With at least 24 million ecommerce businesses worldwide and more than 2 billion online shoppers, it’s safe to say that the future of retail is digital. But with a rise in digital demand comes more competition. As an ecommerce retailer, it’s crucial you stay ahead of your market by keeping up with the latest tech innovations.
Meet customer demands, differentiate yourself from competitors, and improve user experience (UX) with digital strategy. Start with these top 7 tech innovations shaping the future of retail and stay relevant in an ever-changing market.
1. XR Technologies
Extended reality (XR) tech encompasses:
- Augmented reality (AR) - layering digital components on top of a real-world view, usually via a camera.
- Virtual reality (VR) - a completely virtual simulation that users can interact with, usually via a VR headset.
- Mixed reality (MR) - an emerging XR tech that combines virtual environments and real-world components, using elements of both AR and VR for an interactive experience.
In terms of retail innovation, XR blends the perks of shopping in person with the convenience of a digital experience, making it a popular choice for retailers.
Ecommerce brands can integrate AR, for example, to enable virtual ‘try-ons’ of products. This includes clothing - with the ability to see digital versions of items on your body through your phone camera - but extends to other products, too, like furniture and paint colours. IKEA Place is a popular example of AR in the ecommerce space.
VR also lends itself well to retail in that a customer can interact with a digital product. They can move it around for views from multiple angles, zoom in and out, and even augment the product (like changing the colour or opening a drawer) for an engaging experience.
2. AI Technologies
Artificial intelligence (AI) is taking industries by storm. The rise of ChatGPT and DALL-E, though controversial, has led to widespread use around the world as more people embrace AI tech.
In retail, though, there are ways to incorporate AI that create less concern from consumers. One is when implemented for deeper customer behaviour analysis.
Understanding target customers is essential for any retail business. With AI, the data you collect is put to good use without needing hours of examination, making it a more time-efficient way to get to grips with your customers.
It also has a knack for uncovering patterns, trends, and anomalies, making it easier to pinpoint important results from your data. Dive deeper into years of numbers and pull out key insights in a matter of minutes without the worry of human error.
The North Face is an example of AI analysis used effectively. Implementing Watson, an AI tool developed by IBM, The North Face team use customer data to better understand consumer clothing needs. The data can include weather conditions in the local area as well as feedback and purchase history, making for more accurate personalised recommendations.
3. Online Payment Methods
An online payment system for small business models is essential in online retail. But how is the world of digital transfers shifting?
In the near future, expect more convenience from digital wallets and biometrics, helping customers checkout with the tap of a finger.
Cryptocurrencies and blockchains are likely to become a more standard way of paying, too. With around 10% of Brits investing in digital currencies in 2024 (a huge increase from 3% in 2019), more online payment systems will likely start accepting cryptocurrency transfers.
4. Machine Learning for Inventory
Machine learning (ML) is an application under the umbrella of AI. It creates models of data that help computers learn without human intervention, making it one of the most exciting technologies shaping the future of retail.
A key process that ML is already starting to gain importance in retail strategy is inventory management.
By incorporating ML into your systems, it can analyse supplier choice without your intervention, weighing up reliability, quality, and cost-effectiveness.
It will also learn from your business history. For example, suppose a supplier used a certain delivery company that led to a late shipment. In this case, the ML system is more likely to steer clear of other suppliers using the same delivery company in the future.
ML can take control of stock levels, too. By keeping an eye on real-time data and purchase histories, it can predict when you’ll need to order more shipments for accurate demand forecasting.
Zara, a clothing brand that’s seen consistent growth in its ecommerce, is well-known for using AI for inventory management. The team use AI algorithms to predict trends and inform their buyers of which garments are likely to be more popular and when to order, enabling smaller batch shipments to reduce waste.
Reduce costs, improve logistics, and avoid customer disappointment with ML.
5. Sustainable Technology
Whether you’re just starting business plans or you’re an existing global retailer, incorporating sustainability into your processes is crucial.
Eco-friendly options are gaining growing importance in the UK, with 80% of consumers, for example, actively trying to reduce food waste when shopping.
Luckily, there’s plenty of green tech that can quickly up your eco-credentials. This includes:
- Green hosting
- Switching to a renewable energy supplier for your offices
- AI and ML to reduce product waste with better demand forecasting
- Email inbox optimisation software to reduce server load
- Delivery route optimisation
6. Social Commerce
Almost every big social platform - including TikTok, Instagram, and Pinterest - now has native social commerce capabilities. In simple terms, this lets brands sell businesses directly through social media apps.
But why is this a good idea? Let’s take a look at some of the key benefits:
- Create a more interactive selling experience
- Reach a wide audience of social media users
- Access targeted audiences
- Make online shopping simpler than ever
- Reduce the number of steps needed for a conversion
In 2023, there were over 16 million social buyers in the UK alone, showing huge potential for retailers. As a new channel to sell your products through - and one that takes very little effort to set up - it’s well worth giving it a go.
7. Subscription Based Models
From Hello Fresh to Glossybox and everything in between, subscription-based shopping has taken off in the UK.
With regular deliveries automatically and the ability to cancel at any time, consumers enjoy the convenience of subscription shopping. It also has a level of gamification involved, with the chance to pick and choose what you get or leave it up to the retailer for an exciting surprise.
Technology has made it simpler than ever to offer online subscriptions, too. AI, for example, allows small merchants to gather in-depth customer insights for personalised boxes.
Stitch Fix, a clothing-based subscription box, use AI to develop clothing picks for their customers based on previous purchases, preferences, and feedback. Their stylists then work with the AI choices to finalise the boxes, reducing labour and making customer-focused decisions.
Automatic online repeat payments also make it simple to set up the subscription model. Your customers simply choose their package and enter their card information, and a secure direct debit is taken periodically for automated subscription renewals.
Final Thoughts
Retail technology has been shaping the industry for years. If your online shop has been running on the same systems for too long, hopefully this article has given you the inspiration you need for updates that’ll see you into the future of ecommerce.
—
Meet our guest author Daniel Groves
Daniel Groves is a business growth consultant with expertise in strategy execution, business growth for startups, and digital marketing. Known for innovative solutions and results-driven approach, Daniel's passion is empowering businesses to achieve sustainable growth and market leadership. Connect with Daniel on LinkedIn or visit his website: https://danielmgroves.co.uk/.
Main Image Credit: Alex Knight
