Total Commerce: Key Trends of 2023 and Predictions for 2024
Total commerce, in its most basic definition, is the ability for a brand or retailer to be present wherever and whenever its customers are shopping. While easy to understand in theory, the reality of total commerce is increasingly complex as new channels of buying emerge, consumer attention is increasingly scattered, and digital transactions continue to grow significantly. For example:
- Nike is expecting 60 percent of its revenue will be direct to consumer by 2025 (Yahoo Finance)
- Thirty-one percent of American adults say they’re online “almost constantly” (Business News Daily)
- Total dollars spent via digital wallets is expected to exceed $10 trillion by 2025 (Juniper Research)
With this continued change in both consumer behavior and new ways of doing business, the commerce landscape, and total commerce in particular, has become increasingly intricate. This complexity is further compounded by the addition of new technology, more strict data regulations, and a need to drive business results and growth. These combined factors have given rise to several notable trends in 2023, such as automated intelligence, the proliferation of retail media networks, an emphasis on first-party data collection, a heightened focus on personalization, an increased commitment to sustainability, and a sharpened focus on customer lifetime value, among others.
While the commerce landscape was buzzing with new opportunities for brands and consumers alike to transact and do business, when it comes to total commerce, three key trends made their impact in 2023, setting the stage for long-term impact and predictions for 2024.
Commerce Everywhere: Omnichannel Integration
The Trend: Inherent to total commerce, as previously defined, is omnichannel integration (i.e., the connection of online and offline sales channels). While many might say omnichannel integration is a never-ending trend, 2023 has been the year when brands and retailers alike simultaneously planned for and adopted commerce everywhere — seamless shopping experiences across their physical stores, .com experiences, mobile apps, and more. As savvy brands have begun to collect and leverage first-party data this has started to unlock the ability to not only reach consumers in a more personalized manner, but to do so across channels and with purpose.
Behind the Trend: According to Harvard Business Review, 73 percent of consumers use multiple channels during their shopping journey. Couple that with a Zendesk report showing 87 percent of customers think brands need to put more effort into providing consistent experiences, and it's clear a consumer need exists. But the consumer need is just one side of the coin. Does omnichannel integration pay out for brands? Research from the Aberdeen Group suggests that companies with strong omnichannel customer engagement strategies retain an average of 89 percent of their customers compared to 33 percent for companies with weak omnichannel strategies. Furthermore, those companies with strong omnichannel experiences report an average 9.5 percent year-over-year increase in annual revenue, relative to 3.4 percent for those without.
Why it Matters: Connecting experiences between online and offline is just the beginning in driving commerce everywhere. As brands and retailers alike integrate sales channels and collect more customer data new experiences will come to life. For example, Ulta Beauty recently announced the launch of in-store sampling machines tied to its loyalty membership. While results have yet to be seen the potential for powerful data capture is endless — e.g., new product recommendations, in-store consultations, etc. By capturing these types of new and unique data points and leveraging them across the commerce ecosystem, brands can create seamless experiences and continue to win and grow.
Automated Intelligence is Everywhere
The Trend: It wouldn’t have been a conference, panel discussion or article in 2023 if the topic of artificial intelligence (AI) wasn’t mentioned. Joking aside, AI continues to show its value in driving efficiency and impact within commerce and across all industry verticals for that matter. With the launch of ChatGPT in November 2022, 2023 became a year of learning and optimization for the technology as several brands began to identify use cases and establish new ways of working. Organizations such as Tropicana and Nestle have implemented internal versions of the technology to help streamline tasks such as performance management, trend spotting, brand history questions, and more. Alternatively, social media platforms have been using AI across their products and offerings and, ultimately, many of us are end users of the technology.
Behind the Trend: Despite being the shiny new object, research by PwC shows that 66 percent of consumers are comfortable with businesses using AI-powered chatbots for customer service. In fact, 45 percent of consumers prefer chatbots for simple tasks, such as answering questions or tracking orders. Critical to these stats is the ability to leverage AI in a way that feels real and authentic to the brand. When done properly, consumers often feel they're having a conversation with a "real" person. However, when done poorly this can quickly lead to customer frustration and distaste for a brand.
Why it Matters: While concerns exists with using AI to communicate with customers — from job security to privacy concerns — AI is one of the most quickly adopted technologies in recent years and is expected to see an annual growth rate of 37.3 percent from 2023 to 2030, as reported by Grand View Research. AI has the potential to significantly impact how we sell and do business every day. While we may see jobs displaced, we will likely also see new jobs created. Brands and retailers alike need to think about what the future of AI means for them. For example, what is the role of a customer service or sales employee if AI can do some of their monotonous tasks? Can they focus more on the customer? Act as a concierge and offer in-person guidance on new or similar products? There are limitless options, but brands need to ground themselves in the purpose and philosophy of using AI to improve their customer experience and engagement.
CRM Evolved: Addressable Relationships
The Trend: As everything becomes a commerce experience and with omnichannel experiences core to growth, all brands, regardless of industry, must be thinking about their customers first and foremost. Fundamental to this is building relationships and loyalty, and 2023 began a year of awakening for CRM. The difference? In 2023 and beyond CRM is much more than customer relationship management. It has quickly evolved to addressable relationships — an opportunity to learn about and build relationships with customers from the first time they interact with a brand until they become loyalists and advocates, understanding them and offering them personalized experiences and offers along the way.
Behind the Trend: As brands are challenged with increasing costs and a need to do more with less, customers, and addressable customer relationships at that, are more important than ever. According to Epsilon, 80 percent of consumers are more likely to purchase from a brand that delivers personalized experiences. Similarly, a SmarterHQ report indicates that 78 percent of consumers say they're more likely to become repeat customers if a brand provides targeted, personalized content.
Why it Matters: As commerce experiences become more connected through omnichannel, and businesses become more efficient with technology such as AI, this will lead to a massive opportunity in building addressable relationships with customers through new data sources, more efficient processes, and true personalization at scale. As brands have more first-party data on their customers they’ll more successfully be able to identify what matters, where and when, to drive the most effective customer relationships and greater lifetime value.
As omnichannel integration, automated intelligence, and addressable relationships become status quo in 2024, this will set a solid foundation for the evolution of total commerce, specifically with growth and adoption of the following:
- The Evolution of AI: While 2023 set the foundation for AI, 2024 will be the year of further adoption, evolution and growth. Expect to see a shift from usage of traditional AI that solves specific tasks with pre-defined rules into generative AI with a focus on creating new content and data. As performance and capabilities improve, expect to see both increased adoption as well as a greater emphasis on industry regulations and guidelines.
- Customer Lifetime Value: By redefining CRM as addressable relationships in 2023, we’ve set the stage for the evolution of customer lifetime value in 2024 as part of the total commerce experience. Brands that continually innovate to enhance the customer experience, through technology such as augmented reality, virtual reality, metaverse, and more, both online and offline, will have an opportunity to capture more unique data, increase personalization, and grow customer lifetime value.
- Sustainability and the Circular Economy: Concerns about the environment and ethical business practices began to gain momentum, particularly as consumers demand more transparency from brands, including sustainable and ethically sourced products. Notable companies like Patagonia, H&M, The North Face, Eileen Fisher, and REI are actively working toward reducing waste, promoting recycling, and advocating for a more sustainable approach to the fashion industry. In 2024, expect to see more fashion brands and additional industries such as automotive, technology, furniture and home goods, CPG, and more to adopt circular economy principles to respond to growing demand from environmentally conscious consumers.
In summary, as consumers continue to evolve their media usage and consumption behaviors, brands are looking to identify new and more efficient ways of doing business in the commerce space, wherever and whenever the consumer is present. As brands seek to build seamless, authentic experiences for consumers we’ve seen strong momentum in connecting commerce in 2023, only to be unlocked further in 2024 and beyond.
Matt Horton is senior vice president, go-to-market strategy at Publicis Commerce, a company powering the total commerce experience, working with clients in all categories to deliver sustained business growth in commerce.
Customer-oriented, strategic-thinking marketing and operations professional with over 15 years of experience in building relationships, cultivating partnerships, retaining top accounts and growing profit channels. Multi-tasking and self-motivated leader with expertise on expanding network connections, revealing customer needs to deliver solutions, translating C-level directives into actionable initiatives, and strategic planning across business levels and segments.