an interview with bol.com, entrepreneur Steven van Belleghem states that most SME entrepreneurs benefit from selling on platforms, with a specific product range. The fact that more and more entrepreneurs are choosing an omnichannel approach is in line with the digital transition.
White spots and grey spots
In an interview with Frank Maessen, Product Manager Data at bol.com, it is emphasized that more and more intermediaries and agencies (such as e-pickr product research) are offering help to entrepreneurs to sell successfully in their own webshops and on platforms. Maessen calls this a good development, because he believes that merging data from different channels can lead to better conclusions and better decisions.
Products that are often searched for within platforms, but are not yet offered, are called "white spots" in the industry. "Grey spots" are examples of products that are offered but can still be improved, for example by offering the same product with a faster delivery time. So successfully exploiting these "blind spots" is a chance for both external sellers and the platform itself.
Bol has already announced some time ago that it will not take over so-called "white spots" that are successfully exploited by partners, but will offer them on the platform. In fact, actively informing the seller base about these "white spots" and "grey spots" has increasingly become one of the main tasks of bol. This means that platform entrepreneurs will have to look for creative ways to find these spots next year and sell their products successfully with them.