Online ecommerce in 2018 will be marked by faster delivery times and stronger identity verification, experts say.
As we move through the first quarter of 2018 it is apparent that retail trends this year will be a mix of the old and the new.
Experts say an old standby — the need to speed up shipping — will be something retailers will continue to work on in 2018. But retailers will also be future focused this year, embracing new ways to verify identification in an era of increasing security breaches and widespread identity theft.
Speeding up shipping will continue to be a priority for online retailers competing with each other and Amazon. And, in fact, retailers will also continue to compete with one other thing: consumers’ increasing expectations.
While surveys indicate that consumers still prefer free shipping to fast shipping, their perception of what “fast shipping” means have shifted dramatically in just the past three years. Deloitte found that while nearly two-thirds of consumers considered three-to-four-day shipping to be “fast” in 2015, by last year that percentage had fallen to about one third.
So, how important is speed?
The National Retail Federation says consumers in 2018 will want their goods shipped fast. In fact, almost three-fifths of those polled say they are willing to pay more for same-day delivery. From 2014 to 2015 the amount of money that customers shelled out for faster shipping increased dramatically — from $100 million to $620 million — according to Bringg, a Chicago-based logistics company with customers in 50 countries.
This will continue a trend that began last year when on-demand deliveries grew significantly, according to Shopify, an e-commerce company based in Ottawa, Ontario.
Many say this need for speed is another feature of the “Amazon effect,” in which the Seattle behemoth puts pressure on existing retailers to up their game in many different areas. In this case, retailers are feeling the effect of Amazon Prime.
Amazon’s service, which began in 2005, charges customers an annual flat fee of $99 for unlimited one- or two-day shipping. The company now has an estimated 90 million U.S. customers signed up for Prime.
“When companies other than Amazon see what is happening then they cannot but help to attempt to do something similar. There are even some markets where Amazon has two-hour delivery,” says Steven Hausman, a technology consultant based in Gaithersburg, Maryland.
Dubai and San Francisco-based fashion and beauty e-commerce specialist Mari Corella says to meet this expectation retailers from across the spectrum are working with physical stores and distribution centers “to offer delivery of their products in mere moments.”
The business pressure to speed up delivery explains, in part, the more intense focus on buy-online-pick-up-in-store options. OrderDynamics found that slightly more than 29 percent of U.S. retailers provide what’s often called BOPIS, according to Chain Store Age.
Others have estimated a higher number, but none of the figures appear to match consumers’ enthusiasm for the service — in separate surveys, NTT Data Services and JDA Voice of the Consumer found that 49 and 50 percent of shoppers respectively said they had used buy-online-pick-up-in-store services.
All in all, consumers are expecting more options when it comes to getting their goods.
“Customers have become accustomed to ordering items at a later date. We have seen this firsthand, as the Christmas order spike comes later and later each year,” says Philip Rooke, CEO of Spreadshirt, a Leipzig, Germany-based self-expression ecommerce company. “This means that we need to hire additional staff for a shorter time, which is not very motivating for the staff and makes on-boarding a lot more complicated.”
Identity verification moves into the future
When it comes to identity verification, new regulations in Europe and a spate of high-profile data breaches worldwide will push retailers into the future in 2018.
The European Union’s Payment Services Directive, which is intended to harmonize payment products across the 28-member market and among its population of 510 million people, requires banks to offer a biometric options by 2019. MasterCard already provides this service in 37 countries. Its Identity Check Mobile, colloquially known as “Selfie Pay,” allows customers in 12 European markets to verify their identity with a fingerprint, iris, or a selfie photograph.
The objective of using biometrics and multi-factor authentication is to reduce the reliance on passwords.
“Experts will tell you it’s best to have something you know, something you have, and something you are,” says Nick Bilogorskiy, a cybersecurity strategist at Juniper Networks, of Sunnyvale, California.
Thanks to break-ins at Equifax and other databases some 3.3 billion passwords are “out in the wild” just waiting for bad guys to test them, says Bilogorskiy.
The overall market for authentication is expected to continue to grow from $622.9 million in 2017 to $1.6 billion by 2022, according to Research and Markets.
Meanwhile, three out of four millennials say they are increasingly comfortable with using biometrics and less careful with passwords, says an IBM Security study of worldwide consumer behavior that surveyed 4,000 adults from across the United States, Asia Pacific and Europe.
With two-thirds of respondents saying they are now comfortable with using biometrics to get online, the study concluded that biometric authentication is becoming mainstream.
Alastair Johnson, whose U.K.-based ecommerce payments and ID platform Nuggets, says innovative technologies will combine to take on the fraudsters who impersonate others.
“Currently user account security verification often comes in the form of a username and password that are vulnerable to social engineering, phishing and malware, along with verification via email and SMS. But both of these can be breached in their own rights,” Johnson says. “In 2018 more advanced secure methods of biometric verification combined with the blockchain will be used to resolve these problems.”
No doubt, retailers will make great strides in 2018 when it comes to identity verification and advancing the service they provide consumers when it comes to online delivery. The only more solid bet is that both challenges will need more work as commerce evolves and consumer habits change.
But worries about all that can wait until 2019.
Photo by Mike Cassidy. Chart Source: Deloitte