The year 2022 was one of slower growth for e-commerce, as markets reverted to pre-pandemic levels. Despite this, merchants, analysts and investors are optimistic that online shopping will continue to grow in 2023. It has been projected that worldwide e-commerce sales will surpass $6 trillion in valuation and make up more than 22% of total retail sales, up from $3.4 trillion (13.8%) in 2019.

However, with the promise of opportunity, we can expect more market movements in the new year, owing to the industry's fast-paced nature, new market entrants and consolidations, and constantly shifting business environments. Consumer behavior will continue to evolve, and the boundaries between physical and online shopping will continue to blur.

To sustain and accelerate growth, e-commerce brands need to look inward and optimize what’s already available: customer lifetime value (CLV). Following are the most significant challenges that the global e-commerce industry will face in 2023, and how to overcome them.

Global inflation and rising costs: Is there light at the end of the tunnel? Global inflation is causing more problems for e-commerce businesses, reducing their ability to spend to acquire more customers within targeted segments. The most damaging side effect is rapidly rising customer acquisition costs. In addition, competition for the same customer segment contributes to higher marketing and advertising expense. With inflationary pressures already eating into consumer spending, it will take more than ever to get them to spend with you.

For e-commerce companies lacking a diverse customer acquisition strategy, rising online ad costs eat into the bottom line. And paying to get new customers affects your profit margins in the long run, regardless of spending power. Acquisition of new customers is five times more costly than retaining existing ones. Newly acquired customers are also less likely (a probability of between 5% and 20%) to make a purchase than existing customers (60%-70%).

It’s no surprise, then, that businesses are realizing that retaining loyal customers makes financial sense. Don’t we all want to increase profits while keeping acquisition costs in check?

Rising customer expectations: Amazonification hits smaller merchants hard. Customers are never satisfied, and their expectations keep growing with each order. They expect you to know their preferences and that your business can cater to their needs. They want speed, convenience and, most importantly, assurance that they’ll get what they paid for, and when it will arrive.

At the root of these expectations are anticipation and the thrill of receiving purchases. Customers yearn to experience hope and trust in the delivery journey. There’s a huge opportunity to use logistics data to turn these compelling emotions into a competitive advantage. You can do this by tracking the order from the warehouse and fulfillment center to final destination, then turning those steps into communicable touchpoints with the customer.

Many e-commerce businesses aren’t yet using logistics data to understand and meet customer expectations. They have little to no visibility into what happens once the customer hits checkout and the logistics process kicks in. They leave this crucial customer experience step to external parties like fulfillment partners or carriers.

This is an opportunity that’s left in your partner's hands and out of your control. However, when your business reclaims control over this part of the buying journey, using real-time warehouse and carrier data, feeding it to customers can keep them 100% engaged and satisfied.

Customers want to be informed about when the order is being processed, when it's ready to be sent to the carrier, when it's been picked up, whether or not it made it past customs, and when it will be delivered. They want to be kept in the loop about their order every step of the way.

When you keep your customers happy during the last leg of an order’s journey, they’re more likely to stay loyal to your brand. A 5% improvement in customer retention can lead to at least a 24% improvement in profits.

First- to-last-mile logistics: Does it always have to be a hot mess? The severe disruptions in global supply chains over the past two years are causing businesses to adopt new strategies and technology for improving resilience and efficiency. However, as they become more intelligent and agile, the level of complexity increases exponentially.

For e-commerce businesses in 2023, this complexity will be felt in both upstream and downstream logistics. While upstream logistics still needs to be managed, the downstream leg directly impacts your business. If you offer omnichannel retail, the buying experience must be consistent, with speed and reliability being key factors. For e-commerce businesses, the risks are much higher. Serious fulfillment issues could cause customers to drop off quickly.

Major players like Amazon are well-equipped to manage this complexity and offer fast fulfillment. Smaller businesses require more resources to compete on the same scale. Still, by building and investing in their data advantage, they can better solve this problem by aggregating, analyzing and adding value to logistics data.

Data is where the magic happens. By standardizing data sets available to e-commerce businesses, they can increase visibility into carrier performance, and open up new customer engagement channels.

Explore the most sophisticated tools that use machine learning and artificial intelligence to accurately estimate delivery dates — a feature that even large e-commerce merchants struggle to provide, and one that’s a game-changer in checkout conversion optimization.

To become truly customer-centric, companies must prioritize end-to-end. Change is constant. Your business needs to organize, streamline and optimize internal and customer-facing processes. The goal is to make the entire journey seamless and pleasant, from discovery to repurchase. When customers have a great buying experience, they’re more likely to return and spend more.

Implementing end-to-end logistics data to increase CLV is a guaranteed way of investing in the future of your e-commerce business. It minimizes marketing costs, builds long-term customer relationships, drives end-to-end visibility and protects your bottom line. 

At the core lies a commitment to customer satisfaction, mastery of operational data, and the courage to do whatever it takes to create the best delivery experience. Businesses that keep up with these challenges will be able to seize opportunities to grow revenue and boost sales in 2023.

Dana von der Heide is founder and chief commercial officer of Parcel Perform.