1. Direct to Consumer is already ~15% of e-tail – a trend to keep an eye on
e-tail market split by D2C & Non D2C (2021) USD Bn , % split
Consumer data is of utmost importance in the age that we are in. And a classic challenge for brands selling online leveraging 3rd party applications was the lack of access to granular actionable data. Add to this the massive price competition that takes place on marketplaces, which further amplifies the challenge.
From the consumer standpoint, early adoptors of e-commerce are more mature and expect more curated experiences catering to each sector. The consumer feedback mechanism also needs to be real time and brands should be able to react quickly and edit their offerings in tandem with evolving consumer needs.
These supply and demand trends have placed the Direct to consumer (D2C) channel on a pedestal of growth and this segment already accounts for ~15% of online retail in key e-tail markets in METAP. Within D2C, the digitally native brands segment is seeing the highest growth rates.
2. Shoppertainment is everywhere – shopping cannot merely be a transaction anymore
Shopping online started off as a deal hunting exercise in the early days. However, the pandemic has made online shopping a norm. Consumers now spend a lot more time online and the best price is no longer the sole motivator that decides choice of platform.
Players that are able to augment their overall platform experience by bringing in experiential aspects like Live streaming, Virtual reality, Gaming to name a few will run away with the winner’s mantle in the upcoming years.
Social Media and Short Form content platforms have a strong role to play in this new age as they bring in unique ways of engaging consumers through a sense of community. This connection is now being augmented with commerce. The brands benefit from being able to target specific consumer archetypes that would really benefit from their offerings, and consumers also receive recommendations from people whose interests resonate with theirs, making it extremely relevant, maximizing value creation for both parties.
In 2019, for example, total players from the MENA exceeded those from North America. By 2022, the MENAT will outnumber Europe in terms of players.
3. Sustainability/Circular economy is expected to pick up in the medium term as consumers weigh their environmental footprint over convenience
Players focussing on Artificial/Plant based Meat
The environmental impact of convenience in retail and other industries has been huge and across the globe, awareness levels of this has increased immensely over the past few years.
Consumers now are very aware of the challenges and implications on the environment, and it will only be a matter of time before they start adopting sustainable methods/products over convenience/price. This trend will start gaining traction among affluent classes and the GenZ cohorts, who are getting more conscious about their environmental footprint.
Pre-Loved goods, Artificial/Plant based meat/milk, Sustainable Fashion etc. are some segments to watch out for here.
While this is not an immediate trend, we do believe that this is a segment that will see strong traction in the medium term in the region. Other markets globally have already seen strong sizable players emerge.
Players focussing on Pre-loved goods