Businesses who sell online have faced two years of uncertainty, so will our 2022 ecommerce predictions offer them clarity on where online retail markets are headed this year?
Many brands are comparing their 2021 online sales results with 2019, rather than 2020, as it was considered such an exceptional year. 2022 will likely see the growth curve return to what most would have predicted at the end of 2019, while retaining much of the increase in share that online sales have taken from offline channels.
In this blog, Pattern’s marketplace experts share their 2022 ecommerce predictions for the year ahead with insights on trading patterns, which online players are winning, and challenges that we are yet to overcome.
ONLINE SALES CONTINUE TO GROW
The year-on-year comparisons for the first quarter may not look promising – particularly in Europe which was in a strict lockdown during the same period in 2021 – but overall, there is still some growth potential for online sales. Our leadership team across China, UAE, USA, Australia and Europe predict that there will be growth in 2022, but not at the rates seen during 2020 and 2021.
Pattern’s German Country Manager Torsten Schaefer believes it will be tough for businesses to achieve year-on-year sales growth in Q1 and Q2 of 2022 due to the lockdown during the first half of 2021, but overall, throughout 2022 he expects to see a growth rate of 10%.
The growth rates are expected to be stronger in both the China and USA, which will suffer less from exceptional comparative figures from 2021, as neither market had substantial lockdowns last year. Both Pattern’s General Manager for Asia Arthur Cheung and US-based Director of Marketplaces George Hatch predict we could see a growth rates of near 20% in their respective markets.
Merline McGregor, Pattern’s General Manager for Australia, shares similar predictions for her market. She explains that it will be important for businesses to “align investment with long-term growth, the opposite to the last two years which has been about reacting to the market.”
The Middle East has also seen less restrictions in comparison to most other regions. MENA General Manager, David Quaife, who is based in the UAE, expects to see growth continue in a similar fashion to 2021. However, any introduction of new lockdown measures could catapult online sales figures, as occurred in 2020.
MARKETPLACES WIN IN 2022
Marketplaces have fueled ecommerce growth rates for years and will continue to do so in some markets in 2022.
Pattern’s Arthur Cheung points out that cross-border marketplaces – such as Tmall Global – have become Chinese consumers’ primary source of foreign goods, as it is hard for them to travel overseas to shop at the moment. Prior to the pandemic, Chinese tourist spend was materially important to premium and luxury retailers in many major cities such as Hong Kong, Sydney, Paris, Milan and London. Now Chinese shoppers are flocking to marketplaces to buy these products, Alibaba says its Tmall Global cross-border shopping platform has 100 million annual users.
Tmall is also not the only marketplace to consider in China, and brands should think about whether they need a presence on others, such as JD.com, Koala, Pindoudou and Suning, to maximise their sales opportunities. Arthur tells us, “In China it is increasingly important that brands have multiple touchpoints with end customers, and have products available on more than one marketplace, as we will not see any one platform capture all the revenue growth.”
Similarly in the Middle East, David Quaife predicts that there will be more than one marketplace winner. He says: “Amazon will be the dominant player in the Middle East but Noon and other retailers with their omnichannel propositions have doubled down on investment throughout 2020 and 2021.” In his markets, customer experience drives customer retention, and that will be key to who can take market share in markets that will continue to quickly grow.
In other markets Amazon has less competition and will defend the dominant position it has risen to.
Amazon.com already accounted for 41% of USA ecommerce sales in 2021 and whilst we continue to see this grow, George Hatch believes it will be at a slower pace in 2022. He also predicts that Walmart - currently the number two marketplace in the USA - will gain share as it scales and matures, and invests in new digital infrastructure.
In Australia, Merline McGregor fully expects Amazon to continue its phenomenal growth, gaining ground from other traditional brand aggregators in 2022. She says: “The brands that Pattern sells on marketplaces in Australia have grown in excess of 200% year-on-year in January 2022. Our research shows us that with the sharp uptick in Prime subscriptions in the Australian market combined with Amazon’s reliability, and fulfilment centres located close to most of Australia’s population, the marketplace has set itself up for success in 2022 and beyond.”
Another theme in the Pattern team’s 2022 ecommerce predictions was the constraint on ecommerce logistics and supply chains. The past two years have posed challenges in most regions, but improvements are finally feeding through. In Europe, Torsten Schaefer says that ecommerce players, and particularly Amazon, have increased their warehouse capacity through 2021, but a lack of capacity will remain a challenge in 2022.
In the UAE, David Quaife states: “There has been a huge focus and investment in this area over the last two years, so I would not foresee any major issues with last mile delivery. However, the supply chain, largely due to manufacturing issues, will continue to have a negative impact into 2022; hopefully this will reduce in the second half of the year.”
Merline McGregor and George Hatch predict there are still lots of challenges to overcome in both the USA and Australia. George believes capacity and inflation will drive US logistics costs to new highs, Just In Time inventory will need to change to allow for more of a buffer, and manufacturers will need to build in longer shipping times to ensure product is available when in demand.
Merline adds: “The scarcity of natural products such as wood to produce pallets, and Urea (a fuel additive used in diesel trucks) could see our supply chain environment continue to be disrupted until 2023 and beyond.”
SOCIAL COMMERCES GOES GLOBAL
Social commerce is one trend that will unite Eastern and Western markets in 2022. TikTok, also known as Douyin in China, has grown in popularity across the globe. As the platform evolves its capabilities to become ecommerce friendly outside of China, both Merline McGregor and Arthur Cheung predict it will be an important channel globally.
Last year, Pattern released a report outlining how social channels are becoming significantly important in creating demand generation amongst consumers, as well as brand awareness.
“Social channels are a great way of capturing new audiences and encourage impulse spending. It has been around for years in China but in 2022, we expect to see even more livestream shopping events, brands commercialising their content and other markets outside of Asia following suit," concludes Arthur Cheung.
For regular free ecommerce insights and research, see our Ecommerce Research page at https://pattern.com/uk/resources/ecommerce-research/.