In the early days of ecommerce, website functionality was basic, product selection was limited and personalization was nonexistent. But since the first online order was placed in 1995, global ecommerce sales have far surpassed $5 trillion and consumers can now have virtually any product delivered to their doorstep in a few simple clicks.
As technology advances, so do consumer expectations. Let’s take a look at possible subscription and ecommerce trends for 2024:
But before we dive into 2024 predictions, let’s look at shopping behavior that shaped subscription ecommerce over the past year according to our quarterly reports with PYMNTS.com.
2023 was the year of retention, and there’s no better tool to encourage repeat purchases than recurring subscriptions. Despite growing inflation and other economic concerns, shoppers were more inclined to sign up for subscription services for enjoyment and convenience rather than to save money. According to our April 2023 Subscription Commerce Readiness Report, a combined 59% of subscribers listed convenience or enjoyment as their top priority.
But while cost may not have been at the very top of consumers’ lists, they expected to get their money’s worth in the form of first-class features, such as:
When asked to name their top three reasons they would discontinue a subscription, many consumers listed the inability to pause or skip (27%) and change subscription frequency (23%) as reasons to unsubscribe. Giving shoppers options can give your business an edge over inflexible merchants.
Data privacy continues to grow alongside consumer skepticism, and it’s your job as the merchant to reassure them their payment information is in good hands. A top reason subscribers said they may cancel their subscription is if it’s renewed without their approval (31%).
Loyalty rewards were once optional for merchants, but our data showed that consumers are now expectant of these offerings. The most common reason cited by subscribers for canceling a subscription, with 40% of votes, was the discontinuation of free shipping. Terminated loyalty offerings weren’t far behind, with 27% of consumers backing their importance.
Uncertain economic conditions in Summer 2023 gave merchants even more incentive to win loyal customers. Our June 2023 Subscription Commerce Readiness Report broke down ecommerce subscribers into three personas: loyalists, persuadables and short-timers.
Loyalists, who make up only 30% of subscribers but account for nearly 80% of all revenue, value human connection over surface-level brand interactions. Here’s how you can win them over:
Brands continued to invest in subscriptions in September. While the average industry sees a combined annual growth rate (CAGR) of 10%, subscriptions have grown at a record 60% over the past few years.
Our September report, The Impact of Subscription Models on Consumer Choice, dove into the six main retail subscription models and found that many shoppers hold two or more different types of subscriptions.
Shoppers who hold several different subscription types, called multi-model subscribers, have an average lifetime value of more than $2,500 — more than any other persona. Here’s how to attract them:
Abundant retail subscription options are reducing the need for in-store shopping according to our latest report, The Replenish Economy: A Household Supply Deep Dive.
While in-person shopping is still the top choice for consumers, many now opt for retail subscriptions to avoid hitting the store. More than 11% of shoppers prefer scheduled deliveries and almost 4% of consumers have entirely stopped shopping in person for replenishable products, citing subscriptions as the reason.
Younger consumers are more likely to shop online for replenishable goods, with 39% of millennials relying mainly on retail subscriptions, followed closely by bridge millennials (38%) and Gen Z (31%).
Those who prefer shopping in-store cite convenience and flexibility features as their most important reason for signing up for a subscription. Features such as free shipping, refunds, ability to change or pause subscriptions and live customer support could persuade in-store shoppers to opt for online subscriptions instead.
Considering the trends discovered from our 2023 research, we predict these topics will gain even more traction in 2024.
Omnichannel commerce, a retail strategy that integrates a brand’s sales and communication channels into one unified shopping experience, will continue growing in 2024. This approach seeks to eliminate any disconnects within the buying and browsing process to create a more streamlined customer experience.
Omnichannel combines data from each selling channel — from social platforms, to email marketing, storefront browsing and even in-person purchases — and makes it accessible to the merchant in each format.
“Omnichannel used to mean, ‘I want to be able to sell directly to consumers, both online and offline,'” says Sharon Gee, vice president of revenue growth and general manager of omnichannel at BigCommerce. “That is still the case, but now there are many different flavors of online experiences that need to be integrated.”
The public saw important use cases for artificial intelligence this year as the battle for AI chatbot dominance took over the tech industry. But behind the scenes, future-forward ecommerce brands are adopting innovative AI and machine learning technology to improve the customer experience and simplify shopping for both consumers and merchants.
AI will enhance multiple areas of the customer journey, including personalized recommendations, chatbots, predictive analytics, payment optimization, fraud detection, image recognition and dynamic content generation, among other tools.
More specifically, merchants will use payment optimization tools to increase conversions and improve transaction approval rates. Our Smart Dunning tool, for example, uses machine learning to automatically retry failed payments at the optimal time and recover up to 50% of lost revenue. Tools like this are a worthwhile investment to streamline the most important part of your customer journey: the purchase!
As we mentioned above, artificial intelligence will play a large role in the personalization process. AI algorithms can analyze user behavior, preferences and purchase history to provide personalized product recommendations to enhance the shopping experience and increase the likelihood of conversions.
AI does this by using filters to increase the success of accurate personalization. Collaborative filtering, for example, uses AI to recommend products based on what similar users have liked or purchased. Content-based filtering recommends products based on items the user has viewed or purchased in the past.
Omnichannel marketing comes into play here to collect data from multiple touchpoints — online browsing, social media views, etc. — and send offers through channels like email, browser pop-ups and SMS.
We already know loyal customers want to feel like part of a community, and memberships can do just that: connect like-minded individuals who love the same products. Memberships not only offer consumers a sense of community, but they also help merchants increase retention and collect long-term data to improve products and marketing campaigns.
Some popular aspects of a membership program include offering early access to new products and exclusive discounts to reward members for their loyalty. It’s a great way to have direct communication with your customer base and create brand advocates who will spread the word about your brand and products.
2024 will be a pivotal year for ecommerce merchants as they strive to meet consumers’ expectations around seamless omnichannel experiences and personalized, human-like interactions. Those who master their retention strategy will be most successful in building sustainable growth.