why digital goods are disruptive commerce

The e-Commerce proeminence – digital sales have been exploding for two decades, and will probably maintain this trend for the foreseeable future. It will represent the vast majority of the retail revenues, with huge influence both in businesses and consumer habits.

Digitalization of the commerce experience – technology advances are completely changing the retail business as we are moving from a digital centric to a digital only shopping experience.

Dematerialization of goods – disruptive new technologies such as The Internet of Things (IoT), Artificial Intelligence (AI), Augmented and Virtual Reality (AR/VR), autonomous systems, voice assistants integrated to lots of devices and the Spatial Web will soon become massive and pervasive, digitalizing the world around us. A digital world will be a digital goods world.
Let’s deep dive into each of these trends.

E-Commerce is booming and this trend will not stop soon.

Online sales have been flourishing all around the world. In the US, it has practically doubled in 5 years (from USD 230 billion in 2012 to USD 450 billion in 2017). In Brazil, for example, it went from BRL 22 billion in 2012 to BRL 48 billion in 2017.

Besides this massive growth, e-commerce only accounted for 10% of total retail sales in 2017 and engaged just a small part of the consumer population. Imagine, then, what will happen when e-commerce’s growing share of sales are combined with the explosion of people getting online. By 2024, thanks to 5G and disrupting innovations in connectivity technologies, there will be 4.2 billion more people ready to consume online, reaching a total 8 billion people online, each with high-speed connections. Digital commerce will skyrocket, with unimaginable opportunities for the companies in its ecosystem!

From a Digital Centric to a Digital Only Commerce Experience

Digital commerce is evolving in numbers and also in shape. The evolution of the retail environment, driven by advances in technology, has taken us from single channel or siloed channels to omnichannel retailing. Customers expect to easily find the products and services they need everywhere, to create a seamless relationship with the sellers and the producers in each and every platform, and to always have a fluid shopping experience.

Now, consider that we are living just the early days of a complete transformation of the retail industry. Combine the evolution so far with, in the near future, powerful AI recommendations and product personalizations, IoT products enabled to buy other products unmonitored, local short-distance productions powered by 3D printing and innovative materials, tremendous cost reductions in manufacturing and logistics leveraged by the evolution in robotics and autonomous systems, and disruptive new means of payment, such as cryptocurrencies, cashierless stores and real-time payment systems that will reduce friction and transaction costs, and we will evolve from a digital centric to a digital only commerce experience. That is, the purchase of physical or digital products will be more and more similar events, both in the expectations that we will have before, during and after the purchases, as well as in the value that we attribute to the products and services. The physical goods commerce is a trillion dollar industry, so imagine the potential impact to digital goods commerce if just a small part of this revenue moves for it as the differences between the two industries become blurred.

And the Digitalization of the Commerce Experience is just the beginning. How we interact with the digital world is changing. The next wave is the dematerialization of the goods themselves!

The Next Disruption of Commerce

The digital goods market will go way beyond mobile apps or virtual items inside games. Actually, they are already far more than this. Take Netflix as an example: it’s not just an Android application or a website, but an ubiquitous service available in any device, everywhere, anytime. Now, imagine that digital services will become even more pervasive. Today the primary interface to access digital services is the displays. They are everywhere, from our smartphone, computer and watch to our living room TV. This is about to change, deeply. The Screenless Software Movement has already begun and embraces many new digital experiences where human interactions with the computers happen through human speech (tech like Amazon Alexa) or our body language (tech like Magic Leap).

Imagine when digital products do not rely only on screens. This future will happen sooner than you think. Canalys appoints that worldwide smart speaker shipments grew 137% year-on-year in Q3 2018 to reach 19.7 million units, up from 8.3 million in Q3 2017. Amazon, the top spot in this market, shipped 6.3 million Echo smart speakers alone in Q3 2018. Canalys estimates that more than 56 million smart speakers will have been shipped globally in 2018. And, although these numbers are pretty remarkable by themselves, the revolution will happen when voice assistants become integrated with a proliferation of other devices, such as fridges, ovens, dishwashers and many others. This is going to tremendously impact commerce, not only because it will create a powerful new sales channel (by the way, voice shopping in US and UK combined is expected to jump to USD 40 billion in 2022, up from USD 2 billion today), but because it will create a new digital goods industry on its own. The possibilities are endless, from screenless media and entertainment services, to education, productivity tools, home automation and much more.

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