Future Trends in E-Commerce

[Former Member]

Since its appearance as a phenomenon less than a decade ago, E-Commerce has rapidly grown on the Internet in both technical capability and cross-industry adoption.  Almost every vendor nowadays has a web storefront to showcase and sell its goods and services, regardless whether its customers are consumers or businesses.  The more advanced E-Commerce websites now offer highly interactive user experiences, empowering the user with multiple ways to directly shop for, purchase and resolve issues with products online.  Much technology exists behind the scene to “know” the customer, by capturing profile information, user preferences and browsing history, all with the intent of offering a more personalized experience and recommending things to the user that he/she may find most relevant or interesting.  The lines between the various shopping channels are also becoming increasingly blurred, where, for example, someone who orders a product online can now go and pick it up at a local store instead of waiting for days for it to show up in the mail.

In the coming years, a few major trends are likely to affect the world of E-Commerce.  They are already occurring today to a greater or lesser extent, but will likely gain far more traction in the future.  I describe these briefly below, compiled from my observations at recent conferences such as the Gartner CRM Summit and Web 2.0 Expo, as well as from reading a number of different news articles on these subjects.

1. Social Networking

Social networks have taken the computing world by storm over the past couple of years.  The reasons for this are various, but perhaps the most important one is that what social networking does is satisfy the basic need for people to want to communicate with and relate to each other, especially with others who share their interests or beliefs.  For this very reason, social networking has gained a strong foothold in E-Commerce as well.  People want to express their opinions about products they have purchased.  At the same time, people interested in buying these products generally value and trust such reviews based on firsthand experience far more than any information provided by the vendors or so-called industry experts. 

One of the presentations I attended at the Gartner Summit by Adam Sarner had the following suggestions for vendors – to offer functionality on their E-Commerce websites for customers to rate and review their products, and to pay attention to reviews showing up on independent or 3rd party sites about their products (such as on Twitter or Amazon).  Vendors should analyze all the review data to further promote those products with higher ratings, and to address the problems in those products with consistently low ratings or negative reviews.  Those customers who always post negative, sometimes caustic reviews cannot be ignored – the best way to handle them is to reach out to them and to try to address their grievances, or to counter the balance by actively encouraging those customers who post positive reviews and speak highly of the products.

In addition to user product reviews, another major application of social networking for E-Commerce is in the growth of thriving community forums, usually built by active users and fans of certain products.  A classic example mentioned by Adam Sarner was tivocommunity.com, an online community maintained by and for TiVo enthusiasts, where people can find answers to just about anything related to TiVo products (whether it’s a usage question, technical problem or a search for a hack).  Vendors can leverage these independent communities to build a more solid, loyal customer base, by encouraging participation and addressing issues that are raised in them, particularly by introducing new product features or services based on comments from participants.

2. Mobile Computing

Mobile devices have now become as commonplace as landlines, and in many regions of the world even more so.  The capabilities of mobile devices have also dramatically increased over time, especially with the advent of the iPhone and its usable web browser, as well as the latest generation of Blackberries and other PDA’s. Many of these devices have GPS built in, allowing them to be “location-aware.”  Numerous web applications are emerging that leverage this capability to provide location specific, useful information to people on the road when they most need it, such as doing price checks for products in nearby stores or finding the nearest restaurants with the best customer reviews.  This is leading to the next generation of web applications that will provide meaningful, personalized information to users based on their current environments, not just their profiles and preferences.

As these kinds of mobile applications expand in scope, the term “ubiquitous computing” will really take hold, meaning that people will be accessing commercial websites not just in the office or at home, but anytime, anywhere using their mobile devices.  Tim O’Reilly of O’Reilly Media, the person widely credited with coining the term “Web 2.0,” already has another term called “Where 2.0,” essentially the combination of Web 2.0 and mobile location awareness.  According to a presentation by Gene Alvarez at the Gartner Summit, E-Commerce applications need to begin focusing on mobile, location-aware functionality, as this kind of usage pattern for websites will soon become widely prevalent.  One of the primary ways in which people will purchase things will be with their mobile devices, either directly over the Internet or by identifying the nearest, most convenient location to get or do what they are looking for.

3. Virtual Technology

People spend much of their time online everyday, thanks to highly interactive websites where they can not only do all their buying, selling and servicing but also all of their social interactions with their friends and communities of interest.  The more needs that are met online for the user and the more the user’s senses are satisfied with appealing experiences, the longer he/she is likely to spend online on a particular website or application.  Traditionally, websites appealed just to the eyes, and more recently they have begun to appeal to the ears as well.  It’s only logical that technology will eventually lead to the satisfaction of the other senses as well (ie. smell and touch).  That’s where virtual technology comes in.

Applications like Second Life have become very popular, where people can “live” in an imaginary world and pretend to be somebody else entirely.  Another very interesting presentation I attended at the Gartner Summit by Adam Sarner focused on this topic, pointing out how this is just the beginning of what’s to come in the virtual realm.  Eventually, technology will advance enough to allow people to totally immerse themselves in virtual environments, where all their senses will be satisfied as they explore worlds and lifestyles totally different from their own, real lives.  The goal is one of “self-actualization,” or the ability for people to grow and fulfill their dreams and ambitions online, not just satisfy their basic needs or socially interact with others as today’s websites do.  People will have “personas” for the different worlds they “live” in, based on their preferences and how they want to be perceived by others in those worlds.

So where does E-Commerce fit into all this?  Well, these virtual environments present more opportunities for vendors to sell their products and services.  The vendors can offer virtual worlds of their own to satisfy the needs and desires of the various personas that people may want to have, and they can further learn the behavioral patterns of these personas within the virtual worlds so as to target them with the most effective marketing campaigns. 

Eventually a lot of this work will be done automatically without human intervention, where people will authorize automated agents to work on their behalf to represent their interests online.  An end user may have an agent for each of his/her personas – for example, one agent may be responsible for taking care of the user’s basic needs – ordering groceries, drugs, etc.  Another may be responsible for searching for the best job opportunity, another for a date.  Similarly, vendors will have their own automated agents to service all the agents of end users.  As a result, much of E-Commerce will over time become fully automated, allowing people to spend more time on other activities of interest, whether in the real world or in virtual worlds.