The history of commerce is, in many ways, a history of humanity. Commerce – the act of exchanging one thing of value for another – has continuously evolved over the past millennia. 

Innovation in commerce can be traced back to the invention of standardized currency between 700 and 500 B.C. as a uniform unit of account and means of exchange. Innovation in infrastructure such as the construction of the Silk Road brought with it the first true form of global commerce, introducing a foray of novel, exotic products from the far east to Europe and the Middle East. Brick and mortar retail went from village stalls, to corner stores, to modern trade and giant malls – in addition to phone, mail, catalog and TV shopping. The advent of e-commerce, a USD 2.2Tn-strong industry today, has, however, arguably brought about the most dramatic evolution, and is set to shape the future. 

We can only predict the future of e-commerce through recent trends, and by extrapolating the trajectory of innovation in commerce throughout history. As Albert Einstein said, “If you want to know the future, look at the past.” Although the landscape and technology continue to evolve rapidly, the transformation triggers remain largely similar.

How Our Future Selves Will Shop And Transact: 4 Predictions

  • Ecommerce will continue to grow exponentially #Adoption

eCommerce has continued to grow at a meteoric pace globally, outpacing traditional retail. E-commerce is growing 4x year on year, faster than the global retail sector as a whole at an annual rate of 24%.

Despite initial skepticism around the industry’s exponential growth during the pandemic, e-commerce has shown strong resilience in 2022. The USD 183 Bn spike in 2021 has given way to fast, steady growth, and the trend is set to continue in the years to follow. By 2040, 95% of all purchases are expected to be via eCommerce.

Zooming in on MENA, the past 3 years have seen unprecedented growth of e-commerce. Over 200 Million consumers transitioned to online shopping during the pandemic. E-commerce volume grew from USD 18.6 billion in 2016 to USD 60 billion in 2021, and is expected to hit USD 107 billion by 2025, growing at a faster rate than European and Asian markets. Driven by growing internet penetration, one of the world’s youngest populations, and highly lucrative unit economics and labor market, the MENA e-commerce market is expected to grow at a 11.5% CAGR from 2022 through to 2027,

Similar to the earliest innovations in payments and transport, this growth will only be made possible by the continued advancement of the underlying infrastructure across payments, logistics, supply chain management, and most importantly reverse logistics e.g. managing consumer returns.

  • AI and Personalization will drive large-scale adoption #Innovation

Although we’re still in the early days of generative AI applications, one can’t help but be fascinated by their ingenuity and potential for changing how people interact with systems, devices, apps and websites.

The future of commerce is personalized. Bombarded by an overabundance of choices, users will favor platforms that best understand and address their unique needs. 

AI will also unlock completely different ways of discovery, where the shopping experience will be more conversational, less product driven and more need driven, and the real frontier for AI lies beyond recommendations based on purchase history data and predictive tags. AI will enable platforms to offer true shopping assistance to the user, even helping them learn more about themselves in the process. 

And evolution in this space will rapid fast, it was only 30 years ago when this was the pinnacle of online shopping.

  • Social commerce to play a bigger role in shopping #Adoption #Innovation

The meteoric rise of influencers in the past decade gave birth to a new type of discovery and selling through peer-endorsed suggestions.

With the abundance of choice in the modern day, brands are vying for customer attention. The winning product might not be the ‘best’, but will likely be the one with better distribution, more top of mind brand awareness, and stronger visibility. 

This encouraged influencers to monetize their followers base. We saw Mr Beast opening up his first burger chain, Serena Williams and Kevin Hart starting their own VC firm and regionally in MENA, Hadia Ghaleb launched and sold out her own swimwear line

We can already see platforms like Amazon & Meta seizing the opportunity with their influencer fronts, allowing users to interact with/buy recommended items with the click of a button. 

More platforms will launch new products or full on experiences to capitalize on their existing loyal following. This unlocks additional revenue streams, with opportunities for better margins and novel retention frameworks. 

  • Quick commerce is here to stay #Innovation

On-demand platforms have transformed our lives, effectively becoming the new normal. It is almost unfathomable to anyone today to consume content, be it their favorite song, an educational video, a podcast, or the latest hit series, on any medium other than on-demand platforms such as Netflix, Youtube, Spotify, or Anghami. It is hard to imagine the transportation landscape in our cities without on-demand platforms such as Uber and Careem. 

The magic of the on demand culture is how easily customers adapt to it. In the hectic modern schedule, consumers will rely more on services that make their lives easier or give them time back. No one needs all the video and music of the world a click away, but if given the choice, users will take it. Users would even trade things like variety for the extra convenience, for instance choosing an on-demand content platform that is readily available or they are already subscribed to, even if it doesn’t necessarily have the content they originally wanted.

Quick commerce does exactly that; it helps consumers be more spontaneous , worrying less about what they need to buy in advance. It also plays a big role in managing food waste and discouraging hoarding, with the reassurance that restocking is faster, easier, and more economic.

But quick commerce has been a victim of its own unprecedented success. The pandemic prompted the exponential acceleration of startups in that space, resulting in many companies scrambling to run before they could walk. Many were hamstrung by unsustainable cost structures, unreasonable spend over competition and territory grab, and a mantra of scale it before you nail it.

The reality is a lot of these companies will unfortunately implode, not due to competition or challenges with the model itself, but because they were unsuccessful at building and running the business in a commercially sound manner, where every order makes money (aka positive unit economics).

However, the precious few that will survive the test will go on to build the next generation of the future of e-commerce.

Final words

The future of ecommerce is super exciting, but I predict it will also be fragmented and overwhelming.

With advancement in AI, social selling and innovative logistics, the contest to win coveted customer attention and business in online and offline retail, is shifting from assortment and availability, to discovery, personalization, and convenience. 

Fragmentation and the abundance of competition will serve to accelerate adoption of e-commerce, enticing more consumers to make the switch with plenty of lucrative deals. However, history has shown that after every fragmentation cycle comes a wave of consolidation. My bet is on e-commerce companies that build superior user experiences, and over-index on the biggest driver of transformation in this era: tech.