The future of e-commerce: Navigating slower growth
E-commerce has experienced rapid growth in recent years, which was further catapulted by the surge in online shopping during the COVID-19 pandemic. However, industry experts now predict that the growth of e-commerce will slow down in the coming years. This doesn’t mean there’s no growth, just slower growth. According to the Global Retail E-commerce Forecast 2023 by Insider Intelligence, the sales growth of retail e-commerce will only increase by 8.9% this year. This is a significant decrease compared to the double-digit growth rates of 26.7% in 2020 and 16.8% in 2021, but it is up in 2022, which came in with 7.1% growth. Adjust data also confirms this pattern. While app marketers may encounter challenges due to the slower growth of e-commerce, they can also capitalize on new opportunities for success.
Decelerating e-commerce app install and session growth
Over the past years, there has been a deceleration in global e-commerce app install and session growth. The install growth rate was 21% from 2019 to 2020 and 17% from 2020 to 2021. However, it experienced de-growth in 2022, declining by 0.6%. App sessions grew 55% year-over-year (YoY) in 2020, 25% in 2021, and a much smaller 12% in 2022. This backward trend can be attributed to several factors, including the easing of lockdown restrictions, the return to brick-and-mortar stores, and the shift toward a more sustainable and ethical model of consumerism. Despite the absence of the boom seen in the 2010s, e-commerce, and m-commerce will still slowly march forward. Our data shows that in Q1 2023, installs were 5% higher than the 2022 average, and sessions were up by 9%.
In-app revenue growth rate drops
Although in-app e-commerce revenue consistently trended upward in 2022, the growth rate was much lower than the previous year. In-app revenue increased by an impressive 46% from 2020 to 2021 but only rose by 4% YoY in 2022. This may be due to more people venturing out for in-person shopping experiences or spending less overall due to the economic downturn, leading to a decline in mobile e-commerce sales.
Insider Intelligence’s report shows that during the lockdown period in 2020, global retail sales growth was down by 2.6%, but retail e-commerce sales increased by 26.7%. As lockdown restrictions eased, retail sales grew by 12% in 2021, and retail e-commerce sales growth increased by 16.8%.
E-commerce sales may slow down in 2023 due to economic uncertainty as consumers become more mindful of spending. However, our data shows that in-app revenue for e-commerce apps increased by 17% in Q1 2023 compared to the 2022 average, which could indicate a different trend for m-commerce sales. January and February of 2023 are also up 29% and 35% YoY, respectively. Additionally, March grew by an impressive 48% YoY.
Tips for thriving in this new normal
Yes, e-commerce growth might slow down, but this doesn't mean it's time to panic. This can be an opportunity to focus on steady and stable growth while building a stronger brand. Here are some strategies e-commerce app marketers can use when facing a sales dip:
- Focus on customer loyalty: As the number of new customers entering the market decreases, it's essential to prioritize customer retention. To encourage repeat purchases, offer incentives and rewards. Engage customers through social media and email marketing to strengthen the relationship.
- Optimize the user experience: Consumers in the US are spending more on trusted websites, with repeat sales rising 36% from $28 to $39. Improving the onboarding experience and showcasing values that align with users is crucial to continue this trend. A seamless user experience is critical to increasing retention, so optimize your app's interface and provide excellent customer service to encourage loyalty.
- Leverage referral programs: Referral programs are a powerful tool to attract new customers. You can create a referral program that rewards both the referrer and the referee with a free product or service. This can significantly boost word-of-mouth marketing and generate thousands of monthly referrals.
- Explore new markets: While the overall growth of e-commerce may be slowing down, there may be opportunities to tap into new markets or niches. Conduct market research to identify untapped segments and tailor your marketing efforts accordingly. Expanding your reach to new markets can help offset the decline in sales growth in your current market.
- Use gamification: E-commerce often suffers from low conversion rates, where potential customers abandon their purchases due to issues with shipping, payment, or technical difficulties. To combat this, you can use gamification techniques to encourage desired behaviors by leveraging the power of rewards and competition to inspire app activity.
- Utilize original data and research to boost growth: You can focus on developing your brand through content marketing projects that may require more work to prioritize. This involves surveying your users and potential clients to better understand your target audience. You can then transform the results into newsworthy content that journalists can pick up, which will help increase brand awareness.
- Drive sales with social commerce: Social commerce is projected to grow three times faster than traditional e-commerce, increasing from $492 billion worldwide in 2021 to $1.2 trillion in 2025. Consumers are spending more time on social apps and are using them in new ways. Gen-Z, for example, is now using TikTok for searches they once conducted on Google. Social media is no longer just a branding channel and should be treated more like a search engine. Marketers should consider focusing on native advertising and influencer outreach.
It’s vital to stay ahead of the curve and ensure your app remains relevant and successful in the ever-changing world of e-commerce. As the year progresses, we will keep a close eye on any changes in this vertical and keep you in the loop with the latest updates and strategies for success.
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