Online Retail Trends for 2018: Pricing, Privacy and Voice
The start of a new year is a great time to take stock of the trends and developments of the last 12 months. It’s also a good time to look ahead to some of the new innovations that will soon become standard practice. At Digital River, our online retail predictions for 2018 include some changes to high level e-commerce sales strategies, as well as intriguing developments in consumer technology.
Brands have been quick to adopt e-commerce subscription models to strengthen customer relationships, improve revenue forecasts and increase brand loyalty. But there’s still room for growth as the access economy matures. One area we see e-commerce companies improving upon is pricing experimentation and elasticity.
Brands will increasingly examine different price points, pricing models, "freemium" vs. premium strategies, and the frequency of e-commerce subscription renewals. In the post-ownership economy, consumers are open to new ways of paying online for products and services. We see companies taking advantage of these attitudes and experimenting to find the most profitable pricing strategies.
In addition to price tests, we predict companies will implement more dynamic and contextualized online pricing in 2018. With sophisticated data on consumer habits, brands can alter pricing during periods of peak online demand. Brands will look to make a shift to this value-based pricing model to improve profitability for their existing e-commerce offerings.
Brands also will increasingly consider product usage data to develop opportunities for micro-transactions. Many people already pay online for monthly access to services, but only use the service a handful of times each month. So instead of getting people to commit to a monthly or annual subscription, more companies may instead look at unit-based measures and pricing models.
Consumers can be sensitive to fluctuating price points, particularly in retail spaces where comparison shopping is so common. While those concerns need to be addressed, we do think there’s tremendous opportunity for brands to experiment with online pricing strategies.
Consumers are becoming more privacy savvy with each passing data breach and scandal. And with new General Data Protection Regulations (GDPR) taking effect in 2018, companies should reassess their data practices.
The biggest challenge companies are going to face lies in the number of tools they’re leveraging to create an engaging customer experience. Companies want to create customer profiles to provide personalized and contextualized experiences. However, as dynamic personalization strategies become more sophisticated, companies will have to evaluate and understand not only how they're handling their own shopper data, but also how their partners are handling their shopper data.
Ultimately, it comes down to understanding and auditing data in a meaningful way. It will be vital for companies to consider how data is being collected, what rights they have to that data, where the data ultimately lives, and to clarify who owns the data.
We believe 2018 will see a large number of companies initiate holistic audits of their data collection tools, strategies and practices.
One of the biggest potential areas for growth in 2018 is in the voice-activated technology space. Smart devices like Amazon Echo, Google Home and Apple HomePod are quickly gaining popularity. However, there’s room for improvement not only for increased consumer adoption, but also monetization of voice commerce.
As developers pioneer new ways of incorporating voice technology into new product offerings, consumers will more fully integrate the technology into their lives. As that happens, opportunities for voice commerce increase. It will be up to companies to craft products and consumer experiences that make people not only want to use voice technology, but use it to buy products and services as well.
We’ve not yet reached our inflection point on smart, voice-activated devices. While voice technology is still considered somewhat niche at the moment, we believe we'll see some tremendous gains in this sector in 2018.
James Gagliardi is vice president, strategy and innovation at Digital River, a global e-commerce, payments and marketing services provider.