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E-commerce and marketing businesses spending big on AI with little gain, says research
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UK-based e-commerce companies are investing significant capital in AI to improve the customer experience, however, many businesses are yet to realise significant gains.

That’s according to a survey of senior executives at 300 large and mid-sized e-commerce companies in Europe and the US by CMS Storyblok.

UK businesses have spent an average of £321,000 in the past year on developing or implementing AI solutions to enhance their digital customer experience, with 21% spending more than £500,000. Yet almost half (44%) state that their AI investment has only made a slight improvement to their customers’ digital experience.

Surprisingly, nearly all of UK business leaders (93%) say that their AI investment has delivered a good Return on Investment (ROI), of which 28% perceive it as a very good ROI. This potentially indicates businesses are taking a longer-term view of AI investment to improve their digital offering.

The research also explores the most popular use cases for AI amongst UK business leaders, which were cited as website content creation (59%), customer service (53%), marketing analysis (51%), translation services (49%), and marketing content creation (48%).

Dominik Angerer, CEO and Co-Founder of Storyblok said: “The transformative potential of AI for the digital experience is enormous, but our research highlights a clear gap between expectation and reality. While UK businesses are seeing some improvements, these remain incremental rather than truly transformative. What’s particularly interesting is that despite this, most business leaders still consider the capital they have committed to AI a good investment. This could suggest that many UK companies do not expect big gains immediately, but are instead taking a longer-term view of AI to transform their digital offering.

“To unlock AI’s full potential, businesses must go beyond surface-level implementations and integrate AI in a way that drives meaningful transformation. Core to this is the flexibility to scale with ease, and that’s where composable architecture comes in, enabling companies to seamlessly integrate AI-driven solutions across multiple channels without the restrictions of legacy systems. From hyper-personalisation to seamless localisation, nearly every possible AI use case could be implemented more effectively, and to a higher standard if businesses raised the digital bar and embraced modern marketing technology.”

The global e-commerce market set to pass $11 trillion milestone
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The global ecommerce market is on a trajectory of rapid expansion, set to reach $11 trillion in 2028, driven by technological advancements, seamless delivery services, and rising internet penetration.

With China and the US dominating the landscape, companies must continuously innovate to meet evolving consumer expectations, embrace ESG compliance, and leverage data-driven strategies to maintain competitiveness in an increasingly dynamic sector, says GlobalData.

Its latest Strategic Intelligence report, “Ecommerce,” reveals that the global value of transactions for the ecommerce market  is set to grow at a compound annual growth rate (CAGR) of 11.1% between 2023 and 2028, driven by improved technology and delivery services and wider internet adoption.

Aisha U-K Umaru, Strategic Intelligence Analyst at GlobalData, said: “The global ecommerce industry is dominated by China and the US, with market shares in 2023 of 33% and 30%, respectively. These countries are home to some of the world’s biggest tech companies, including Alibaba and Amazon, which benefit from the huge troves of data generated by user activity on their platforms.”

Subscription-based services are a growing ecommerce segment. Beauty brands like Estrid and Harry’s started with subscription services and have enjoyed great success. Both are now available in physical stores, further boosting sales. Harry’s filed for an IPO in March 2024 after reaching nearly $1 billion in revenue. However, some subscription services have struggled after a rapid rise. Once valued at almost $2 billion, meal-kit subscription service Blue Apron was bought for about $100 million by food delivery company Wonder in 2023.

Umaru continued: “Consumers are also concerned with the social and governance factors of ESG. As a result, it remains high on the agenda for ecommerce companies, both to comply with relevant regulations and to meet consumer demands. ESG regulations such as the EU taxonomy for sustainable activities are also a method of clamping down on greenwashing, the practice of inflating a company’s ESG performance for marketing purposes.”

Other terms such as carbon neutral, green, and environmentally friendly are being regulated, and ecommerce companies must ensure they comply with relevant guidelines to mitigate the risk of litigation.

Umaru conlcuded: “Initiatives like the Fifteen Percent Pledge, which urges US retailers to allocate at least 15% of their shelf space to Black-owned businesses, highlight the increasing emphasis on social equity within the ecommerce sector. Additionally, issues such as supply chain transparency and diversity remain critical, as brands strive to align with the evolving ESG priorities of Gen Z and Millennial consumers.”

Research points to 5.3% growth in ‘back to school’ online shopping
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Back To School, an increasingly important trading period for UK retailers, delivered a welcome boost to online retail revenues, according to the latest data from Wunderkind.

Original data from Wunderkind’s Marketing Pulse, which analysed over 55.4million customer journeys during the start-of-school shopping season during 2024 and 2023, showed that web revenues for Back To School 2024 rose +5.3% year-on-year, delivering a welcome uplift in retail sales.

With Mintel estimating that UK consumer spending on Back To School items surpassed £1335millionlast year, the start-of-term trading period is now an increasingly important part of the retail trading calendar.  Kantar’s latest figures show Back To School helped drive an increase in grocery spending at the end of last month, with sales of lunchbox snacks, including yoghurts, fruits and cereal bars rising +14% year-on-year in the last week of August.  Meanwhile, other retailers including M&S, which froze pricing on school uniforms for the fourth year in a row and offered additional second-hand lines to keep prices low, and Asda, which reported an 88% increase in sales at the start of its Back To School campaign, vied for start-of-term share of wallet.

Wunderkind’s data showed that Thursday 29 August was the biggest revenue-generating day of the 2024 Back To School season, when online sales rose +46% on the daily average for the period (26 Aug – 08 Sep), as parents surged to make pre-term purchases.  Monday 02 September, the first day of the school year for many, saw the highest converting day of Back To School, with web conversions up +10% on the daily average, as final start-of-term spending and last-minute purchases were made.

As well as the opportunity to grow sales, the event also provides retailers with a timely opportunity to engage existing shoppers and acquire new customers ahead of the all-important Golden Quarter, delivering future engagement opportunities to win share of wallet during Peak Trading, Wunderkind suggests.

Wulfric Light-Wilkinson, International GM of Wunderkind, emphasised the strategic importance of the Back To School period, commented:  “In addition to being a profitable sales window on its own, Back To School serves as a critical precursor to the Golden Quarter, positioning brands for a successful peak season.  Retailers that perform well during Back To School typically carry that momentum into strong Black Friday and Christmas campaigns, as they benefit from acquiring new customers and capturing valuable first-party data for use in Q4.”

Light-Wilkinson also highlighted the growing challenges in paid third-party channels, noting: “As platforms like social media, search, and display become more competitive and costly, brands must focus on optimising their owned channels.  By building first-party data, retailers can drive more cost-efficient conversions and deliver personalised, one-to-one experiences during pivotal trading periods.”

The rise of TikTok shop as a tier-one marketplace 
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TikTok Shop has emerged as a formidable player in the world of social commerce,  challenging established platforms such as Facebook, Instagram, and YouTube. The platform’s swift ascent has captured the attention of online sellers and industry observers alike. Sarah Znideric, VP of Global Partnerships at Linnworks, discusses the rise of TikTok Shop, some of its biggest success stories, and its potential to compete as a genuine tier-one marketplace…

TikTok Shop Success Stories

TikTok Shop’s success stories are nothing short of remarkable. From humble beginnings, some sellers have experienced exponential growth using the platform. One strong example of this is the case of Nature Spell, a hair and skincare company, which started with just a few orders a day and eventually peaked at around 9,000 product orders daily.

Other success stories on the platform have included Maters & Co, which received more than 100,000 orders for its pure honey products in its first year on the platform, and the influencer Cariad Ryan, who, as an affiliate, sold £90,000 worth of TikTok Shop products in four hours on Black Friday last year. These achievements demonstrate how TikTok Shop can help to translate ‘hype’ into real world success, and drive substantial sales and visibility for businesses.

The Diversity of TikTok Shop Products

The platform caters for a wide range of product categories, including beauty, fashion, homeware, pet care, food, refurbished tech, and books. While beauty and fashion products have seen perhaps the biggest success, sellers from diverse industries have also found sales success on TikTok Shop. And this success is driven by the platform’s inherent blend of community, entertainment, and shopping, which have contributed to its widespread appeal.

The Strategic Timing of TikTok’s ecommerce Move

Combined with the product offerings on the platform, the launch of the platform itself seems well-timed. In a similar vein to eBay’s growth trajectory 20 years prior, TikTok benefits from a mature infrastructure, ensuring a quick and natural expansion. TikTok’s commitment to ‘community commerce’ sets it apart, providing the app’s users with an immersive shopping experience from within the TikTok app.

Gaining New Customers on TikTok Shop 

The platform has proven effective in helping retailers to discover new customers without cannibalising their existing traffic. Often, TikTok Shop attracts an entirely different audience, or engages with customers that might not have otherwise made purchases on different marketplaces and platforms. The relatively fast sign up process, combined with the platform’s small commission fees ranging from 1.8% to 5% on sold products, have provided a cost effective and convenient revenue stream for sellers.

The Key to Success on TikTok Shop

While it is possible to simply list products on TikTok Shop, sellers that embrace a TikTok-centric approach will reap the most rewards, creating engaging and native content that aligns with the platform’s entertaining nature. This emphasis towards creativity extends to becoming a creator on the platform itself, where regular posts can generate a significant and engaged following. And for those that may be more camera shy and reluctant to get involved in this way, it is possible to leverage TikTok’s community of influencers to achieve an alternate method of product promotion, often in exchange for an affiliate promotion.

The Future of Online Marketplaces

The arrival of TikTok Shop represents a paradigm shift in online marketplaces, and provides a vibrant, community-driven shopping experience that promises a dynamic future for retailers. Its unique approach, coupled with a commitment to ‘community commerce’, positions TikTok as a formidable player in the evolving ecommerce landscape.

The increasing popularity of TikTok both as a social media platform, but also as a new online marketplace, presents online retailers with a compelling opportunity to take advantage of what is a uniquely diverse and engaged audience. The platform’s success stories, diverse product offerings, and commitment to community-driven commerce make it a strong contender for tier-one marketplace status. As the future of online marketplaces takes shape, TikTok Shop stands at the forefront, inviting savvy retailers to embrace the changing face of ecommerce.

Photo by Solen Feyissa on Unsplash