5 E-commerce and Retail Trends to Watch: Insider Intelligence

Livestream shopping will have its moment to shine and it is getting closer, generative AI is taking its place in content creation, digital advertising is on the rise and the world of online and retail sales is beginning to close its gap. Here are five trends that are shaping the retail industry, according to Zia Wigder, CCO of Insider Intelligence.

E-commerce and retail growth rates are converging

Prior to the pandemic, the percentage of sales growth in Mexico was 35% in e-commerce, while total retail sales growth, which include in-store sales, was 1%. In 2020, e-commerce sales spiked to 65.2% and total sales went down 9%. These past few years, as businesses recover from the economic downturn caused by the pandemic, the numbers are getting closer. This year, online sales rose 16.2% and total retail sales were 4.5%. Insider Intelligence foresees that in 2027 sales will stabilize, with online sales up 10.3% growth and total retail sales up 3.2%, said Wigder at VTEX Connect conference in Mexico City this week.

Retail media as 3rd wave of digital advertising

Wigder notes that the first wave was the search, led by Google, followed by the dominance of Meta in the display ads wave. Currently, retail media is the new frontier, and Amazon leads the way with 75% of media add spending revenue. However, she anticipates that this percentage will decrease as more companies invest in this sector. In 2021, the total spending on retail media in the US reached US$36 billion, with companies allocating resources to other channels such as traditional media and sponsorships. By 2026, this figure is projected to rise to US$110 billion. 

In Latin America, more than half of retailers are adopting paid retail media channels as part of their marketing strategy. In Mexico, 59.4% will use Amazon Ads, 63.8% will leverage Mercado Ads, 31.9% will incorporate Rappi Ads and 37.7% will engage with Walmart Connect. 

Social shopping

Livestream shopping has yielded mixed results as a new consumer approach. Wigder pointed out that certain technologies, such as chatbots, took decades to gain widespread adoption. Similarly, social shopping is an alternative that may require time to mature, but is poised to become a crucial channel for online retail. Tiktok is currently making substantial investments, earmarking US$500 million for its shopping endeavors in the US, including the development of logistics centers and the potential restriction of access to external e-commerce sites within the app. Social media plays a key role for product discovery. In Mexico, the platforms with the most significant influence on shoppers are Facebook at 52%, followed by Instagram at 18%, YouTube at 12% and Tiktok at 10%.  

Generative AI 

Generative AI is currently most prominently employed (about 76%) in the retail industry for content creation. Most of this application involves generating written content, including emails to both customers and brand associates, as well as social media copy. With AI, each company has the capability to personalize these messages using customer behavior data. Additionally, 71% use generative AI to stimulate creative thinking, 63% to analyze market data and 62% to generate visual assets. 

Faster adoption of new technologies

In the realm of new technology, adoption is occurring at an unprecedented pace. The adoption timeframe for search engines spanned 14 years, social media took 11 years and retail media achieved it in just five years. The latter has skyrocketed from zero to US$30 billion in relatively brief period compared to the former two. However, Wigder points out a significant challenge: rapid adoption does not necessarily translate into long-term usage. If a product is easy to adopt, it can also be easy to drop, especially when there are low switching costs or barriers to switching.

“So just because you are from an established company in the market today, it is not mean that you don't have a bright future ahead of you. If you're able to adapt quickly and take advantage of these new technologies, there will be new players that will be important to watch,” concludes Zia Wigder.