7 eCommerce Predictions for the Next Decade

I’m a little late to the party to make New Year predictions for 2017, so let’s do something a bit different.  Below are seven eCommerce predictions for the next 10 years: major trends I believe will reshape the way we sell online by 2027.

A Viable Alternative to Google and Facebook

We’ve entered a unique time where just a few major platforms have monopolized (or are close to monopolizing) the majority of traffic online.  Someone in the eCommerceFuel Private Community went so far as to say the internet for store owners in 2017 consists mostly of Amazon, Facebook and Google.  And I think they’re largely right.

Given these behemoths’ entrenched position and network effects, it’s hard to to knock them off their perch. Combine that with the demands on public companies to show ever-increasing profits and paid traffic costs for merchants, and it seems the giants will only continue their march upward.

So what happens a few years from now, when Google and Facebook have raised their rates to the point where it’s not feasible for most to profitably purchase traffic?  When there’s no more surplus left to harvest?

I’m not sure what form it will take, but I predict a major traffic alternative for merchants will spring up in the next decade.  One that will likely operate under a paradigm different from legacy social media or traditional search engines.

Perhaps it’s an open source search engine built on the promise of no ads with the goal of delivering truly unbiased results.  Or maybe an independent review site that ranks stores and products based solely on reviews they generate, which are guaranteed unbiased.

But I do see the trend of ever-increasing ad costs and SERPs and Facebook feeds that are increasingly stuffed with paid content as unsustainable both for merchants and users.

Great Ads Will Become Table Stakes

Superbowl ads are among (if not the) most expensive advertising you can buy.  There’s one commonality among almost all of them:  They’re either humorous (or try to be!), or they aim to make a deep emotional connection.

They employ these techniques because they work.  At a time where attention is getting exponentially harder to earn and more expensive to buy, fun creative and emotional advertising will become table stakes for getting noticed.

When Dollar Shave Club released its now infamous video in 2012 it made headlines due to its irreverent and funny approach.  Fast forward to 2017 and I’m seeing videos like this everywhere.

Just in the last few months, examples from Purple Mattress and VidAngel come to mind (see below):

At the moment it’s mostly larger brands that are producing this kind of content.  But by 2027 I think it will be a requirement for even smaller seven-figure store owners who don’t want to spend a fortune on paid traffic but want to see decent results.

Virtual Reality Is Not Dead

I’m not sure who issued the kill order, but virtual reality quickly went from being the next big thing in 2016 to an over-promised, dried-up technology that people now believe is dying.

Google Trends certainly doesn’t paint a rosy picture for the term “virtual reality”:

I believe VR will still play a major role in the future and will eventually be one of the primary ways people shop, enjoy sporting events and consume entertainment.

The problem?  People expected the technology to mature practically overnight.

Consider the internet.  It started to hit mainstream homes in the early ’90s, yet buying things online didn’t become widespread until nearly 15 years later.

The consumer version of the Oculus Rift was released less than a year ago.  And because we haven’t seen massive adoption in 12 months, the powers that be have relegated VR to the scrap heap of tech.

Give it some time, people!

Any technology is expensive, buggy and over-hyped in the beginning.  But I’d be shocked if at least 50% of computer users don’t own a VR headset by 2027.

Adoption of a Mobile Checkout Standard

Mobile use has exploded over the last five years, but there’s still a massive gap in conversion between phone and desktop.  The biggest problem?  Buying stuff on tiny screens is a huge pain.

Services like Apple Pay have promised to make that easier but still haven’t closed the gap.  Part of the problem is that there’s no universal standard across devices and browsers.

Open platforms are difficult and sometimes go against the financial interests of big companies. However, I’m optimistic that the next five years will see the emergence of a universal mobile payment protocol that mobile vendors can use to facilitate easy payments via phone.

Think something similar to the “http” protocol for the web.  You can get online with any number of browsers because they all speak the same language.

It’s such a huge, systemic problem encumbering online commerce I’ll be shocked if this isn’t fixed by 2027.

The Decade for Small, Unique Brands

In a recent Community discussion, our resident Amazon expert Lars Hundley summed up my thoughts perfectly on this issue when he said:

I feel like this decade is the era of small, unique brands.

Seth Godin has said, “You either need to be cheaper or better.  If you try to be both — or are neither — you’ll fail.”

Amazon is cheaper.  Wal-Mart is cheaper.  Good luck trying to beat them without spending billions beefing up your own supply chain.

Stores like Beardbrand, Asildastore, Whipping Post, Linjer, FCTRYIsland Apothecary and Gransfors Bruk are better.  They have unique products, yes.  But more importantly, they have soul and a story to tell.

Amazon and brands like these will be the two types of eCommerce that thrive during the next decade.

Amazon Will Become a Less Appealing Channel

In the 2017 State of the Merchant report, I compared profit margins between merchants selling primarily on Amazon and those who focused on their own sites.

Profit margins were nearly identical:  17.6% for storefront sellers vs. 17.9% for Amazon heavy sellers.

With nearly identical margins, what’s the biggest appeal of Amazon?  Speed and scale.  You can grow on Amazon amazingly fast and scale without needing to hire a team or build out infrastructure.

But that comes at a cost.  You have to get comfortable with two scary things:

First, it’s widely known that Amazon uses you for market research and often introduces its own products to compete with successful sellers.  It may not make sense for Amazon to make its own version of your relatively niche product now, but as time goes on and some of its lower-hanging fruit gets in-sourced, it may become more appealing.

Second, you’re trading speed and scalability for ownership.  If Amazon decides to jack up its fulfillment or commission rates by 35%, there’s not much you can do about it.  This is doubly true in 10 years, when Amazon’s marketshare will be exponentially larger.

As it grows, I believe Amazon will increasingly compete directly with sellers and likely leverage its monopoly to raise rates.  As the biggest game in town, it will still be a channel you can’t overlook, but I predict a strong dampening of the euphoria we’ve seen around Amazon in recent years.  I also think we’ll see the discussion taking on more confrontational undertones as sellers increasingly compete with Amazon head-to-head.

Stores Will Grow Dramatically Leaner

I woke up earlier this month to a front page in my print copy of the Wall Street Journal titled “The End of Employees.”  It outlined how companies are increasingly utilizing contractors for everything apart from their core competencies.

And it’s not just Fortune 500 companies.  I’m increasingly seeing this with store owners.

In my Keynote talk at eCommerceFuel Live last year I studied a group of store owners I dubbed “cash cows.”  These were stores that managed to generate 5x more profits per employee ($125K per employee vs. the average $25K per employee).

Among the commonalities they shared were a focus on manufacturing, smaller catalog sizes and an increased likelihood to outsource using contractors and third-party logistics (3PLs).

Even over the last year I’ve noticed a number of SaaS apps spring up that are now addressing the needs I previously had a VA do.

Between technology, 3PLs and access to a deep pool of global contractors, I think we’ll see the average number of employees and required overhead for store owners dramatically decrease over the next decade.

This is great news if you’re a store owner, as it means a more efficient, profitable operation.  But what do you do if you’re trying to get a job in eCommerce and aren’t quite ready to start your own gig?

Two things spring to mind.  First, understand technology really well.  If you can leverage the tech tools out there to help owners run and automate their businesses, you will, counterintuitively, make yourself invaluable.

Second, make sure you bring expertise to the table from day one.  Whether it’s fair or not, I regularly speak with owners who are looking for team members who can hit the ground running and, perhaps most importantly, are able to teach themselves.

“I don’t like managing people,” a well-known tech entrepreneur told me a few weeks ago. “I like people who can see the problem, jump in and start quickly making progress.”

Again, it may not be fair or nice to hear.  But I think this is the reality that many face in the hiring world today.

Where Did I Get It Wrong?

One of the great things about making predictions a decade out is that it’ll take a while to be proven wrong!  Don’t let me escape unscathed.  In the comments below, challenge me on any predictions you think are off-base or flat-out wrong.

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Photo credit by Alex.  

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15 Comments

  1. “Amazon Will Become a Less Appealing Channel”

    Absolutely – I already see this happening. In the conversations I have with Amazon sellers, there is often a lack of fascination with the channel. It’s too big to ignore – but that’s usually the only compliment I hear about Amazon from entrepreneurs.

    1. Thanks for sharing Mark. I’m already starting to see pockets of this too just chatting with merchants. Should be interesting to see if / how quickly this trend continues to grow…

  2. So true about authentic brands. If you are a “me too brand” you’re bound to disappear.

    What are your thoughts on small business fulfillment services? Now that FedEx dropped its name in the hat of fulfillment services to compete with FBA, is USPS likely to follow?

    To me it seems like the natural and obvious evolution of things, given that they have the warehouse infrastructure just as much as FedEx does.

    Thanks for the great content!

    1. Hey Rico! Interesting question on fulfillment. I would be surprised to see USPS jump into outsourced fulfillment but it’s more of a gut feeling than something I have good reasons for. Perhaps it has to do with the 3PL business being pretty thin margin I believe and requiring lots of efficiency and I’m not sure that’s USPS’ strength relative to the likes of FedEx and Amazon. But anything is possible.

      Thanks for reading and good to hear from you man – hope all is well in Bozeman! 🙂

    2. The United States Postal Service has strict limitations, imposed upon it by Congress. They are handcuffed because they are a government entity. Many claim that this keeps them from ever being able to become profitable.

      The question of whether they may get into fulfillment services is first a question of whether or not it is even allowable, by law.

  3. Great article Andrew. Totally agree on the streamlining part as that is something we habe have been doing, totally unaware that others are also looking to leverage every staff member to maximize efficiency. I’ve put a reminder on my Google calendar to go back to this article and see where we stand then!

    1. Thanks Nathan, appreciated! A calendar reminder for 2027? Awesome. I’m honored to (hopefully) be the first appointment on your calendar for that year. 🙂

  4. I have to disagree with your expectations for virtual reality (although you didn’t really say where or how you see it being used). It is adjunct technology, not really an advancement in and of itself.

    I recall a previous phase of VR hype in the 90’s, it fizzled, just like it’s doing now. The same goes for 3D movies and television, which have come and gone several times over the decades in the same way. Both VR and 3D are just window dressing applied to other media, which hold much more inherent value by themselves.

    While VR may have large potential in a few areas, like instruction and entertainment, the application of the technology will remain limited. It simply doesn’t have the breadth or adaptability which is built into the technology which spawns it.

  5. Andrew, regarding “I think we’ll see the average number of employees … for store owners dramatically decrease over the next decade”

    I don’t agree.

    I think we’ll need similar numbers of employees but will instead demand that they have a more focused, usable skill set and are more accountable for their own performance.

    I agree that some eCommerce jobs will become more automated in terms of people being replaced by software, but this just gives rise to an expert who can control the increasingly complicated software.

    Think Adwords; it’s now commonplace to outsource to a specialist who can manage the entire system rather than DIY.

    The rise of offshoring has meant millions of people jumped in to make side-money, but many now see it at as full-time money.

    There’s now another subtle attitude shift towards specialist outsourcing being perceived as a full-time, reliable and rewarding career. And with this naturally comes more accountability for both employee and business owner.

    We need committed employees, not opportunistic Virtual Assistants, who understand that there are specialist skills required for eCommerce.

    I think we’ll see a shift in WHO we hire, not HOW MANY we hire.

    1. Thanks for your thoughts Katrina! I think we might be closer to agreement than you think.

      While I do see tech taking away some of the work traditionally employees have done, I see an even larger percent moving from employees to contractors. Just like you mentioned with your AdWords example. So when I say “lean”, I don’t necessarily mean that we’ll need 20% as many people involved in the business. But rather that many, many more of them will be contractors vs. in-house employees.

  6. Andrew, Dead-on with Amazon. It’s already happening. It’s never been a free ride with them anyway, but it is getting less “freeier” every year. They are clearly starting to flex their muscles to increase their margin and profitability. I am specifically talking about Amazon vendors. On the seller side it looks like the conditions to do business are unchanged. Bu they aren’t. Prime is forcing sellers to adjust, and FBA (fulfillment by Amazon) has become a logistic puzzle in itself with Amazon flexibly changing rates according to seasons. Diversification is on my mind. Jet is the new kid on the block, and with Walmart’s backing they can grow to become real competitors to Amazn. Won’t happen overnight.

    1. Thanks for the thoughts Patrice! Perhaps I should have made this a prediction for 2017 vs. 2027? 🙂 Will be very interesting to see how this plays out….

  7. Alex, you continue to shine as a thought leader in ecommerce and the Internet. This article offers outstanding insights for business owners about possibilities for the future including potential dangers (especially Amazon). Thank you.

  8. I think amazon can stop their success only when they get too greedy. At one point customers will stop to buy “Amazon products” because of the fact that they don’t want everthing to be an amazon product. Otherwise amazon products aint the best quality. Pople notice that. Otherwise I also think that the confrontation between sellers and amazom will be increasing as they go head-to-head.

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