With 2017 well underway, Magento surveyed 2,200 branded manufacturers, multi-channel, and web-only merchants from over 15 vertical segments to find out about their key eCommerce initiatives for the coming year. The survey encompassed insights about retailers forecasts for 2017, investments and marketing.

What We Found
Online retailers are expecting another bumper year of growth. In fact, more than half of the merchants we surveyed expect their online revenues to grow by at least 20% and a fifth of merchants expect online revenue growth to exceed 50% in 2017. The big winners are set to be web-only merchants who are forecasting faster revenue growth than their branded manufacturing or multi-channel peers as millennial consumers increasingly gravitate towards buying from online merchants offering differentiated online experiences that facilitate ease of doing business. 

So, with bullish forecasts and optimism in the air, we asked our merchants:

What’s going to be hot in 2017?

• A focus on making mobile experiences great. In 2017, almost three-quarters of Magento merchants expect that mobile transactions will total more than 20% of their total online revenues while two-thirds of them expect mobile revenues to exceed 40%. Just a few years ago such forecasts would have met serious cynicism in the eCommerce boardroom, but with mobile transaction growth now firmly in the stratosphere it is perhaps unsurprisingly then that 45% of the merchants we surveyed are planning to increase their investment in mobile experience during 2017. One emerging mobile technology that promises to bring the speed and slick experience of the native app to the mobile browser are Progress Web Apps (PWA’s), with 12% of merchants already using or planning a trial of PWA’s in 2017 and a further 30% actively watching adoption of the technology.
• Taking omnichannel integration from checkbox to maturity. Of the 668 omnichannel retailers that responded to our survey, almost half have already instituted ship-from-store programs and buy-online-pick-up-in-store (BOPIS) programs although, of these, only 53% agreed that their programs were operationally mature. In 2017, omnichannel retailers will double down on benchmarking to ensure that programs that are already in place are delivering the right consumer experience. Of the holdouts (those yet to implement omnichannel integration), a significant number intend to introduce trials in 2017 bringing adoption of ship-from-store to 64% and BOPIS to 68% by the end of 2017. Furthermore, by the end of 2017, 60% of omnichannel retailers will make their store inventory visible online, 57% will have a cross-channel return program and 46% will enable ship-to-store.
• Pushing content marketing to social channels. Of all the programs that merchants plan to invest in during 2017, product content (e.g. video, imagery) ranked #1. Driving this investment is the desire to proliferate high quality, differentiated content that drives discovery and interaction via social channels early in the consumer’s discovery lifecycle. While today only 7% of the merchants we surveyed are advertising on social commerce platforms such as Pinterest, a further 19% plan to invest in a trial during 2017 and 39% are actively watching. So great is the importance of social as a channel for merchants, 38% of the merchants we surveyed expect to increase their paid social media budgets in 2017.

What Won’t Be So Hot? 

• Hyped Technologies. VR, AR, Drones, 3D Printing, IoT, 2-hour-shipping are all the rage with the media, but our survey showed that online merchants are taking a very conservative approach to any investment in these potentially disruptive technologies. Three-quarters of the merchants we surveyed stated they have no current interest in 2-hour-shipping, 3D printing, AR/VR or voice search initiatives in 2017. Interestingly some emerging technologies are faring a little better – more than half of the merchants surveyed cited that in 2017 they are either watching or plan to invest in trials for predictive pricing, virtual assistance tools and mobile payments (Apple / Android Pay)
• Obsessing about Amazon. When as asked about the biggest obstacles facing merchants in 2017 only 25% cited competition from Amazon versus 40% who cited competition from other online retailers (not including Amazon). Consequently, although 42% of merchant’s plan to increase their spending on marketplace advertising and listings in 2017, 59% plan to increase spend on search engine marketing to compete with other (non-Amazon) retailers. Topping Amazon as an obstacle to growth, are shipping and fulfillment challenges (39%) and the ability to scale in international markets (31%).
• In-Store Digitization. The past few years have seen a dizzying array of vendor solutions for digitizing the store experience, but our survey found that in 2017 omnichannel retailers are less than enthused about the ROI on these investments. Only 12% of the omnichannel retailers surveys have active mobile point of sale (mPOS) or clienteling tools deployed and only a further 25% of merchants are planning a trial of mPOS or clienteling in 2017, leaving most firmly in the category of “staying away”. Even the merchants that have operational mPOS and clienteling programs are struggling, with only two-fifths reporting their capabilities to be operationally mature. 

See predictions and expected digital trends for 2017 from leading Magento Solution Partners:

2017 Predictions Part 1: Rethinking Retail with B2B, Mobile, International & Digital Transformation

On the eve of the new year, we asked our partners to reflect on the trends they see gathering momentum in 2017. Notable areas of concensus include accelerating merchant interest in B2B ecommerce, a continued focus on optimizing shoppers experiences on mobile, international expansion, and retailers rethinking the role of physical stores. Here’s a roundup of their thoughts:

• Integrated B2B & B2C

• “More and more mid-market customers want to see both customer paths in one instance, which makes their overall process more efficient.” (Martina England, Corra)
• “[We] see B2B online retailing as an on-going trend that will be gaining a lot more steam in the coming year. With the B2B eCommerce market approaching $1 trillion dollars according to Forbes, even mid-market retailers are looking for an agile way to break into this space.” (Karah Finan, Web Solutions NYC)

• Mobile

• “We often think of “mobile” as being a single type of device, but the fact is that there is a lot of diversity in experience and viewport. In 2017, differences across all the sizes of smartphones are going to drive a change in the way we think about design and UX. If we look at a cross section of the Corra client base, we can see variances of 70% or more in conversion and order values across the various “mobile” device sizes. (Van Schlichting, Corra)
• “One trend we see picking up greater momentum in 2017 is the further development of progressive web. To that end, we will be pushing out essentially 3 different PWA trending posts coming out in Q1 next year.” (Caleb F. Bryant, Gorilla)

• Accelerating Pace of International Expansion

• “Brands & companies put more and more focus on defining a global eCommerce model with increasing efforts of localization at the country level.” (Florian Legendre, Bluecom)
• “Retailers expanding into international markets has been increasing over the last few years anyway, but in the UK, the uncertainty around Brexit will see brands, in particular, look to expand into additional markets with a view to mitigating risk of any negative terms imposed by the European Union.” (Alex Shepherd, Corra)
• “Even though the general idea of a marketplace is engrained in the footholds of the Internet, it has been constantly evolving. The Facebook Marketplace is living proof of it and could become the slightly overwhelming menace messaging service for places such as Craigslist, Freeads, and Gumtree. Also, in the eCommerce industry, it is very common to see popular brands make the move towards marketplaces like eBay, Amazon, Rakuten, and many others. In the last year alone, the number of offers in the fashion category on Amazon increased by a whole 87%, so there is no escaping this escalating trend. This means, from an entrepreneurial standpoint, there is no reason to forfeit access to the millions of global users who are ready to buy. Together with clients, we at Divante have tested this model and observed up to 80% of income to come from this source.” (Krzysztof Podeszwa, Divante)

• Customer Experience Design

• “Flexibility is the way. We heard a lot about the end of physical stores in 2016, but we believe that stores, online and offline, have to evolve with a particular focus on flexibility. Retailers need flexibility in their labour and in particular they need flexibility in the store formats: popup stores, mobile stores, and new store formats. There will be an increase in physical presence with non-traditional formats; we will see more entertainment hubs or social destinations where shoppers can explore and test products that they see online. Big eCommerce retailers have already started to create physical stores for testing product and they have already started to give life to real partnerships with local stores to enable shoppers to pick up their orders. The convergence of physical and digital worlds is going faster, with a particular focus on flexibility. (Marco Dalla Libera, Alpenite)
• “The trend toward in-app browsers will create challenges on the technical and experience front. Instead of developing to the ‘big 4’ browsers, we will find that the actual experience of customers can vary far more than in the past. Retailers who are keeping a close eye on their analytics and tools like hotjar recordings will stay ahead of this curve.”  (Rachel Weir, Corra)
• “Here at Pixafy, we’re working to incorporate a shift towards social commerce. Being where the customer spends time (social media) is critical, and not having to leave the channel offers the game-changing ‘transact anywhere’ capability retailers are looking for. (Aleza Shapiro, Pixafy)
•  “‘Less text, more images’ seems to be the overall design trend for eCommerce sites, giving the consumer less content to worry about and more visual appeal of the product and associated lifestyle. Higher quality images can also help some retailers drive down returns by better representing the product from the outset. (Williams Commerce)
• “Voice enabled commerce will spur a “voice first” (a la mobile-first) design direction for a lot of major brands. Starbucks is already heading that direction, and Amazon had Alexa-only offers and products this past Cyber week: expect more brands to create their own voice assistants, and some will do it poorly. This could be an inflection point of mass adoption or fatigue.” (Phillip Jackson, Something Digital)

2017 Predictions Part 2: Personalization, Payments & Shipping

Customer expectations are changing as quickly as the technology they use, and retailers need to keep up if they want to keep customers happy. Among the trends our solution and technology partners see vying for retailers’ attention in 2017 are accelerating momentum around personalization (from product to customer journey), continued evolution of payments, and the rise of shipping as a competitive differentiator. Here is a roundup of our partners’ reflections:

• Personalization Accelerates

• “The importance of full journey personalisation, both on site and off site. We are future proofing our clients to deliver this experience by constantly researching the best software and partners to implement the most advanced on-site search facilities across client sites.” (Jon Woodall, Space 48)
• “Personalized products are going to be a big trend, for example, Artifact Uprising. The ability to create your own personalized and beautiful items with ease will be key in 2017. Additionally, personalization is going to meet the authentic, niche microsite experience to drive more customization, particularly in fashion and lifestyle brands. Taking this one step further, retailers will start to see the importance of information architecture by capturing and maintaining more data points across the various products and product components they stock. Another important aspect of personalization is personalization based on the shopper, regardless of the channel they are engaging in. We are seeing more third parties gain a better understanding of customer behavior, not only online but also in-store. 2017 will see us better harness this information and create a better experience for shoppers across the board.” (Sasha Butkovich, Corra)

• Payments Evolve

• “Mobile checkout at retail stores [is increasing]. (Dong Xu, Silk Commerce)
• “Classy Llama expects that hardware-based payments will become a larger factor in eCommerce payments in 2017. More merchants will add Apple Pay and Android Pay as payment options, thereby reducing friction in the checkout process. This should help smaller merchants compete more effectively against giants such as Amazon. ” (Erik Hansen, Classy Llama)
• “Bye Bye Traditional Wallets. 2017 will see a drastic decrease of traditional payments and will move towards payment via smartphone, watch, or other wearable devices. The use of digital wallets like mobile wallet will grow up both in digital and physical stores. With the new credit card standards, a lot of retailers are updating their POS systems moving closer towards a world that is able to accept mobile payments as easily as credit card payments. 2017 will be a year when a larger portion of the general public becomes comfortable paying with their mobile phones rather than their credit cards.” (Marco Dalla Libera, Alpenite)
• eWallet Plus – As smartphone user base increasing rapidly, mobile payments are becoming more and more common. Mobile payment clubbed with loyalty points is on the rise and will be one of the key trends to look for. The upgrades to consumers’ mobile devices and merchants’ point-of-sale systems will spell the end of the traditional wallet for many people in 2017, especially since “mobile” payments will be possible using more than just a smartphone—watches, rings, and other devices and “wearables” will now be connected and capable of making payments. Merchants would be wise to set themselves up to accept these new payment methods as soon as possible. For example, Selfie pay. (Tapas Ranjan Lenka, Cybage)

• Shipping As Competitive Differentiator

• “Shipping on demand: The rise of real-time inventory across multiple locations and channels will usher in a new era of speedy delivery. Advances in inventory management and shipping capability have enabled retailers to turn their physical stores into fulfillment locations—thus minimizing the distance between available inventory and the consumer. In 2017 you can expect cost-effective, hyper-local shipping options to become normalized and customer expectations advancing further still.” (Carl Hartmann, Temando)
• “Online Retailers will go for Speed. Online shoppers want immediate shipping: their expectations of an acceptable delivery window are shrinking. That’s because big market players, like Amazon, have conditioned shoppers to expect fast delivery and they will condition them to expect same day delivery. So delivery speed will become competitive differentiators. Same day delivery is not simple and retailers have already started to build their own same-day shipping options through partnership with other companies and start-ups. Logistics and supply chain industries are also investing more and more in new technologies like self-driving cars, drones, etc. to revolutionize the delivery industry.” (Marco Dalla Libera, Alpenite)