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Top Challenges Facing Ecommerce Brands in the Next Five Years

The next five years bring a host of new challenges for online brands, from changing consumer preferences to increased cyberthreats.

 

Discover what lies ahead for your ecommerce brand – and how to prepare for them – in our article.

September 25, 2023

5 min read

Katie Riley, Elliot Taylor

The ecommerce industry has grown significantly in recent years. Retail ecommerce sales are projected to reach $8.1 trillion by 2029, up from $5.2 trillion in 2021. However, with this growth comes a range of challenges that ecommerce brands will need to contend with.

In this article, we explore the key issues facing online businesses over the next five years, so you can better prepare and invest to futureproof your brand for the challenges ahead.

Cybersecurity

Cybersecurity is a growing challenge for ecommerce businesses.

As the number of transactions conducted online continue to increase, so too does the risk of cyberattacks and data breaches.

And these threats are costly. The global average cost of a data breach to businesses was $4.35 million in 2022, with experts suggesting that figure could reach $5 million in 2023. This financial impact can be devastating for ecommerce brands.

To prepare for this growing challenge, ecommerce brands will need to invest in robust cybersecurity measures that protect customer data and maintain trust.

Multi-factor authentication, regular security assessments, secure payment gateways – these all play a role in effective cyberattack protection.

At THG Ingenuity, we understand that the cyberthreat landscape is always evolving – so we evolve our solution to continually detect and prevent fraud against changing trends.

In 2021, a migration to the THG Ingenuity platform enabled Dermstore to reduce its chargebacks by 96.6%. Alongside this, the cosmetics and skincare brand also enjoyed a 63.8% reduction in fraud check delays.

Supported by the latest in cybersecurity protection, our technology platform, integrated with our fraud detection solution, ensures our customers – and their shoppers – can buy and sell online with confidence.

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Logistics and supply chain management

Efficient logistics and supply chain management are essential for ecommerce brands to deliver products quickly and at low cost. However, there are various challenges across both areas that ecommerce brands will need to contend with over the next five years.

The growth of cross-border commerce is one such challenge.

Cross-border ecommerce is expected to grow beyond a CAGR of 26.19%, driven in part by increased internationalization efforts from brands in 2024. However, cross-border logistics and delivery can be complex and costly. The process is often hampered by issues such as customs clearance, duties, taxes and last-mile delivery.

But these issues, while challenging, are worth overcoming.

The options available to brands in driving efficiency are numerous. But investment in new technologies, such as automation and robotics, to improve warehouse management and delivery processes are of particular importance to growing ecommerce brands. 

Robotics, in particular, are growing in popularity among businesses looking to overcome the challenges of logistics for greater cost efficiency and agility.

The global warehouse robotics market is projected to reach $9.1 billion by 2026, indicating a growing trend towards automation and robotics in logistics and supply chain management.

At THG Ingenuity, our global operations and fulfillment network relies on smart robotics, supported by our partner AutoStore to expedite our logistics efforts. Powered by warehouse automation and supported by a worldwide network of 16 warehousing and fulfillment sites, it ensures a seamless shopping experience for our brand’s customers – wherever they are.

A warehouse with machines shifting packages

Changes in consumer behaviour

Consumer behaviors are changing all the time, and ecommerce brands must work to adapt and stay ahead of emerging consumer demands. One of the most pressing changes is a growing shopper preference for environmentalism.

81% of global consumers feel strongly that companies should help to improve the environment. Clearly, sustainability and ethical consumption is dramatically transforming consumer decision-making in recent years.

Since the pandemic, 60% of shoppers have made sustainable, environmentally friendly or ethical purchases. Consequently, ecommerce brands that prioritize sustainability and ethical practices can gain a competitive advantage.

Sustainable packaging, carbon reduction schemes, a switch to renewable energy sources, environmentally sourced products, B Corp certifications and more all help show consumers your commitment to sustainability.

At THG Ingenuity, we recognize that this growing trend is here to stay. We have built sustainability into our technological, marketing and operational offerings, ensuring our brands can align business progress with progress for the planet – all whilst continuing to deliver for their customers.

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Regulatory changes

The ecommerce industry is subject to a range of regulations, including data protection, consumer protection, product regulation and taxation.

However, keeping up to date with these regulations and ensuring compliance can involve significant costs.

Take digital services taxes (DSTs), for instance. Several countries have introduced or are considering DSTs that specifically target ecommerce companies.

These taxes are intended to capture revenue geneated by digital companies, many of which have been accused of not paying their fair share of taxes in the countries where they operate.

As of April 2021, 13 countries had implemented or proposed DSTs, including France, Italy and the United Kingdom. The United States has also threatened to retaliate against countries that implement DSTs by implementing new trade tariffs, further complicating the issue for ecommerce companies.

THG Ingenuity has over 18 years of experience managing the regulatory landscape for brands from across retail, beauty and FMCG. This ensures our customers can continue to flourish and grow, even in the face of changing ecommerce regulations, supported by expertise to provide advice and consolidation of changing requirements.

The ecommerce industry will face a range of challenges in the next five years.

Ecommerce brands will need to be agile and adaptable to stay ahead of the competition and overcome these issues.

These challenges will be felt throughout your business – across your technological, operational and marketing infrastructure.

At THG Ingenuity, we have the expertise and solutions required to unify these elements helping to safeguard your business against the challenges of the future. A partnership with us is a partnership that ensures your brand can continue to grow and thrive in the rapidly evolving ecommerce landscape.

Get in touch today and start preparing now for the ecommerce challenges of tomorrow.

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