Interesting Digital and E-Commerce Trends from 2023

Published in

Personalization and Digital

5 min readJan 16, 2024

By Gopi Vikranth

E-commerce sales in the US reached $833 billion+ as of Q3 2023, and its expected to hit $1.1 trillion, a 10% year-over-year increase compared to 2022. The estimate for e-commerce sales in the third quarter of 2023 increased by 7.6 percent (±1.2%) from the third quarter of 2022, while total retail sales in the same period increased by 2.3 percent. E-commerce sales in the third quarter of 2023 accounted for 15.6 percent of total sales. On an absolute dollar basis, e-commerce continues to accelerate.

This trend has pushed more and more brands to continuously expand their direct 1:1 consumer relationships at a rapid pace. Here are a few interesting trends observed in 2023.

Shopify and Amazon set records on E-commerce sales in 2023

Amazon had the largest Black Friday and Cyber Monday sales in the company’s 29-year history. Similarly, Shopify Inc. announced a Black Friday/Cyber Monday record with a combined total of $9.3 billion in sales from businesses worldwide, a 22% increase in sales over last year. At its peak, collective sales reached $4.2 million per minute at Shopify.

Walmart / Amazon continued to dominate and accelerate in E-commerce while other retailers lag behind

Walmart and Amazon continue to dominate the U.S. ecommerce landscape. Amazon increased its market share to 53% in Q3, up from 48% in the previous year. Meanwhile, Walmart secured $18.6 billion in sales, representing 6.8% of the market.

New age digital retailers like Temu + Shein

Chinese retailers Temu and Shein are experiencing rapid growth in the US. These platforms, adept at matching consumer demand with factory output, have captured Gen Z market. Shein is expected to file for an IPO in in 2024.

Gen AI adoption accelerates in retail and digital in a range of functions

Gen AI is being leveraged for hyper-personalization (personalized marketing via subject lines, emails), Gen AI powered search, replenishment, product images, product descriptions, and smart chatbots that can improve customer service, to name a few. According to HubSpot, 95% of marketers today use GenAI for copy writing in one form or other.

Walmart and a number of marketplaces are introducing Gen A- based search for consumers. Others include Meta, Instacart etc.
Uniqlo’s chatbot engages customers by providing answers to inquiries and recommending products based on their previous purchases. Other examples include Carefour’s Hopla, Mercari’s merchant AI.
Klarna’s collaboration with OpenAI to integrate a ChatGPT Plugin aims to deliver a seamless shopping experience. This innovation will provide users with personalized product suggestions and purchase options for tailored shopping advice and inspiration. Stitch Fix, eBay, Newegg etc. are among other companies adopting similar approaches

Social media live influencers continue to thrive especially Micro and Mid tier influencers

Influencer marketing grew to a $21 billion industry in 2023. Marketers continue to invest heavily into micro-influencers who have between 10k–100k followers, as well as influencers with 100k-200k followers who can create tight-knit communities. A significant 78% of Gen-Z and 61% of millennial women say they trust influencers, especially in beauty and wellness sectors. Examples of brands include LaCroix, Coca-Cola, Glossier, Audible, Sephora etc.. However, AI influencers are right on the heels of these influencers. This is something we watch for in 2024.

AI avatars in marketing are becoming the new face of content personalization and might disrupt existing live influencers

More brands are adopting digital avatars or personas to carry their brand and showcase brands. Lil Miquela, Imma (@imma.gram), QaiQai are a few examples of AI avatars. This trend is being adopted by brands such as Olaplex, Victoria’s Secret as well as collabrations like Noonoouri with Kim Kardashian’s KKW Beauty, and Ayayi with Louis Vuitton.

Brands in digital worlds

Branded Robolox games got 1.8 billion visits in 2023, while the metaverse hype from 2022 cooled off: this presents a dilemma to many brands. To invest or not to in digital worlds like Robolox which had 70M+ daily active users in Q3 alone, growing at 20% YoY. Many brands entered digital worlds in 2023, including 7-Eleven, The Home Depot, the U.S. Open, E.l.f. Cosmetics, Givenchy, Vita Coco, LensCrafters, and Scholastic.

Buy Now Pay Later (BNPL) re-emerges strong

While there were questions on sustainability of BNPL in early 2023, BNPL surged in 2023. Adobe reported $8.3 billion in holiday spending came via BNPL platforms through Nov.1- 27, a17% YoY growth, which amounts to about 7.5% of total seasonal revenue. About $940 million in BNPL spending happened on Cyber Monday alone, an all-time high and a staggering 42.5% increase from last year. BNPL is expected to surge in 2024 as consumers demand more micro credit.

About the Author:

Gopi Vikranth is a principal at ZS and leads Personalization and Customer Experience Analytics.

Gopi, along with Arun Shastri, hosts a podcast called “Reinventing Customer Experience”. Gopi and Arun chat with digital, analytics, technology and customer experience leaders from various industries and organizations to understand how they are engaging their customers. The podcast is available on Apple and Spotify.

References:

1. https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf

2. https://www.reuters.com/markets/deals/chinese-fast-fashion-shein-files-us-ipo-wsj-2023-11-27/

3. https://hbswk.hbs.edu/item/how-shein-and-temu-conquered-fast-fashion-and-forged-a-new-business-model

4. https://restofworld.org/2023/china-shopping-shein-temu-global-rise/

5. https://asia.nikkei.com/Spotlight/The-Big-Story/Inside-PDD-China-s-e-commerce-titan-behind-Temu-and-Pinduoduo

6. https://www.businessoffashion.com/news/retail/temu-leads-shein-bargains/

7. https://www.insiderintelligence.com/content/chinese-ecommerce-us

8. https://techcrunch.com/2023/10/04/walmart-experiments-with-new-generative-ai-tools-that-can-help-you-plan-a-party-or-decorate-a-space/

9. https://www.digitalcommerce360.com/2023/10/17/6-ways-retailers-are-using-generative-ai-right-now/

10. https://www.digitalcommerce360.com/industry-resource/strategy-insights-6-ways-retailers-are-using-ai-right-now-and-how-generative-ai-will-change-ecommerce/

11. https://blog.hubspot.com/marketing/hubspot-blog-marketing-industry-trends-report