4 E-commerce & Fulfillment Trends to Watch in 2023

Following years of digital transformation, unprecedented e-commerce growth, and supply chain challenges, 2022 brought a stark shift in industry trends, including a slowing of that upwards traction due to rising costs and fears of a looming recession. As we look forward to 2023 (which is somehow just over one week away), we at Shippo are busy anticipating the changes we’ll see taking place across the e-commerce space, and identifying the new opportunities that lie ahead.

From an updated approach to managing inventory to emerging sales channels taking the US by storm, this post covers the top four e-commerce and fulfillment trends to keep an eye on in the new year.

Inventory management (202)3.0

Coming off supply chain challenges faced over the past couple of years, 2022 saw e-commerce retailers stocking up before peak season only to realize the impact of inflation and a shift in pandemic trends on demand. Heavy discounts helped merchandise fly off digital shelves over Cyber Week – with Cyber Monday breaking records as the biggest online shopping day of all time – but year-round discounting certainly isn’t a feasible path for small e-commerce businesses.

More efficient inventory management strategies driven by real-time insights will become the norm next year, as smaller businesses simply can’t afford to stock up their stores just to offload at lower prices that cut further into their margins. One solution is to invest in manufacturing facilities closer to home, which will help you avoid delays and disruptions that can come from sourcing overseas. This also allows you to count on more just-in-time production capabilities, resupplying inventory as you need to rather than relying on longer-term estimates.

Here are a few tips to help you efficiently manage inventory throughout 2023 – and avoid overinvesting in SKUs you may ultimately need to offload through discounting:

1. Regularly track e-commerce sales trends for your most popular products and source or cut back on inventory accordingly in real-time.
2. Understand which product categories are trending in the market, evaluate how popular items align with your own product lines, and invest in those areas.
3. As your business grows, an inventory management system can help you keep a constant eye on how your inventory levels spike and lull throughout the year so you can make adjustments where necessary, as quickly as possible. Shippo partners with several IMSs that we can help you evaluate when the time is right for your business.

Merchants get creative with incentivizing loyalty

We all know that today’s consumers want – ney, expect – e-commerce perks such as free shipping, quick delivery times, and convenient fulfillment experiences. But from our behind-the-curtain perspective, we also know that for most small e-commerce businesses, it’s not realistic to meet every one of those expectations without sacrificing their own wellbeing. 

If the key to success lies in convincing new customers to purchase with you – and then keep them coming back time and time again – what’s a small business owner to do? How do you acquire new customers and then inspire their loyalty if you aren’t able to offer popular incentives such as free shipping across the board?

We see 2023 as the year small businesses each take that question and answer it in their own creative way, depending on what they can offer according to their unique business needs and SKU-level margins. While universal free shipping may be feasible for some, others may find that offering free shipping after a certain price threshold helps them strike the right balance between driving conversions and bottom-line revenue.

Others still may find the best strategy is to implement loyalty programs that incentivize through perks in exchange for high levels of engagement, repeat purchases, and brand or product advocacy. Here are a few ideas for how to convert more first-time buyers into loyal fans and advocates:

1. Create loyalty program tiers: Incentivize more or higher value purchases by offering a variety of tiers that your customers can reach by spending a certain amount in your store over a period of time, unlocking perks – such as free shipping, selective discounts, or free gifts with purchase – for each level.
2. Offer incentives for specific activities: Reward points for various activities that drive both engagement and loyalty. For instance, leaving a review might earn a customer two points, while leaving a review that includes a photo of your product might include five. Once a customer racks up enough points, you can allow them to use those points to splurge on perks such as free shipping.
3. Implement a subscription program: If someone buys from you once, they pay a fixed shipping fee per order, but if they pay $100 upfront for free shipping on every order year-round, you’ll incentivize them to come to your brand first.

Gen Z leads the charge in making shopping more social

Social shopping is only poised to grow as we head into 2023, with the social commerce market as a whole expected to reach $3.4 trillion by 2028. Because Gen Z and Millennials are so active on a variety of social media – spending around three hours per day across platforms on average – it’s only natural that these channels are becoming their go-tos for discovering new products, and even purchasing directly. With all this in mind, it’s crucial to build a social media presence for your brand that not only attracts and engages your target buyers, but also helps inform their purchasing decisions.

Going a step further, live selling is also predicted to continue its growth spurt – it’s estimated the livestream shopping market will be worth $35 billion in the US alone by 2024. Some other stats to keep in mind as you think through how you might implement live selling into your own e-commerce strategy in 2023:

• 78% of businesses already use live commerce in some capacity as a way to strengthen their relationships with customers
• Live commerce conversion rates can be up to 10X higher than what’s seen through traditional e-commerce channels
• ¼ of US consumers say live commerce would encourage them to purchase through social media channels more frequently

Andrew Chen – Chief Product Officer of live selling platform (and Shippo partner!) CommentSold – told us about the growing phenomenon, “Live selling is fundamentally a content strategy. People choose to follow live-selling creators and shops for how much they relate to and are entertained by those creators and shops. Finding the balance between product knowledge and an entertaining presentation to build a relationship with shoppers will be the key to a successful live selling strategy in 2023“.

Consumer-friendly policies take the burden off universal free returns

While universal free returns are nice in theory, in practice – much like with free shipping – it’s hard for a small e-commerce business to justify eating the cost. The good news is that consumers are willing to remain loyal to brands that offer a more convenient returns experience as well – it all depends on how your business crafts your policy and manages the end-to-end process.

According to Shippo’s 2022 E-commerce Returns & Exchanges Report, 84% of consumers read a return policy before making a purchase online, and 91% say that the overall ease of their returns experience impacts their willingness to shop with a retailer again. While free returns may take the cake for consumers – and many smaller merchants are willing to take on the burden of paying for e-commerce returns to maintain positive customer relationships – there’s no doubt this often comes at a high cost, especially when you consider consumers are expected to return more than $816 billion worth of merchandise by the end of 2022.

As with the cost of shipping, we expect that in 2023 we’ll see merchants get creative with how they anticipate and accept returns to minimize the risk to their business, whether through the pre-purchase experience (providing more detailed information on product pages, or creating FAQ sections to address common misconceptions and points of feedback), or the returns experience itself (incentivizing an exchange in lieu of a return by offering extra credit for later use in your store, for example).

We look forward to helping our merchants address new challenges and discover emerging opportunities as we move ahead into 2023. Be sure to subscribe to our newsletter to stay on top of these e-commerce and fulfillment trends as we dive even deeper into each of them in the new year. Aand if you’re not already a Shippo customer, sign up for your free account to access discounted rates on shipping labels, dedicated fulfillment support from our in-house experts, and more.

Happy holidays!