These 11 ecommerce trends from Klaviyo, Loop, Yotpo, and other leaders will help you stay ahead in 2023 and beyond.
If you’re in the ecommerce industry, you’ve been on a major roller-coaster ride over the last three years:
- The unexpected drop, then spike, in online shopping in 2020 and 2021, followed by some stabilization in 2022
- Understocking from supply chain issues, and then by oversupply once lockdowns started to lift
- Record ecommerce profits followed by tightening wallets in the face of a looming recession
The loopy ride is far from over. As you already know, this year will bring its own highs, lows, twists, and turns. To help you understand how the industry is evolving, we spoke with ecommerce experts to forecast the top 11 ecommerce trends for 2023:
- Leaders from companies that build tools that power ecommerce, including Klaviyo, Yotpo, Loop, ShipBob, and LoyaltyLion
- Ecommerce agency leaders who are on the frontlines helping top merchants deliver exceptional support and optimize their conversion rates
- Our in-house team of ecommerce experts at Gorgias, who help merchants like you deliver revenue-boosting customer experiences
During our talks, it became clear that in 2023, the pendulum will continue swinging from acquisition to retention (for real this time), and brands will pivot away from rapid growth and toward sustainable profitability.
1) Online stores will (finally) figure out retention
2023 is the year retention becomes a true priority for online stores.
You’ve probably heard this story before. Retention has been a trendy term for years. But for many merchants, creating a retention strategy is like going to the dentist twice a year — everyone knows it’s important but not enough people actually do it.
You can see this lack of true commitment in Yotpo’s recent survey on the state of ecommerce retention. The survey showed that over 40% of online stores didn’t make any changes to improve retention in 2022 (despite 52% saying they were more focused on retention than they were in 2021).
But this year, the combination of rising customer acquisition costs (CAC), uncertain economic times, and tightening budgets will force brands to prioritize retention on the same level as acquisition.
George Walsh, Content Marketing Manager at LoyaltyLion, agrees that brands can no longer treat retention as a theoretical in 2023:
“Next year, we’re going to see more ecommerce businesses move away from acquisition and work harder to retain their existing customers during these economically trying times. Consumers are being pickier with their purchases as cash simply isn’t stretching as far, so brands will have to work harder to prove their value. Businesses themselves are also having to navigate smaller budgets, so with customer acquisition prices soaring, it makes sense to switch the focus towards existing customers”
In other words, it’s time to start flossing — online merchants won’t be able to avoid the dentist in 2023.
📚Recommended reading: Our CX-Driven Growth Playbook has lots of insights on the importance of retention, as well as specific tactics for turning one-time buyers into repeat shoppers.
2) Profitability > Growth
The same dynamics that push brands to take retention seriously — rising CAC, recession fears, and tightening wallets — will lead to closer focus on profitability (instead of growth at all costs).
Prepare for some major edits to the classic direct-to-consumer (DTC) playbook popularized by the likes of Warby Parker, Dollar Shave Club, and Allbirds. These brands grew incredibly fast by pouring tons of money into performance marketing, generating hype, and offering lucrative deals for online shoppers.
Then, customer acquisition was the North Star, even if it meant operating at a loss for years. Today, very few brands have that luxury.
The precarious global economy means the end of cheap capital to sustain unprofitable business models. Couple that with a constant rise in digital advertising costs, and many ecommerce stores will find that profitability is the sole path to survival as a business.
That’s why Jeremy Horowitz, Senior Partner Marketing Manager at Gorgias, believes merchants should get serious about their profitability goals in 2023:
“Start setting Net Profit goals yesterday. 2023 will be marked by survival, not top-line YoY % growth. Know your Sales, COGs, Marketing costs, and how much you need to make to pay your team and yourself. Get honest about the ad spend you can actually afford. And get creative about how you’ll earn enough sales to turn a profit.”
3) Subscriptions eclipse one-off sales
As the search for profitability takes center stage, more brands will start testing subscriptions as a new, consistent revenue source.
Subscriptions can be the most direct path toward profitability because they help online stores:
- Boost metrics like average order value (AOV) and customer lifetime value (LTV) without increasing CAC. For example, Uqora — an ecommerce brand for health supplements — found that subscribers buy their products more than 8 times throughout their lifetime. In addition to the increases in LTV and AOV, brands only have to acquire subscribers once, instead of constantly retargeting them with performance ads.
- Make their brand a part of customers’ lives. The 2022 Subscription Commerce Report showed that most of the buyers who first purchased a subscription in 2020 exhibited lasting behavioral changes in 2021. In other words, subscriptions aren’t just a new trend, but a part of people’s lives. This gives merchants a unique opportunity to change consumer behavior and embed their brands into buyers’ routines.
- Delight shoppers and turn them into brand advocates. Subscriptions give you more chances to make buyers happy — think birthday discount codes, free shipping, loyalty points, and so on. Brands that create a great experience for their subscribers have a great chance of turning them into brand ambassadors who help grow the business organically.
To cut to the bottom line, Recharge’s 2022 Subscription Commerce Report shows that 42% of subscribed customers stick with a company for at least a year after the initial purchase, compared to only 1% of non-subscription customers:
Ryan Kodzik, Founder & Chief Creative Officer at Future Holidays, also believes that subscriptions will be a big weapon for online stores in 2023:
“The traditional ecommerce business model relies heavily on one-time customers. But research suggests that this is about to change. Subscriptions were one of our trends to follow for 2022, and they’ve only become more significant since.”
4) Brands leverage live chat as a conversion tool
When done right, live chat and chatbots provide great on-site conversion opportunities. They recreate the immediate sales interactions of in-person shopping, delight buyers with immediate support, and gather first-party data. That’s why we believe a lot more brands will start using live chat as a key owned marketing channel in 2023.
Now, it’s worth noting that most merchants still think of live chat as a way to provide customer support in real-time. This is an important use case, but it’s only the tip of the iceberg.
Brianna Christiano, Director of Support at Gorgias, knows that live chat can also be a great way to recreate some of the best elements of in-store shopping:
“A chat widget can be a great tool to unblock the sales process, both through proactive outreach and self-service functionality. When it comes to proactive outreach, you can set up automated chat campaigns to reach out to shoppers on your ecommerce site. You can:
- Offer a product quiz
- Ask if shoppers have questions
- Share a limited-time discount
- Direct them to best-selling collections
- Make new product recommendations
- Remind them about your free shipping policy
- Explain which payment methods you accept, like credit card, cash on delivery, Apple Pay, PayPal, etc.
Traditional marketing channels like social media or search engines focus on getting people to your site. But if those visitors don’t make a purchase, you’re earning nothing on your marketing investment.
It’s like spending all your money on a beautiful storefront, but not staffing anyone in the physical store to help the shopper. When they can’t find help, they’ll quickly heel-turn and walk back out the door.
That’s why live chat’s ability to increase conversion rates is so valuable.
Allen Burt, Founder and CEO at Blue Stout brilliantly sums up the importance of conversions over traffic:
“Most brands don't realize how increasing conversion rates affect profitability. To compare, if you increase your traffic through paid ads by 10%, your profit margin actually goes down on each sale (because ads are increasingly more expensive as you scale). Conversely, if you increase revenue 10% via a conversion rate increase of 10%, profitability goes up far more than 10%, since those sales didn't require any additional ad spend.”
Live chat ensures you’re actually taking care of your traffic and potential customers by answering their questions, giving them useful self-serve resources (e.g., FAQs about shipping or payment options), and finding new ways to nudge them toward a sale.
For example, Jaxxon saw a 6% increase in conversions and a 46% revenue boost by creating engaging live chat campaigns, including one to offer VIP-level support to people browsing premium products:
Just imagine how much more sales you can also drive with a simple automated message to all visitors like “Spend $50 for free worldwide shipping!” or “All orders over $100 get a 10% discount!”.
Put simply, live chat can help you make the most out of our website traffic.
📚 Recommended reading: Learn how Jaxxon boosted revenue by 46% with Gorgias live chat and self-service.
5) Live commerce travels west and goes mainstream
Live commerce, the shopping format pioneered back in the 1970s (throwback to QVC!), has made a big comeback thanks to the livestreaming functionality of modern social media apps. While its popularity has been mostly limited to China, 2023 could be the year where live shopping takes over the Western Hemisphere.
Klarna’s latest Shopping Pulse report shows that 1 in 4 Gen’Zers from the UK, US, France, and other western countries have already participated in a live shopping event.
Plus, Coresight Research estimates that livestream ecommerce penetration in the US will more than 5x between 2020 and 2026.
Our partners at Coalition Technology also believe live commerce will be one of the biggest stories of 2023:
“A billion-dollar industry in China and growing in popularity worldwide, live commerce is forecasted to reach $35 billion in sales by 2024 in the U.S. And this is not solely through social media — ecommerce giants like Amazon, eBay, and Walmart are taking advantage of this “social buying” phenomenon by adding livestream shopping to their platforms.”
6) Social commerce gains ground on social advertising
In 2023, we’ll continue to see the rise of social commerce, which allows shoppers to buy directly on social media apps. Brands will pivot away from social ads and toward social commerce to avoid rising ad costs and find new ways to differentiate themselves.
Besides being cheaper, social commerce also simplifies the buyer experience. It allows product discovery, research, and checkout to all take place on a social media platform (usually Instagram or TikTok), reducing the friction in the customer journey, especially for people on mobile devices.
This is in stark contrast to social advertising, which relies on people clicking on ads, leaving their social media app, and going to an external ecommerce website.
Like live commerce, social commerce also started in China, but the US is quickly catching on.
McKinsey predicts that social sales will form 4.7% of all US retail ecommerce sales in 2023, with that figure projected to go up to 5.2% in 2025. Globally, the social commerce market is also expected to grow to more than $2 trillion by 2025.
7) Cross-border ecommerce sales reach new heights (or… distances)
The boom in online sales during the COVID-19 pandemic created lots of competition for established merchants. As a result, many brands started selling globally and this trend will only accelerate in 2023.
Juniper Research showed that the value of cross-border ecommerce will exceed $2.1 trillion in 2023, from $1.9 trillion in 2022. Additionally, ShipBob’s 2022 State of Fulfillment Report found that nearly 32% of brands plan to fulfill orders in a new country.
Kristina Lopienski, Director of Content Marketing at ShipBob, also confirmed that more and more merchants are looking to sell abroad:
“With high competition and potentially reduced consumer spending in local markets, many brands are looking across borders for customers who are interested in their products. ShipBob’s 2022 State of Fulfillment Report found that 56% of brands planned to expand cross-border offerings this year (of which, 32% planned to start physically fulfilling orders in new countries in 2022).”
8) Personalization moves toward owned data
This year, personalization will go from a nice-to-have to a must for online stores.
You’ve heard this one before, too. But in 2023, merchants will have a much bigger incentive to double down on personalization.
The more personalized an experience, the higher the chance of converting visitors into buyers. The higher your conversion rates, the more you get out of your marketing spend. This leads to better profit margins, which, alongside retention, is the mother of all goals in 2023.
Plus, there’s ample data to show that customers value personalized experiences, while online stores don’t do a great job of delivering them.
According to Segment’s 2022 State of Personalization Report, 49% of all customers say they’ll likely become repeat buyers after a personalized shopping experience. Yet, only 35% of companies feel they’re successfully achieving omnichannel personalization.
Arjun Jolly, COO at adQuadrant, also explains that personalization is now an expectation rather than a bonus in the eyes of customers:
“71% of consumers expect personalization and 76% are disappointed when they don’t receive it, so it’s becoming incumbent upon brands to deliver from awareness through to conversion and loyalty.”
However, today’s brands can’t rely on yesterday’s main personalization weapon — third-party customer data. The value of third-party data has decayed due to:
- Strict regulations
- Updates from Google and Apple
- More privacy-conscious consumers
That’s why the foundation for successful personalization in 2023 will be zero- and first-party data gathered directly from visitors and buyers and stored in a CRM-like tool.
Brands will need to focus on the old-fashioned way of uncovering what their customers want — talking to them (via surveys or live chat, for example).
Like Alex McPeak, Content Marketing Manager at Klaviyo, says:
“As brands throw out the old DTC playbook, and instead come to recognize the importance of really knowing and understanding what drives their customers, there’s going to be a renewed focus on talking to customers, gathering data and insights, and applying that knowledge to brands’ marketing strategies moving forward.”
9) Augmented reality (AR) reshapes the shopping experience
This year, we may finally see AR become a staple in online shopping. Of course, technologies like virtual reality (VR) and artificial intelligence also deserve a mention here, but 2023 feels like the year of AR, especially as virtual try-ons gain popularity.
According to Statista, 110 million users in the US will use AR at least once per month in 2023, up from 83.7 million in 2020. This is a big increase, especially compared to VR, which hasn’t fared nearly as well.
This increase in usage coincides with a year in which brands must be laser-focused on delivering a great user experience.
Additionally, popular ecommerce platforms and marketplaces are already using AR. For example, Amazon uses AR to improve the mobile shopping experience by letting visitors see how furniture would look in their room — a big advantage over shopping in a brick-and-mortar store.
Arjun Jolly, COO at adQuadrant, also believes 2023 is the year AR goes viral:
“AR has been trending for some time, but it’s yet to really hit the mainstream. We think 2023 is the year it finally happens.
While entry into the VR world will set a user back at least $1,500 (for the headpiece/goggles), most adults in the U.S. are already prepared to use AR via their smartphones.
We’re already seeing mass adoption from marketers in the make-up and furniture spaces with a sprinkling of auto and retailers for good measure. And, while the metaverse is busy trying to get off the ground, AR offers users the ability to truly blend, and benefit from, real and digital worlds.”
10) Sustainability becomes an even larger purchasing factor
It’s no secret that sustainability already plays a big role in forming shopping habits, especially among millennial and Gen Z consumers. While this is a well-established trend, we decided to include it as it will continue to grow in 2023.
Talkwalker and Khoros’s Social Media Trends Report shows that 2023 will see brands focused on sustainability take a larger share of the market. At the same time, shoppers continue to emphasize the importance of sustainability, with 82% wanting companies to put people and the planet before profit.
According to Ryan Kodzik, Founder & Chief Creative Officer at Future Holidays, the biggest sustainability initiatives this year will be focused on packing waste and shipping options:
“Remember when “eco-friendly” was just a marketing buzzword? Today, it’s become an opportunity to build a unique value proposition for your online store. Sustainable ecommerce makes good business sense. From more sustainable products to reducing packaging waste and better shipping options, steps taken now can reap significant rewards in 2023 and beyond.”
McKinsey even calls packing sustainability a “megatrend” prompted by consumer sentiment and tighter regulations across the world.
11) Fear not — ecommerce is still going strong all over the world
All this talk of recessions, smaller budgets, and consumer uncertainty can paint a pretty grim picture of 2023.
Fortunately, we also have some great news — the growth trajectory will pick back up after the stabilization of 2022 and we’ll see an increase in global ecommerce revenue and growth rates.
Statista’s research estimates that online retailers will grow their sales to $6.3 trillion in 2023, compared to $5.7 trillion in 2022. This figure is projected to go as high as $8.1 trillion in 2026, which would mark a 56% increase from 2021.
Statista also predicts this growth will vary across the globe. China, the current ecommerce leader, is projected to grow its ecommerce sales by only 15% between 2022 and 2025. The US and Europe are poised for up to 50% growth over the same period.
Additionally, Nicole Walker, Partner Marketing Manager at Loop, believes the share of all retail revenue that comes from ecommerce will continue to rise:
“Year-over-year growth may look similar to 2022, which is a far cry from the boom years of 2020 and 2021. But, the proportion of retail revenue that comes from ecommerce will continue to grow, thanks to the continued popularity of online shopping. And that’s great news for Shopify merchants – the opportunity to grow and expand is still very real.”
2023 will be about getting back to basics
Despite the new challenges and opportunities for online merchants, the most important trends of 2023 won’t be exactly novel.
Yes, we know it’s more fun to talk about the impact of machine learning and other cutting-edge ecommerce solutions. These technologies will surely play a role, but on the whole 2023 will be marked by a renewed focus on the most fundamental concepts in the world of online commerce: retention, profitability, and customer experience.
Here are three things you can start doing today to stay ahead of the game:
- Create a solid retention strategy. Retaining your current customers is a smarter (and cheaper) way to grow your business as opposed to relying primarily on acquisition. Check out our guide to ecommerce retention rate for seven proven ways to improve your retention.
- Prioritize profitability over growth. Spending exorbitant amounts on digital ads and influencer marketing is no longer a central tenet of the DTC playbook. Profitability is now the primary goal and reaching it will require you to increase conversion rates, reduce cart abandonments, and abandon the unsustainable growth practices of the last 10 years.
- Talk to your visitors and buyers. Zero- and first-party data gathered with users’ consent is the new foundation for creating exceptional shopping experiences. That’s why finding new ways to talk to buyers (like live chat) is paramount in 2023. Klaviyo’s guide on collecting customer-first data is a great starter resource on this topic.
Finally, remember that despite the challenges, the future of ecommerce as a whole is still bright. Merchants who adjust to the changing landscape will have plenty of opportunities to thrive, regardless of what unexpected bumps await us.