I couldn't help but notice some interesting trends that will probably have quite an impact on the European eCommerce industry as a whole, so I thought I would lay them out in this Op-ed. I do hope you will find some useful or new insights here.
To make things easier, each trend has a list of potential winners, losers, and safe players.
Disclaimer: These are all just educated guesses about the future, so some (or all) might be wrong. Time will tell.
Trend 1: The European Union unites?
Most booths on the show floor at Ecommerce Berlin 2023 were related to cross-border Ecommerce in Europe, same as last year. This make sense, since the market is maturing and local players have no way to grow but to move outside their borders. Just look at the expansion of some regional powerhouses like Zalando (DE), and ANSWEAR (PL), and you'll see the same recipe:
refined shops brought to near perfection (in terms of conversion) 🛍️
size-leveraged deals with suppliers 🤝
enormous marketing budgets when entering each new market 💰
What countries? Well... here is the list of the top 20 countries in the EU by GDP (a good enough proxy for eCommerce potential market size): DE, FR, IT, ES, NL, PL, SE, BE, IR, AT, DK, FI, RO, CZ, PT, GR, HU, SK, LU, BG.
Here is my guess: players will venture into nearby, marginally smaller markets than their home market. Unless they are just getting started in smaller markets, which leaves them with no choice.
Medium shops with little differentiation
Marketing agencies and ad networks (due to consolidation in the long term)
"Love brands" with loyal customers
Local products suppliers
Shops expanding in new markets
Marketing agencies and ad networks (due to competition in the short and medium term)
Trend 2: Attribution is dead. Long live attribution.
Let's lay it as it is: Google completely dropped the ball with attribution 🏀.
Why? Attribution gives Google Ads (their biggest money maker) its raison d'etre. While the default last-non-direct-click attribution worked fine at first, it quickly became (almost) completely useless as the buyer journey became more complex.
The result? Supermetrics, Funnel, Improvado, Adverity, Admetrics and the list goes on. And these companies did good business for years. I used to see this type of companies on the show floor. This year, they were not there anymore.
Google picked the ball up again 🏀 (without purchasing any of the companies above), and built decent Data Driven attribution directly in GA4. And slapped BigQuery on top for free, so companies now have direct access to the granular underlying data. My guess is that many of the players named above will either pivot to new products or value propositions, or get lost in zombie land.
Attribution technology players
Large shops who used to have much better data by using attribution technology players
Small and medium shops who now have access to better data out of the box
Trend 3: Conversion is the new Acquisition
Google Performance Max is on everyone's tongue at Ecommerce Berlin this year. There are entire sessions dedicated to it, and shops I met are already using it and experimenting more and more. P-Max promises smarter ads and better results. If it is true, that means three things:
more money for the ad network that delivers results
less money for traditional PPC agencies
a more level playing field for eCommerce players
The one that is most interesting in my opinion, is the level playing field. That means, that it will get harder and harder for players to compete on ads, and they need to differentiate by focusing on something else.
My guess? Conversion 👈
That means that shops will become truly obsessed with what happens on their pages (and I mean both CR and AOV), and with maintaining a longer relationship with their customers (looking at purchases/customer). I know there are a lot of acronyms in this paragraph, so I will just conclude by saying that CLV:CAC is king 😇.
So, what does that practically mean?
It all starts with basic work on design, and UI/UX improvements of the shop page (of course, always A/B testing the changes) and goes all the way to more advanced tools that help make the most out of each visitor and customer:
I also see this every day at Aqurate - a shop employing advanced conversion methods can make roughly 2x the revenue of a shop stuck with the more "traditional" ways. More and more players are starting to catch on.
At the end of the day, eCommerce is a very dynamic field, closely tied to macroeconomic and geopolitical factors, but also highly dependent on today's gatekeepers, the ad networks. To win at this game, understanding trends is crucial and I do hope that this opinion article was helpful. As I said... I might be wrong... but I might also be right 😁.
Here are some other thoughts from Ecommerce Berlin that I did not have time to cover in detail here:
BNPL (buy-now-pay-later) is still going strong, but felt like less than last year.
Sex shops remain a perfect fit for eCommerce (privacy, easy to transport and store, high value per volume) and are evolving rapidly. They even had 2 sessions on stage this year.
Refrigerated lockers might be the tipping point that groceries businesses needed to go into mass-market.
Dynamic pricing is big and growing. We'll soon need regulation for this.