Q4 2024 Emerging Retail & Consumer Trends

Today’s retailers are increasingly leveraging third-party partners to unlock new growth opportunities. By collaborating with external companies that specialize in specific business functions—such as logistics, payment processing, customer service, marketing, and technology—retailers can focus more on their core competencies. This allows retailers to more effectively allocate money, time, and resources.

These partnerships can reduce operational burdens for the retailer and allow them to more easily react to market changes or customer demands. If executed well, this collaborative approach can enable retailers to deliver a high-quality customer experience while fostering their own growth.

These solutions can empower retailers to provide a quality shopping experience throughout the entire customer journey:

Discovery

As customer acquisition costs increase and return on ad spend (ROAS) declines, brands should adapt their marketing strategies to remain competitive.¹ Partnering with agencies or utilizing software can be a strategic move to develop effective digital campaigns that reach new shoppers and build brand awareness. Agencies can leverage vast consumer data to create targeted and personalized advertising campaigns. Software, like a demand-side platform (DSP), allows retailers to buy digital ads across multiple exchanges in an automated way. By deploying differentiated strategies that meet customers where they are, retailers can improve their return on ad spend and lower customer acquisition costs.

Evaluation

During the evaluation phase, shoppers actively browse and research products to make informed purchase decisions. Third-party marketplaces have empowered retailers to expand their product offerings and provide a more diversified assortment to customers. These platforms enable customers to easily compare multiple products from different sellers, allowing them to thoroughly assess their options before making a purchase.

Customer reviews significantly influence purchasing decisions, with 63% of customers more likely to trust and buy from a company that features reviews.² Dedicated customer review platforms enable retailers to efficiently collect, manage, and display reviews on their websites. This transparency can build trust and provide valuable insights to potential buyers during the evaluation phase.

Beyond price, free and fast delivery are the top factors encouraging customers to buy directly from a brand.³ While third-party logistics providers are crucial in the fulfillment stage, they also play a vital role in the evaluation phase by providing delivery estimates to shoppers. These estimates help customers make informed decisions, knowing when they can expect to receive their purchases.

By leveraging third-party marketplaces, customer review platforms, and efficient logistics providers, retailers can significantly enhance the evaluation phase of the customer journey and drive conversion and revenue uplift. These strategies can not only improve the shopping experience but can also build trust and encourage customers to make confident purchase decisions.

Purchase

Retailers are continuously enhancing their checkout processes by integrating online payment and financing solutions to ensure a quick and seamless experience for customers. By expanding payment options to include digital wallets and "Buy Now, Pay Later" services, retailers offer more convenient and flexible payment methods. This approach can lead to higher conversion rates, increased sales, and reduced cart abandonment. Additionally, providing convenient payment options can boost customer satisfaction and encourage repeat purchases, ultimately improving customer lifetime value.

Fulfillment

Retailers partner with third-party logistics providers (3PLs) to handle the storage, picking, packing, and shipping of their products, effectively outsourcing the entire order fulfillment process once a customer places an order. Leveraging a 3PL allows retailers to enhance efficiency and optimize logistics and freight costs. Additionally, it offers the flexibility to scale operations according to demand fluctuations. As customer expectations for fast shipping continue to rise, partnering with 3PLs enables retailers to boost customer satisfaction without the need to invest in their own logistics infrastructure.

Post Purchase

The post-purchase shopping experience is crucial for driving customer retention and advocacy. Third-party logistics providers (3PLs) often offer reverse logistics services to manage customer returns. Additionally, specialized companies focus on returns management to help retailers provide seamless return experiences for their customers. Another key player in the post-purchase phase are customer service providers, who handle tasks such as answering questions, processing orders, and managing complaints. These services enhance a retailer’s efficiency and boost customer satisfaction, ultimately leading to a higher customer lifetime value.

Not all solutions are suitable for every retailer to outsource. Retailers need to carefully assess their internal capabilities and strengths, pinpointing areas where they may lack expertise or resources. By identifying these gaps, they can strategically select third-party service providers that can enhance their offerings and deliver a more comprehensive experience throughout the customer journey. This evaluation process involves analyzing various aspects of their operations, such as logistics, customer service, and returns management, to determine which functions would benefit most from external support. Ultimately, the goal is to create a seamless and efficient customer experience by leveraging the specialized skills and technologies of third-party providers where needed.

While the market is crowded, Amazon is a player that provides solutions across the entire value chain. In collaboration with Amazon, Deloitte conducted a study of their Buy with Prime offering. See our report to learn more.

Acknowledgments: The authors would like to thank Alex Cohen, Carol Cui, and Jamie Curran for their contributions.

Endnotes

¹DTC Briefing: Brands rethink their marketing a customer acquisition costs soar & shoppers get pickier, Modern Retail, 2024.
²The Inside Scoop on Ecommerce Reviews: Why They Matter and How to Make the Most of Them, Big Commerce.
³The Future Shopper Report, VML, 2024.