The future of eCommerce

The retail industry has faced many challenges in recent years, including the pandemic and the subsequent cost-of-living crisis. In this blog, we’re letting you know more about the future of eCommerce and how we can help retail businesses manage eCommerce processes effectively.

What is eCommerce?

Put simply, eCommerce is any sale that’s been made online. It can be used to purchase items, digital goods or even services, depending on what the business offers.

When a consumer purchases items online, it’s vital that businesses have the correct procedures in place to ensure a smooth process from start to finish. This includes ensuring that stock levels are kept up to date and that the packaging process is efficient. Without these processes, a business can quickly end up struggling and potentially losing a customer’s trust forever.

Digital commerce is also important for online businesses and involves the wider experience, such as marketing efforts and customer engagement.

How has the economy changed for businesses?

It will likely come as no surprise that the economy has changed drastically in recent years. This has led to many retail businesses struggling to stay afloat, with some even needing to close their brick-and-mortar stores and eCommerce businesses. Some of these challenges have included political instability, wars and a cost-of-living crisis. All of these elements have significantly impacted operating costs for retailers around the world.

Despite these challenges, the retail sector has continued to innovate and grow, demonstrating its remarkable resilience and desire to meet customer needs.

How has the economy changed for consumers?

From a consumer perspective, concerns remain, particularly around the cost of living, a weaker economy and a lack of savings. Recent research indicates that over a third of people still cite the cost of living as their biggest concern, although this pressure has slightly decreased compared to last year.

Inflation has been a major issue, with prices for goods and services rising by about 22% over the past three and a half years. Essential items such as food, electricity, gas, and housing costs have seen significant price increases, making it difficult for consumers to manage their spending. These increases have disproportionately affected lower-income households, which spend more on these nondiscretionary items.

How has customer behaviour changed in recent years?

Different consumer groups have been impacted in different ways, due to many factors, including their salaries and the amount of disposable income they have each month.

Older consumers, who may own their homes but live off savings, are particularly affected by the cost-of-living crisis and a weaker economy. Middle-aged, wealthier consumers are concerned about job security and its impact on their willingness to spend. Younger consumers, including millennials and Gen Z, face challenges with saving for a home, as inflation has eroded their potential savings.

As a result of these variations, consumer confidence also changes across the different income groups. As expected, the wealthiest 20% of households are more optimistic about their personal finances, while 80% of UK consumers feel pessimistic about their finances for 2025. However, this pessimism has improved compared to last year.

The bottom 40% of households have less money leftover after paying for essentials than they did five years ago, while the top 60% have more spare cash. The wealthiest 20% of households are responsible for about a third of spending across retail, leisure and hospitality.

Consumers continue to focus on essential spending, with the most affluent households maintaining their spending levels on holidays. Middle-income households, typically middle-aged with mortgages, are looking to cut back on nondiscretionary spending due to interest rates. Private rents have risen significantly, impacting discretionary spending, but have recently stabilised.

How has the retail sector responded to these changes?

In order to remain competitive, retail businesses have needed to adapt to these changes. The retail landscape has continued to evolve rapidly, with marketplaces gaining momentum and changing the industry.

Modern retail has seen a huge shift, as elements such as social commerce, pre-loved items and discount models, such as Shein and Temu, continue to grow. Social media platforms, such as Instagram and TikTok, are impacting how people shop due to their additional features.

Retail businesses recognise that the customer journey has become more complex as a result of this shift, as consumers often bounce between digital and physical channels. Retailers must navigate these complexities effectively and continue offering a seamless experience when it comes to eCommerce sales. Providing a positive experience both in person and online can help to promote consumer trust, which also boosts loyalty.

Since the pandemic, retail businesses have noticed a significant change in how consumers are spending money. As more people turn to online shopping, the market has now reached a level of maturity. The true legacy of the pandemic is a more competitive market and a complex customer journey. Consumers’ expectations have risen, driven by seamless experiences in other sectors like entertainment and information. Online retailers are required to remain ahead of these changes to maintain consumer satisfaction.

How will the retail sector change in the future?

Looking ahead, the retail industry is entering a new phase of growth, driven by factors such as social commerce, marketplaces, next-gen customer experience and internationalisation.

• Social commerce, particularly on platforms like TikTok, is expected to grow significantly.
• Marketplaces are expanding, offering consumers a wider range of choices for shopping online.
• Generative AI (GenAI) transforms search and personalisation, with AI agents potentially automating parts of the customer journey.

Retailers must adapt to these changes, optimising their websites and strategies to meet the evolving needs of consumers. The implications for retail are significant, as AI agents and advanced personalisation become more prevalent.

How efficient are UK eCommerce systems?

Businesses must remain ahead of the competition when it comes to eCommerce trends and the systems they have in place. Many eCommerce brands aren’t utilising their systems to their full potential, which means they end up losing money and essentially losing customers. Here’s the data.

UK consumers purchased approximately £130 billion worth of non-food goods online last year, but astonishingly, £27 billion of these goods were returned. This means around 1 in 5 non-food products bought online were sent back.

A significant portion of these returns comes from serial returners, who intentionally over-order, and slow returners, who take their time returning unwanted items. Although accounting for less than a quarter of consumers, these groups are responsible for nearly half of all returns. They are also more likely to exploit delivery and returns policies.

This behaviour creates major inefficiencies in inventory management, logistics and cash flow for retailers. Three in five online shoppers who make returns have used returns to make or save money. Common behaviours include:

• Over-ordering to reach a minimum spend for free delivery and then returning some items (16.9% on average, rising to over a quarter among younger consumers).
• Using rewards or cashback programs to profit from purchases and returns (18.2% on average, rising to a quarter among Gen Z consumers).
• Selling or using items that retailers said to keep after offering to return them (19.8%, rising to over a quarter among Gen Z consumers).

In the clothing and footwear category, 27.4% of shoppers admit to returning items due to over-ordering sizes or colours, a practice known as ‘bracketing’. This trend is particularly prominent among younger generations. 84.2% of Baby Boomers said they do not engage in this behaviour across any retail category, compared to 31.1% of Gen Z consumers.

Additionally, 15.6% of consumers have bought clothing or footwear online just to use for a short time, such as for a social event, a behaviour known as ‘wardrobing’. Meanwhile, 14.5% have bought clothing or footwear online to showcase on social media, known as ‘staging’. These behaviours rise to over a quarter among Gen Z consumers.

Nearly half (46.4%) of Gen Z and a third (35.3%) of Millennials choose different payment methods if they think they might return an online order. This compares to just 5.5% among Baby Boomers. Payment methods include using digital wallets, buy now and pay later services, gift cards and credit cards, when they might not have otherwise.

The hidden cost of returns goes beyond logistics. These behaviours fuel rising operational costs, inflated markdowns and unsustainable reverse logistics.

Many retailers face margin erosion as return rates spike and reprocessing costs climb. While most customers may leave a retailer after a bad experience, 44% of serial returners would repurchase from a retailer despite poor returns, putting additional strain on already inefficient systems.

At Granby, we understand the complexities and challenges faced by the retail industry. Our expertise in eCommerce and reverse logistics can help retailers navigate these obstacles and optimise their operations.

We offer tailored solutions to manage returns efficiently, reduce operational costs and enhance customer satisfaction. By leveraging advanced technologies and data-driven strategies, we support retailers in providing a seamless shopping experience and maintaining profitability in a competitive market.

What is reverse logistics?

Reverse logistics is the process of returning items from the customer back to the manufacturer or distributor. Returns are common for retailers, so it’s vital that you have effective solutions in place to manage these.

Depending on the reason for the return, these items could be reused, recycled or disposed of correctly.

Why do I need reverse logistics?

Every business needs to have a robust reverse logistics process in place, as you will undoubtedly need to deal with returns every so often. Here are some of the key benefits of reverse logistics.

• Maintain customer satisfaction and build customer loyalty
• Reduce costs due to effective processes
• Promote sustainability as items can be dealt with accordingly
• Increase efficiency in your business
• Manage cash flow and resources more effectively

How can we help retail businesses?

Granby offers a comprehensive suite of services designed to support retail brands in the ever-evolving market landscape. Our solutions are tailored to address the unique challenges faced by retailers and ensure they can thrive in a competitive environment.

eCommerce integration

Granby’s technology seamlessly integrates with all major eCommerce platforms, ensuring a smooth and efficient operation. This integration allows retailers to manage their online stores, track inventory, process orders and handle returns with ease. Read our blog on 3PL vs 4PL vs 5PL.

Reverse logistics

We specialise in reverse logistics, helping retailers manage returns efficiently. Our solutions reduce operational costs, improve inventory management and enhance customer satisfaction. By streamlining the returns process, we help retailers maintain profitability and reduce the impact of high return rates.

Advanced technologies

Granby leverages advanced technologies, including AI and data analytics, to optimise eCommerce operations. Our AI-driven solutions enhance personalisation, improve search functionality and automate parts of the customer journey. Utilising customer data and artificial intelligence helps to ensure a seamless shopping experience for consumers and helps retailers stay ahead of the competition.

Customer experience

We focus on providing a next-gen customer experience by integrating social commerce, marketplaces and personalised shopping experiences. Our solutions help retailers meet the evolving needs of consumers and provide a seamless experience across digital and physical channels. Businesses must continue to adapt to customer expectations.

Internationalisation

Granby supports retailers in expanding their reach globally. Our internationalisation services help brands navigate new markets, optimise their strategies and provide a consistent shopping experience for customers worldwide.

By partnering with Granby, retailers can leverage our expertise and technology to overcome challenges, optimise their operations, and provide a superior shopping experience for their customers. Our integrated solutions ensure retailers can thrive in a competitive market and maintain profitability in the face of evolving consumer expectations. Read our blog on: Is now the perfect time for eCommerce?

We hope this blog has been helpful on the future of eCommerce. Are you looking to transform your business’s eCommerce solutions? Contact our friendly team to see how we can help you thrive in the eCommerce market.