What stories hit the headlines in the ecommerce space in 2018

In 2018, more and more consumers have shown interest in fast and simple in-store and online shopping experiences. The rising of ecommerce and mcommerce and the increasing willingness among customers to try new technologies – like voice and chatbots, VR, AI, IoT, etc – led to a growing demand for more seamless and secure in-store and online shopping experiences. This situation allowed companies involved in this space to build and strengthen relationships, offer more services, and personalise the customer experience.

Ecommerce grew stronger

In 2018, ecommerce registered an important growth on a global level. When it comes to cross-border shopping, PayPal’s Cross-Border Consumer Research, conducted in 31 countries with about 34,000 consumers, has shown that cross-border ecommerce is getting more and more attractive in Europe.

In other markets, ecommerce registered a continuous growth. For example, in Pakistan ecommerce was expected to surpass USD 1 billion in 2018, propelled by the increase in broadband penetration and the rise in the number of online payment merchants. In India, ecommerce sales reached USD 32.70 billion (an increase of 31% compared to 2017), with growth being driven by Amazon, Flipkart, and Paytm Mall. In the Netherlands, ecommerce was forecasted to grow by 11% to almost EUR 25 billion by the end of 2018.

Big players continued global expansion

Big ecommerce players have continued their expansion into new markets. In December, Alibaba Group signed an agreement with the Belgium government to launch an ecommerce trade hub, part of Alibaba’s Electronic World Trade Platform (eWTP). The company also showed interest in the Spanish market, collaborating with El Corte Ingle´s across multiple areas including digital payments, ecommerce, and logistics. JD.com continued its expansion in the western markets. The Chinese company decided upon entering Europe in 2019 with its new ecommerce platform and delivery services, first in France, then in the UK and in Germany.

On the other side, Amazon taped into the fashion and sportswear Brazilian market through its Brazilian site, in a bid to expand in LATAM. Moreover, in June 2018, the ecommerce company launched its Prime service in Australia, extending its presence in the country, where it entered in December 2017.

For some retailers, 2018 has not been a prolific year. Sears filed for Chapter 11 bankruptcy with a plan to close 142 more stores, while Toys ‘R’ Us has shut down its ecommerce operations, after it filed for bankruptcy in September 2017.

Innovation and new ecommerce strategies

2018 has been a great year for innovation and new ecommerce strategies. In January, Amazon opened Amazon Go, an automated and checkout-free grocery store in Seattle. Amazon Go relies on cameras and weight sensors to recognise what shoppers take off the shelves or put back. There are no cash registers nor any checkout lines, as customers are billed after leaving the store through their credit cards on file. In December, the ecommerce company’s foray into brick-and-mortar retail continued with the expansion of the checkout-free store format to airports. The US company moved even further in 2018, partnering with Snapchat to create a new visual search function that uses the latter’s app to connect to Amazon and buy products. The new function is built into Snapchat’s app and it is activated when the customer adds Amazon to their Snapchat list. When in front of a product or a barcode, the feature enables shoppers to find it (and, eventually, buy it) on Amazon.

Walmart’s take on cashier-less checkout, Scan&Go, started being tested in stores in the US. The Mobile Express Scan & Go app allows customers to scan and bag their items while they shop and pay directly with their phones by using in-app stored credit card information. After making a purchase, the shopper shows the receipt to an employee who is waiting at the Mobile Express line. However, a few months later, the programme was closed. Then, in December, Walmart opened the first small-sized high-tech supermarket in Shenzhen, China, which allows shoppers to bypass checkout counters by paying with their mobile devices.

While some companies invested in streamlining the checkout experience for customers, others moved their attention to emerging technologies: AI, VR, or blockchain. A study released by Juniper Research found that global retailers’ spending on AI would reach USD 7.3 billion per annum by 2022. In 2018, retailers and ecommerce companies continued to target new avenues to increase personalisation of the customer experience. Flipkart acquired Liv.ai, an India-based AI-led speech recognition software startup, while Walmart partnered with Microsoft for a wider use of cloud and AI technology. Macy’s invested in a mobile checkout option and shared plans to explore AI for new shopping experiences. The new feature would allow customers to virtually place Macy’s furniture within their own living spaces to see how it would look and fit before making a purchase.

Crypto and blockchain were exploited (among others) by Rakuten, which revealed plans to launch Rakuten Coin, a proprietary cryptocurrency based on blockchain and on the existing Rakuten Super Points loyalty programme. TMall, the ecommerce platform of Alibaba, had a similar approach and it manifested interest in partnering with the logistics company Cainiao in order to adopt blockchain in its cross-border supply chain operations.

New laws, rules, and regulations

New laws, rules, and regulations helped the ecommerce space thrive and become safer in 2018. In April 2018, the European Commission outlined draft rules proposals aimed at curbing online marketplaces’ use of merchants’ data to boost sales of their own brand products. The rules aimed at preventing unfair business practices, seeking to ensure a level playing field between big tech companies (Google, Amazon, and Apple) and traditional businesses. In addition, lawmakers wanted the rules to cover voice assistance services or virtual helpers such as Amazon’s Alexa, Apple’s Siri, and Google Assistant, due to their increasing popularity.

In August, Visa has created a new category of payment aggregator, the marketplace, and updated the requirements that have to be met in order to qualify as a marketplace under Visa’s rules. The new designation is expected to have an immediate impact in the ecommerce market by clarifying the status and requirements applicable to ecommerce sites looking to add payment processing services to their platforms.

In the Chinese market, the government expanded policies on retail imports and exports via cross-border ecommerce to unlock the potential of consumption. The Chinese government showed interest in stimulating the potential for increased imports and in stepping up cross-border ecommerce and other new business models.

In September, the European Commission issued updated guidance for ending geo-blocking to help member states and ecommerce businesses to adapt to the new rules. The rules are designed to allow consumers and companies to buy and sell products and services online more easily and confidently across the EU.

In 2018, regulatory bodies focused on the emerging economies as well, with the aim to stimulate ecommerce. In July, the United Nations has urged African states to develop regulations to stimulate ecommerce growth. In the ASEAN region, in November, economic ministers signed an agreement to facilitate cross-border ecommerce transactions within the region. The agreement, finalised after nine rounds of negotiations, is the grouping’s first one on ecommerce.

Important investments and acquisitions

2018 marked the world’s biggest purchase of an ecommerce company, the acquisition of Flipkart by Walmart, in May, for USD 16 billion. It was also reported that Amazon wanted to buy Flipkart, a move that would have put the US retailer in competition with Amazon in India. Walmart hit the headlines again when it shared its plans to acquire the food delivery service Cornershop for USD 225 million, to ramp up its ecommerce business in Mexico and Chile.

Another important announcement regarded Adobe’s intention of acquiring Magento Commerce from private equity company Permira for USD 1.68 billion. According to Reuters, the deal would help Adobe bolster its Experience Cloud business. Then, in June 2018, Google inked a deal with JD.com, agreeing to purchase USD 550 million worth of shares in the company.

Another important investment in 2018 is marked by Alibaba, which increased its control of Lazada, investing USD 2 billion into the business. By acquiring a majority of Lazada’s shares, the Chinese ecommerce platform strengthened its presence in markets like Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

2018 at The Paypers

In 2018, we have launched the ninth edition of the Payments and Commerce Market Guide 2018-2019 – Insights into Global Payments and Commerce Market, which covers the latest trends and developments in the commerce and payments space.

Stay tuned for the next retrospective, this time discussing what has happened in 2018 in online and mobile payments.

About Ana Pastravanu

Ana is Content Editor at The Paypers and has been actively involved in covering digital payments and ecommerce related topics. She is passionate about finding the latest trends and developments in cross-border ecommerce, payment methods, and fintech startups.