Online retail has grown rapidly over the past decade, with more and more businesses establishing their presence online. While that fact may not shock you, here is one that may. The industry is predicted to be valued at $12 trillion by the year 2026.
The growth has provided consumers with greater convenience and choice. However, so many retailers offering similar products and services, competing for the same customers, have left the space feeling very claustrophobic.
Overcrowding of retailers in e-commerce is backed by research, suggesting there are over 20 million sellers online today, leading to increased customer acquisition costs. And, due to the lack of barriers to entry, it is safe to say the number of retailers online will continue to grow steadily.
Anyone with a whim to sell a product can easily create an e-commerce page and start selling. We constantly see new retail brands coming in to compete in this overpopulated online jungle.
So, if the online retail market has proven itself so overcrowded, why do all the retailers still herd towards it?
A Saturated Online Retail Marketplace: Myth or Reality?
Have you ever wondered why new fast-food joints keep popping up despite the bajillion McDonald’s branches, and other brands, that already exist? They see potential in newly developed areas that haven’t been tapped, or, a new need for consumers i.e. the fast health food trend.
Coming back to online retail, yes, the facts do support that there are a silly number of competitors, but opportunities are just as present, or did you forget that we mentioned the industry is still set to grow at a galloping rate?
The chances to compete through the web will always be expanding, and as long as we do so effectively, we too can capture a decent market share.
And to put your mind further at ease, there is no sign of that expansion rate declining yet either.
According to a report on online consumers by KPMG, there are over 2.14 billion global shoppers online, and it is predicted there will be at least 35% more buyers each year. It would be understandable to call a space saturated when there is a very limited cohort left to sell to, but the reality here is that demand is growing at a stable rate.
So, why then, does this myth get propagated constantly?
The answer: We are failing to understand the difference between overcrowding and saturation.
Overcrowding versus Saturation
Let’s explore this with an example. Many thought the automotive industry had become saturated because of the big players until there was a need for eco-friendly cars. Suddenly, the industry was disrupted by electric vehicles, and a whole new section had opened up for automotive producers to challenge multinational companies.
Therefore, we can confidently state that saturation, in this case, leans more towards being a myth, or should we say a misnomer. Sure, there are a lot of players (overcrowding), but there are still more than enough buyers to go around, and lots of tactics to explore to reach your product’s specific audience cohort.
Not only is there a continuously growing opportunity, at least for now, but there are also possibilities to create innovative avenues to compete in. Brands can always differentiate themselves through the way they do things.
The question isn’t where the customers are online, it is, how can you consistently compete in a crowded space and emerge victorious?
Competing with AI in Online Retail Marketing
In 2020, the market size for AI in the retail industry was estimated to be valued at USD 3.75 billion. The use of this new tech stack in e-commerce is still predicted to reach USD 31 billion by 2028. AI’s capabilities are being recognized, and experts are expecting it to play a larger role in retail’s future.
From effective audience targeting to reach your niche of audience and engaging communication to appeal personally to cohorts within your niche, to big data management and analytics, AI can give retailers the advantage they have been searching for. By making automated decisions based on continuous feedback on changing consumer behaviors and their reaction to digital ads, it enhances the returns that digital marketers spend on ads.
Retailers just may be surprised with how good their e-commerce profit margins look with them getting the most bucks out of their omnichannel advertising activities.
Research conducted by the Boston Consulting Group suggests retailers that are using AI to create personalized experiences for consumers are quickly enjoying a 6-10% increase in revenue when compared to those that are not.
It’s no secret that retailers work on really thin bottom-line margins, so whether they are saving a cent on ROAS or gaining consumers from their competitors online, it all makes a big difference.