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/.
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If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.
Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.
At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead.
An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.
A great Amazon SEO Agency partner will:
Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance.
Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS.
To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.
A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.
It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.
Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins.
Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.
As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.
Contact us to learn more about our SEO optimization services.