2023 was a struggle for many online stores – especially those retailers who over-expanded during the Covid boom. Will 2024 be any better? The home delivery expert ParcelHero has gazed into its crystal ball and identified the key trends that online traders should concentrate on, and some e-commerce traps to avoid.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Obviously, no one is expecting 2024 to be a halcyon year for retail. Inflation and disruption to Asia-UK shipments caused by the crisis in the Red Sea have given us a terrible start to the year. Nonetheless, we’ve identified several hot trends that could help increase sales as well as some red herrings to steer clear of for now.’

What’s hot

Same-day – ‘We’ve long believed that the hype surrounding same-day deliveries was premature, but now its moment has arrived. Our latest research reveals 58% of online shoppers say same-day delivery options are important, up from 56% last year and just 33% back in 2020. During 2023, Amazon poured money and resources into developing same-day services in the US and we can expect that focus to be repeated on this side of the Pond this year. That will “encourage” other retailers to follow suit.’

Micro hubs – ‘Same-day and next-day timed deliveries need smaller, regional distribution centres (DCs) and micro-hubs. In the US, Amazon has been opening many more same-day facilities, situated near large cities in order to quickly deliver the most popular items in the company’s range. More than 150 will be opened in the next few years and these smaller, same-day facilities are also likely to be the focus of Amazon’s UK approach to warehousing and distribution in future.’

Online holds firm – ‘At the peak of Covid lockdowns, in February 2021, e-commerce captured 37% of all retail sales. That bubble was always going to pop. However, for more than a year online sales have held firm at a consistent 26% of the overall market. That is the new normal for retailers and well above the 19% online was averaging pre-pandemic.’

Growing greenness – ‘Before Covid and soaring household bills shredded household budgets, green issues had been a fast-growing priority for consumers, and we believe these will rise in importance again this year. As well as demands for greener deliveries, there is likely to be increased awareness of wasteful packaging materials and unnecessary plastics.’

AI – ‘We’ve all read more than enough about the potential role of AI in retail. In the short-term, much of it is fanciful nonsense. However, AI chatbots on sellers’ websites can be useful in easily answering most consumers’ questions, saving time and money.’

Cancel culture – ‘Be aware that Generation Z (people born between 1995 and 2010) now has huge spending power. The internet is in their DNA and social media provides them with a platform to voice concerns about various causes. They also expect retailers to have opinions on potentially vexed subjects. Retailers must be sensitive to issues. The burning of green, red and silver Christmas party hats in a  M&S social media share was taken by some Gen Zs to be a reference to the Palestinian flag.’

What’s not!

Drones – ‘Amazon has announced a drone delivery service in the UK in 2024. But it’s unlikely to be a UK-wide service. A market for drones to deliver specific items, such as medical supplies, to targeted locations does exist, but urban drone deliveries won’t become an everyday occurrence.’

Home food deliveries – ‘The food delivery market has a bad case of indigestion. Online food sales fell by -13% YOY in 2022 as people returned to restaurants and fast-food outlets. Services such as London’s Jiffy, Bother, Oja and Gorillas have also disappeared. The only growth area may be supermarket tie-ins. Ocado Retail expects to return to profit in its full year.’

Smart shopping gizmos – ‘Investment in retail tech was slashed during 2023. Voice shopping and the development of IoT (Internet of Things) products have been particularly impacted.’

TikTok Shop and live streaming – ‘It’s true that social and sales will go hand in hand in the future. It’s easy to be lured into spending time and money on platforms such as TikTok Shop but, for now, results can be inconsistent. TikTok Shop launched in the UK in 2021 but it was slow to gain traction. By June 2022, the ‘Financial Times’ reported the platform was operating at a loss and many livestreams generated zero sales. Since then, TikTok Shop has picked up in popularity and effectiveness, and the recent launch of Fulfilment by TikTok has created a more integrated service. However, unless your products are aimed squarely at Gen Z shoppers, we think it’s still too early for mainstream live shopping.

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