E-Commerce Evolution

Continuous digital transformation and evolution, initiated by the advent of the internet and its subsequent transition to mobile internet on smartphones, plus the emergence of social networks, have together given rise to novel forms of online shopping. One in particular, shoppertainment, is highly popular with Gen Zers and Millennials. The aim is to give consumers a fun and immersive buying experience, as this helps build stronger connections, increase conversion and sales, and foster brand loyalty. Content is delivered through livestream selling, shoppable videos, contests and giveaways, gamification, and augmented reality (AR).

Platforms such as Facebook and Instagram with billions of users have inadvertently become sought-after apps through which to promote and sell goods. And e-commerce companies continue to integrate social commerce and gamification features on their websites to further fuel consumer purchases.

Examples include the Chinese online shopping platform Taobao which has huge followings and sells billions of dollars of products. TikTok Shop delivers shoppable short and live videos and gets creators to make captivating promotional videos, rewarding them with sales commission. The luxury brand Gucci partnered with Snapchat for the world’s first AR shoe try-on campaign; it generated a positive return on advertising spending and achieved an 18.9 million unique reach.

For now, these new forms of online shopping are fueling astounding growth in the e-commerce space. Supply chains must be agile and responsive to meet these increased demands.

Another shift in consumer behavior among the younger consumer base is a general social acceptance of dupes (products that mimic those of other companies without claiming to be the original nor including reproduced protected logos) and counterfeits (products that are copies of trademarked consumer goods and aim to appear as the original). Counterfeit goods account for $991 billion in international trade each year. Brands with the highest volumes of identified counterfeits include Celine, Dior, Goyard, Prada, and Saint Laurent.

Drivers behind the rise of dupes and counterfeits are cost-of-living concerns and inflation, resulting in consumers looking for cheaper alternatives to luxury brands. Also, online marketplaces, social media platforms, and mobile e-commerce applications have made it easier for consumers to browse and purchase these products. In addition, promotion of dupes and replicas by social media influencers can normalize and even glamorize these products, particularly with younger consumers. Perception plays a part too. Not everyone associates with a specific brand image or set of values, making them more likely to seek alternatives. And some dupes offer similar aesthetics or functionalities as brand-name products at a fraction of the cost, creating a perceived value proposition for consumers.

Examples of explicit copies include Dior’s low-top sneakers which cost $1,050 on Dior websites – the counterfeit shoes cost $68 on the Chinese cross-border platform DHgate. Temu offers a wide range of goods at unmatchable prices such as an electric cooking pot for $2.14, a retractable storage rack for $6.58, and a swimsuit for $6.18 with free shipping.

The social acceptance of dupes and counterfeits is impacting supply chains too. For example, logistics companies serving the e-commerce channels of multinational corporations may be liable to fines and penalties if caught storing, handling, and transporting counterfeit products, as these goods are illegal in many countries. As volumes continue to grow, logistic companies must navigate complexities and ensure regulatory compliance in all countries of operation.

Due to the rapid rise of cross-border shipments, the e-commerce evolution has potential to disrupt the transportation industry. Traditionally, cross-border e-commerce products are consolidated and shipped in bulk. However, to meet consumer demand for faster delivery, smaller orders of fast-moving products are now generally shipped via air freight.

This means cross-border e-commerce retailers are increasingly competing for limited air cargo space to achieve quick shipping times. Cargo Facts Consulting estimates Alibaba ships from China around 1,000 tons of packages daily, Shein 5,000 tons, Temu 4,000 tons, and TikTok Shop 800 tons – volumes equivalent to about 108 Boeing 777 freighters per day.

The surge in demand for fast fashion and inexpensive products may have long-term implications for supply chains such as inflated air transportation prices, lack of air cargo capacity in the event of emergencies or crises, and e-commerce companies having to build logistic infrastructure globally to shorten transportation time. This puts further pressure on the supply chain to meet consumption and customer expectations.