Selling online has come a long way since the first item was ordered online — it was a book, in case you're wondering. Supported by increasingly advanced technology, retailers of all sizes who sell direct-to-consumer (D2C) have stepped into the world of online sales and seen undeniable success. However, it can be challenging to stay ahead of the competition. Now more than ever, it's important to continually be aware of emerging e-commerce news, trends, and events that might impact your business. What were this year's highlights, and what can we learn to prepare for next year?
Shipping costs often present challenges for smaller e-commerce companies, so in June, Shopify announced early access to a fulfillment network for U.S. businesses. Shopify Fulfillment Network (SFN) was designed to provide small and medium online stores with a low-cost shipping option that was completely managed through Shopify.
The SFN uses machine learning to intelligently allocate inventory by artificial intelligence technology that tracks and allocates product inventory. Most orders are filled and shipped within three days, and products can be sent in custom, merchant-branded packaging to allow sellers to provide a more on-brand experience. As Shopify's website states, the SFN handles the shipping logistics so you can "focus on building lasting relationships with your customers."
Beginning Oct. 1, 2019, Massachusetts, Kansas, and other states required online stores to collect sales tax. Since 1992, sales tax wasn't a requirement for e-commerce companies with no physical presence in their customers' states. However, this was changed in 2018 with the U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc., Overstock.com, Inc., and Newegg, Inc. The ruling gave states the authority to require sellers without a physical presence in South Dakota to collect sales tax.
However, there’s no consistency across the nation because each state can decide what it wants to do. Since the 2018 ruling, the new law has been interpreted and applied in different, sometimes contradictory ways by each state. Arizona, for example, has a minimum sales threshold of $200,000 before the sales tax is required, while Kansas has no limit. As states begin to enforce sales tax, e-commerce companies will need to learn how to manage sales taxes in multiple regions; the process can be automated through various cloud-based software applications.
In July 2018, the Trump administration placed tariffs of 25 percent on over 800 industrial components and technological imports from China, to revitalize struggling American industries. The tariff prompted Beijing to retaliate with counter-tariffs and resulted in a series of other duties by both nations since then. While both U.S. and Chinese negotiators continue to work on a mutually favorable deal, the tariffs have impacted a large number of companies that rely on Chinese imports.
E-commerce companies, especially smaller ones, have struggled with understanding how to handle the increased costs brought about by the increasing number of tariffs. Although the U.S. and China have temporarily agreed to suspend additional tariffs, if you sell goods that are impacted by the tariffs, it would be wise to plan for new taxes. According to a survey conducted by the National Retail Federation, more than 79% of consumers are concerned that tariff increases will impact their shopping experience.
Companies are adopting different strategies to navigate tariff costs and maintain a pleasant experience. In September, Target stated that it wouldn't accept any increased costs from suppliers that were associated with tariffs on Chinese imports. Research by the National Bureau of Economics suggests that most U.S. retailers are absorbing the price impact by earning lower profit margins on affected goods. Ultimately, whether you decrease your profit margin or explore alternative sources, it's best to plan for the worst while expecting the best.
WhatsApp Business announced a catalog feature in the second week of November that lets business owners list and price their products in an attractive gallery, and track their sales with SKU codes. Incorporating the new catalog feature into chats, business owners can respond to customer requests or questions with product suggestions from their gallery. Merchants can also provide a link to their website to encourage direct sales.
Facebook's WhatsApp isn't the only place to let people buy products they view on its platform. More than 90% of weekly users on Pinterest use the platform to decide on a purchase. An article from AdWeek showed that, in 2017, the top 500 retailers generated $6+ billion from shoppers on social media. Whether you use Instagram, Pinterest, or the new WhatsApp Business catalog, it's a worthwhile effort to explore how you can use social media to drive sales.
In other e-commerce news, an increasing number of consumers are choosing their products based on the manufacturer's stance on issues regarding the environment, politics, and society. A 2017 study by Cone Communications showed that over 80 percent of consumers felt companies should play a role in fighting racial inequality and supporting women's rights. Social media has empowered similar stories in recent years, with companies facing consumer scrutiny and criticism over their political endorsements, stance on social issues, and practices.
Most likely, you've heard of Chick-fil-A's anti-LGBTQ stance and the negative publicity they received because of it. The social backlash was so significant that the company recently announced that it would only donate to support education, and fight homelessness and hunger.
This trend in consumer activism and scrutiny of company practices has only continued to grow in 2019. In August, Stephen Ross, the chairman of the parent company of Equinox and SoulCycle, announced a lavish Trump fundraiser. Customers of Equinox and SoulCycle, many of whom are a part of the LGBTQ community, took to social media to protest the hypocrisy and boycott Equinox and SoulCycle. As more and more people "vote with their dollars," you may want to explore how you can become a more "conscious company." Paying attention to issues that are relevant to your target audience will help you connect with your customers on a deeper level than a mere product, helping you build something more significant than an email list: a real fanbase.
Maybe you're planning how to use WhatsApp's new business catalog to grow sales or strategizing how you can overcome tariff-induced costs. Or, perhaps you're exploring ways to become a socially responsible company or incorporate Shopify's fulfillment network into your company. Either way, as we wrap up 2019 (holiday pun intended), it's a good idea to harness your knowledge of e-commerce news to position your company for growth. Here’s to a prosperous 2020!
Now that you've got your dose of the hottest e-commerce news, take a look at next year's digital trends.
Last updated on August 16th, 2022.