Among these, two of the top investment areas are third-party marketplaces (42 per cent) and social commerce (39 per cent). Adopting a marketplace model allows for assortment expansion without significant scaling of internal operations, while deploying social commerce can enhance brand awareness and increase market share among younger shoppers. AI, including GenAI, was one of the top investment areas for all retailers (58 per cent) because it can help them boost efficiency, reduce lead times, manage complexity, and enhance creativity.

Most US retailers, however, are not moving fast enough relative to the market leaders Amazon and Walmart, which accounted for over 38 per cent of the US e-commerce market in 2023 and had a combined market share of over 50 per cent in several product categories.

Nor are they keeping pace with upstart Asian marketplaces such as Temu, whose rapid growth already ranks it among the top 20 e-commerce retailers in the United States.

The success and momentum of these leading retailers have created an innovate-or-perish moment for other retailers with e-commerce aspirations, the survey concluded.

Heightening the urgency is the ongoing upsurge of e-commerce itself. Forrester forecasts that over 70 per cent of total US retail sales will be digitally influenced by 2027. It’s only a matter of time before the majority of retail sales across many categories in the US takes place via e-commerce, BCG said in an article on its website.

Increasing the end-to-end speed of their e-commerce initiatives—from identifying and testing opportunities to rapid scaling—will enhance traditional retailers’ staying power in this growing market. The slower they move, the greater the risk that they continue to fall behind the innovative traditional retailers or fast-moving digital natives.

Overall marketplace sales are growing at a faster rate than first-party e-commerce sales, with Amazon and Walmart growing much faster than the remaining marketplace players in the United States.

Specialty retailers have also capitalized on opportunities to create marketplaces.

Temu, meanwhile, has demonstrated that digital natives can follow alternative paths to success. Its strategy of low-priced products and a social referral system has led to exponential growth over the last few years, catapulting Temu into an e-commerce leadership position.

The average prices of the products on the Temu platform are around 50 per cent less than the prices on Amazon. Large in-app discount campaigns result in a 10 per cent conversion rate versus the industry average of 2 per cent.

Fibre2Fashion News Desk (DS)