This series of posts is designed to help medium-sized brands professionalise customer service in preparation of conversational commerce. In each post, we look at a major trend — from chatbots to Live chat, hyper-personalisation and more — and offer actionable advice.
To introduce them, we first explore how eCommerce and online customer service has evolved over the past 10 years. By looking back, we may get a clearer idea of how things may evolve in the next 10 years.
Money's too tight to mention...
Both retail and online sales will drop 10% next year as consumers significantly rein in discretionary spending and save more of their income to rebuild wealth and savings in the coming quarters. — Piper Jaffray & Co. analysts, 2008
When Steve Jobs unveiled the first iPhone in 2007, he described it as a “breakthrough Internet communications device.” He was right. Even while Europe and the US was in the big dip of the Great Recession in 2010, people loved their new iPhones. Consumers started going online in droves… to compare prices. For the first time they were happy to buy from anyone anywhere… as long as it was cheap!
At first, they mostly bought from Amazon. But there was enough business for everyone. Quick-thinking traditional traders threw up quick and dirty web-stores. They bought in bulk, cheaply (often from very socially and environmentally unfriendly sources) and shifted as many units as they could.
Business was good and easy. Hardly anyone cared about customer service. eCommerce consistently hit double-digit growth.
But, Mr. Bezos kept raising customers’ expectations. He kept making browsing and buying easier, offering a broader range of products. He made two-day shipping the standard, kept prices low, and kept entering new markets.
All this put pressure on the competition. After some time, the bigger online retailers who had ‘piled ‘em high and cheap’ just could not compete with Amazon on its own terms. Supply chains choked. Logistics struggled. Complaints rose. As the saying goes; these online retailers started to go bankrupt gradually, then suddenly.
eCommerce kept on growing. High-street retail growth, however, slowed, then dropped like a rock in 2011. Traditional high street retailers couldn’t compete with online’s vast selection, one-click buying, fast shipping and free returns. Many retailers had a solid reputation and brand to work with, but couldn’t figure out how to make it work online. Some tried and failed. Most refused to change, thinking that things would go back to normal when the economy recovered. They were wrong.
Shopping behaviours had changed permanently. People visited the high street only to check out the options. They bought online. Plus, they wanted much more from their stores: a broader range of products, better service with lots of friendly, personal advice. With so much choice online, and all the power in a bricks and mortar store, they became the most fickle, ’disloyal’ customers ever.
From Sears to RadioShack to Toys ‘R’ Us, dozens of historic brands disappeared overnight as they failed to recognise these shifts and adapt.
This was the Amazon Effect, plus the impact of eCommerce, in full force.
But it wasn’t all doom and gloom.
Omni-channel and the customer experience...
Some did get what was going on, and adapted.
Seeing high-street sales drop, savvy traditional retailers quickly reduced the number of physical stores to free cash that they used to strengthen their online presence. They took their ‘personal service’ mentality online with them. This translated well because trust was becoming more important for consumers after their experiences with the quick and dirty web-stores a couple of years earlier. These companies also started figuring out omni-channel approaches. They got to grips with inbound and content marketing (the new big marketing trend of the 2010s) too. In short, they ‘digitally transformed’.
Traditional pure online retailers who were doing well experimenting by moving in the opposite direction. Cheaper high street rents meant less risk. They set up pop-up shops as showcases for their brands. Most used them as centrepieces for well-executed social media marketing campaigns. Some found semi-permanent homes in multi-brand concept stores.
The high street continued to change. In 2019, US retailers announced 9,302 store closings, a 59% jump from 2018, and the highest number since data tracking began in 2012.
By around 2014, most retailers had found their footing with digital. They started to recognise the huge role that customer experience had to play, and began taking customer service seriously.
It was about time, because a new breed of companies had been doing it for some years already. And they were about to start reaping the rewards.
The rise of the DNVB...
Typically supported by big angel investors, a fresh-faced bunch of upstart companies started making waves around 2014. These were the digitally native vertical brands (DNVBs).
These companies make their own products, cut out the middleman and go direct to consumers. This gives them enormous margins. They focus on millennials mostly, with targeted ‘artisan/boutique’ offerings.
They typically offer fast, free shipping both ways and free home trials. They deliver their propositions with loving, personalised customer service. They are obsessive about customer experience. And they operate with lots (and lots) of ethical, transparent, supply chain goodness.
They are damned digitally competent. They give great UX, content marketing, storytelling and branding. Crucially, they also make smart use of data to improve marketing, and tailor products. This means they can accurately predict sales and manage overheads. Operationally, they are tight.
DNVBs are both the ‘anti-Amazon’ and the ethical opposite of the ‘buy ‘em cheap, pile ‘em high’ retailers that dominated the early part of the 2010s. Unlike ‘digital transformers’ or ‘pure online players’ they are hybrid — they have no inherent channel preference or legacy to manage. They go wherever makes most sense for their business model and brand.
Warby Parker is one of the earliest best-known DNVBs. Today, Casper, Away and Glossier are among the ones to watch in the US. UK and European DNVBs include Ace & Tate from Amsterdam and Eve from London.
Internet Retailer estimates that the 72 DNVBs in the US in 2017 generated $8.0 billion in online sales—a 44.4% increase on the year before.
DNVBs are both a force to be reckoned with, and are perfectly positioned for the next wave of eCommerce in 2020. No doubt they will adapt quicker than most.
Mobile and voice meet to create the future…
At the start of the 2010s, mobile shopping was barely a thing. It accounted for around 1% of the $165.4 billion US eCommerce market. But in 2014-2015 mobile shopping surged.
It was most likely a combination of factors, including:
- Rising consumer confidence;
- The new trend for bigger smartphone screens made browsing easier;
- Web-stores were optimised for mobile;
- Payment systems matured;
- Google started boosting mobile search results;
- Consumer messaging app usage surpassed social media usage; brands followed fast (no-one ever really got comfortable doing business in SoMe);
- Customer expectations were higher than ever, and brands were professionalising customer service like mad.
Today’s estimates are that around 54-56% of total eCommerce will be done by mobile by 2021 [eMarketer]. Some say even higher.
Here in the Netherlands, we have the fastest growing m-commerce market in Europe, recording growth of 26% per year, and it will surpass desktop sales by 2023 [Worldpay].
The growth of mCommerce is also tied to the recent growth of voice commerce (vCommerce).
Natural language technology keeps getting better. Today’s smart speakers such as Amazon’s Echo, Google Home and Apple’s HomePod are the fastest-growing consumer technology since the smartphone itself.
As of 2019 there were around 1.5 billion digital voice assistants embedded in all sorts of devices. That’s predicted to grow to nearly 8 billion by 2023 [Juniper Research]. In 2020, 50% of all searches will be voice searches [ComScore]. Who knows how many searches will be voice searches by 2023? 60%? 70%?
By the time we throw artificial intelligence and automation into the mix (I bet you thought we’d never mention them) what emerges will likely be the defining trend of the Twenties: conversational commerce.
We will look at conversational over the course of our posts.
What can we learn from the 2010s?
It’s horrible to use a cliché, but the biggest learning from the 2010s may well be that change is the only constant.
In just one decade:
- Consumer shopping behaviours changed radically;
- Consumer expectations went from non-existent to the highest ever;
- eCommerce transformed from transactional to experiential;
- Customer service went from being irrelevant to essential;
- Customer experience became the competitive differentiator;
- Mobile shopping grew from effectively zero to half of eCommerce;
- Voice assistants grew from effectively zero to 3 billion;
- Digitally native brands started outperforming everyone else;
- The high street changed continuously.
Further change in the 2020s is inevitable. Tech will not suddenly stop developing. Consumer behaviours will not stop shifting. The high street will not look the same two years from now.
Our mission as a customer service and tech company is to help medium-sized brands and businesses like you adapt as the future shifts. Our suggestion is to keep moving. One step at a time. But above all, keep moving. Start with the ROBIN Program and we’ll take it from there.
We hope you enjoy our Seven Customer Service Insights for 2020 and Beyond.
See you soon.
— The ROBIN Team
Seven Customer Service Insights for 2020 and Beyond