Report: Future of the Digital Shelf
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"Our data shows that e-commerce will be the largest driver of retail growth over the next few years, with online retail accounting for almost 40% of global retail sales by 2026," said Deren Baker, CEO of Edge by Ascential, said in a news release. "Increasingly, product discovery and even the whole shopper journey, is taking place on social media platforms like Facebook and TikTok, which expanded their commerce operations during the lockdowns of 2020 and 2021. Meanwhile, traditional brick-and-mortar retailers are taking leaps in their digital transformation following the lead of Amazon. As retail enters a new generation where the shopper path-to-purchase is most likely to start on a mobile phone or a laptop, the digital shelf is the primary place where shoppers discover, select, purchase and engage with products online, and therefore is fundamental to a brand’s future growth."
Edge by Ascential's annual "Future of the Digital Shelf" report, which illustrates the impact that e-commerce is having on traditional retail, predicts that shoppers will spend over $2.4 trillion dollars online by 2026. It also predicts that from 2021 to 2026, e-commerce will make up 63% of all total gross merchandise volume (GMV) growth, more than double the amount generated by all the store-based channels measured in the report.
Edge by Ascential's report highlights e-commerce trends and challenges impacting brands and retailers today. Some additional key findings include:
- E-commerce is reshaping the purpose of the store. Most shoppers now begin their product searches on digital channels and studies show that one in three store purchases begin online. Even when in stores, shoppers are increasingly engaging with digital experiences through mobile apps, QR codes, social media and digital payment tech. The report suggests that store-based retail, while still important, must find fresh purpose in a digital-first world.
- The digital shelf is the primary place where brands achieve future growth, but online is not just one channel. Amid the pandemic in 2020, e-commerce activity increased by 37% worldwide causing the entire online shopping ecosystem to evolve.
The report also emphasizes that the key to driving performance on the digital shelf comes down to three core metrics making up what Edge calls the "Digital Shelf Equation" (i.e., availability + traffic + conversion = sales and share). The report found that:
- Keeping items in stock is the ultimate precursor to sales and conversion on the digital shelf and to maintain a top search ranking. Edge by Ascential has observed clients lose as much as a fifth (22%) of their weekly sales for every day their product is out of stock.
- Search is now the preferred way to shop and an entry point for product and brand discovery.
- For products sold online, a product detail page and online packaging are as critical as the packaging and promotional material for products displayed on a physical shelf.
Insights from Edge by Ascential's latest Future of the Digital Shelf report was gathered between November 2021-2022. The report was created with data from the company’s proprietary analytics tool dubbed Retail Market Monitor, which can analyze the entire retail ecosystem by sector, geography and channel, and identify growth opportunities for retailers and brands. Retail sales data included online and offline operations, and only includes chain retailers, of which Edge Retail Insight covers almost 2,500 worldwide.