Few sectors have arguably experienced as large a shift in consumer behaviour as retail has in the last two years.
A recent report from Australia Post on eCommerce shows a 20.8% YOY online shopping growth in Australia for the 12 months to 30 September 2021. So what’s next? Here are my predictions for commerce in 2022:
1. Can’t buy me love – or can you? Retailers will invest in modern commerce platforms boosting customer loyalty
More retailers will increase investment in modern commerce platforms as IT and marketing departments align on their benefits and agree to invest. According to Forrester, 22% of software decision-makers who aren’t already deploying commerce platforms via software-as-a-service plan to do so in the next year.
Retailer investment into modern commerce architectures will be a good thing for both staff and end users. Brands’ front-end developers have been subject to the rigidity of legacy monolithic technology stacks for years, which has resulted in damage to morale and being slow off the mark adapting to changing consumer preferences to the demise of customer loyalty.
Agile software based on the principles of MACH (microservices, API-first, cloud-native and headless) commerce will allow them greater flexibility. Investing in such platforms will allow teams to test and roll out new commerce features to improve the user experience, which will boost customer satisfaction and competitive differentiation.
2. Hype around marketplaces will cool as brands embrace DTC (direct to consumer) commerce
In 20221 there has been a great deal of hype around marketplaces. These have been adopted by the likes of Amazon and ASOS designed to sell a variety of commodity products, but in 2022 brands will wake up to the realisation that this doesn’t mean every brand can and should enter this space. While marketplaces can work well for tech giants and large retailers who are set up well to benefit, not all branded products lend themselves well to this channel. When a retailer lists products on a marketplace, it can lose a lot of control over the experience, fulfilment and more. In the next 12 months, individual brands will envision how it makes more sense for them to sell products directly to their audience, so that they can own the message, curate the experience and cut out middlemen and their costs.
3. More Retailers to do tech transformations on their own
With COVID-19 driving digital transformation, retailers were forced to digitise to adapt to rapidly changing circumstances. One way they could do that was to invest in tech talent so that they could do more work internally, be more agile and become more self-reliant to give then control over how technology is a competitive differentiator. In fact, around half of commercetools’ own customers were already implementing its platform with no outside help in 2021. It wasn’t that long ago that not having a systems integrator to carry out implementation was unthinkable, yet in 2022 the trend towards retailers becoming more technically-savvy will increase, with many more companies implementing commerce platforms on their own.
4. APPetisers anyone? Headless commerce will be easier to consume
On top of the trend of retailers becoming more tech-savvy, the maturation of new technology itself will also make it easier for brands to up-level the shopping experience. Headless commerce platforms offer a decoupled, open environment, allowing front-end developers to quickly and easily add as many ‘heads’ (channels) to their commerce back-end as they wish. It has been the industry’s best kept secret for years, but this will no longer be the case in 2022. The maturation of headless commerce platforms will lower the barriers to entry for this software. This evolution will make it easier for less technically savvy employees to understand its potential and make the investment, resulting in headless being easier to consume. An example of how headless is becoming the mainstream is how commercetools itself acquired Frontastic, the leading composable front end development platform, to combine the speed and flexibility of headless with the simplicity of a website builder.
5. Commoditisation of commerce is no comedy, it’s the future - and it’s a great thing
It is clear the commerce market can’t naturally sustain hundreds of commerce platforms for much longer. In 2022 the market will move towards there being a smaller number of large go-to platforms that offer reasonably priced, easier to consume commerce functionality at scale. For analogies, look to the public cloud market where AWS, Google Cloud and Microsoft Azure dominate, or to the communications space where Twilio and the public clouds dominate. Some of the commerce platform vendors are likely to be cloud providers, as commerce becomes commoditised, public cloud vendors will recognise the need for commerce functionality in their portfolio and are thus likely to make inroads into this space.
The move to a smaller number of commerce technology providers will be a good thing for retailers, as it won’t be such a minefield to find the technologies they need to build the commerce experiences their shoppers demand. The best tools on the market will be plain to see, as well easy to capitalise on.
6. GraphQL everywhere
In 2022, the majority of retailers will be using GraphQL – it will no longer be a ‘nice to have’, but an invaluable part of their technology strategy. From data over- and under-fetching and slow performance , the problems GraphQL can solve are issues that won’t be going anywhere next year, making it an invaluable technology that will only gain popularity. There is nothing else quite like it – it will concretely be the industry standard.
7. Appification of commerce gets real
In 2021, there have been a lot of start-ups building profitable businesses that offer one granular piece of functionality, such as Fast and Bolt with checkout-as-a-service, 7learnings with price optimisation, and Chargebee with recurring subscription management. These applications have been an attractive proposition for retailers, offering best-of-breed point solutions using access to user data, for example, suggested auto-complete search terms for a product search tool, created based on hundreds of thousands of previous searches for better end user experiences.
In the next 12 months, there is likely to be increased appetite for best-of-breed commerce functionality as well as ease of consumption for the retailer. This will drive popularity for commerce portfolios that bundle together individual best-of-breed vendor functionalities and offer APIs that are built separately and can be consumed independently a la carte.
8. B2B commerce matures
COVID-19 completely changed B2B buying behaviour. A 2021 APAC study by McKinsey discovered that , only 20–30% of B2B buyers want to ever interact with reps in person and 75% of B2B decision makers found the new model is as effective or more so than before the pandemic.
This changed behaviour is driving how more B2B organisations will recognise they can’t solely rely on partners to sell their products, and that they have to control at least one distribution channel. They will therefore make the decision to invest in becoming technically mature.
This will also be driven by the increasing number of digital natives in the workplace who are used to using technology to communicate. As a result, manufacturers and B2B organisations will have to adapt, and will invest more in self-service in 2022.
The way forward
From headless commerce becoming easier to consume, to retailers becoming more technically-savvy, 2022 will undeniably be a huge year for commerce technology. While there will still be some uncertainty over consumer spending, and shopper habits will continue to evolve, it will be exciting to see how the industry matures and technology advances. Watch this space…