3 years ago

What direction is the eCommerce franchise sector heading? And what predictions should your franchise know to better position for success?

Each year new trends emerge to provide insights into these questions. As the industry continues to grow, more opportunities open up. The International Franchise Association (IFA) projects that US franchises will open over 26,000 new locations and create 800,000 new jobs in 2021. This remarkable projection has the potential to grow further as the market positions to make a full recovery at 3.5% by year-end.

But, this growth is not the only factor driving innovation in the industry. The pandemic remains one of the key drivers of change across industries. While bringing adverse changes, it has also brought favorable ones. Now, most countries are attaining optimal vaccination rates. This positive post-pandemic outlook also offers opportunities to eCommerce franchises globally. Let’s take a closer look

The Significance of the Shifting Customer Expectations

A direct effect of the pandemic which has led to the rise in B2B eCommerce is the change in buyers’ behavior. Not only do customers want to shop online, but they also want a better service. In a recent McKinsey survey, 70 – 80% B2B decision-makers echo this sentiment. They want to find vendors, access information, and place orders through online mediums. Besides a faster service, these buyers cited safety and savings on travel expenses as influential factors.

Source: McKinsey & Company

Post-pandemic, some of these changes and expectations may remain present. For franchisors and franchisees, this shift presents an opportunity to serve customers better and enjoy a profitable collaboration Hence, giving more thought to eCommerce franchise trends is not an option. It is a necessity. Let’s explore what to look out for in the coming year.

ECommerce Franchise Trends to Watch Out For in 2022

Embracing Digital Transformation

One key to successful and stronger franchise relationships is effective monitoring. With the right digital tools, like open-source eCommerce software, franchises will experience more visibility in performance reporting operations. These eCommerce solutions may allow integration with payment gateways, accounting systems, ERPs, etc. As digitalization progresses, this trend will continue in 2022.

This rapid technological adaptation applies to the franchisee-customer relationship as well. The pandemic has sped up the use of eCommerce systems in better ways to meet customers’ needs. It includes improvements in contactless payment, self-service portals, omnichannel servicing, and order fulfillment. In 2022, eCommerce franchise systems are likely to continue innovating to meet emerging needs after the pandemic.

Retention of Covid-driven Business Models

The pandemic opened up opportunities for franchises to change their models. For instance, ghost kitchens, which are restaurants with no dine-in facility, grew popular. Several businesses often share these commercial kitchens. They then partner with third-party logistics companies for deliveries. This enables franchisees to reduce startup and operational costs. Post-pandemic, eCommerce franchises may see significant retention of these low-cost models. Although this shift depends highly on customer needs, Mastercard estimates 20-30% of covid-related online business transformation to become permanent.

Transparency Becomes a Priority

Over the years, transparency has gained more ground in franchises. The franchise disclosure document (FDD), which the Franchise Trade Commission (FTC) mandates franchisors to provide, empowers potential franchisees to make informed decisions. Some of the information includes the performance of the franchise, bankruptcies, litigations, and contracts.

Today, non-financial reporting such as the environmental, social, and governance (ESG) indicators are rising. Shopify in the Future of eCommerce 2021 Report found that 72% of global customers expect brands to use sustainable packaging. 5WPR reports that 83% of millennials want brands they buy from to align with their values. 76% want CEOs to speak up on issues they (millennials) care about. While non-financial reporting is not yet as mature as financial disclosure, this tentative shift reflects its potential. ECommerce franchises should allow more visibility into their financial and non-financial practices.

Customer Experience is Increasingly Important

Google plans to scrape third-party cookies starting from mid-2023. Facebook has shared that Apple’s iOS 14 updates may lead to a 50% decline in Audience Network Advertising revenue. It’s uncertain how these plans may affect online advertising. Yet, it holds significant implications for marketers and eCommerce businesses. Reaching and serving customers in better ways while reducing acquisition costs would be a smart decision. One way to meet this goal is customer experience. In a Jungle Scout survey, consumers cited free shipping, lower prices, and convenience as top reasons to shop online. They also consider discounts, fast shipping, and safety. This shows that customer experience is a priority for online shoppers. ECommerce franchises that deliver exceptional services are better poised to remain relevant in the coming year.

More eCommerce Franchise Categories

A popular misconception is that online purchases are mainly lower-cost items. But, times have changed. In the same McKinsey research, 70% of B2B buyers say they are likely to buy above $50,000. 27% reported they would go above $500,000.

Besides purchasing power changes, there has been an increase in several product categories rarely purchased online before. The IFA projects that franchises in the retail food, product, and services sector alone will grow by 3.3% this year. This figure almost triples the estimates of 2020. Even sectors like the automotive and business services franchises that provide online services are not left out. With more customers favoring convenience, this growth may well continue into 2022, giving shrewd eCommerce franchises the chance to offer new, diverse products.

How Franchise V and B is Staying Competitive

Founded in 2001, V and B is a liquor franchise that allows after-work customers to shop wine, spirits, and beer either on-premises or online. The franchise has over 210 establishments in France and about 180 employees at its headquarters. Seeing the need for digital transformation, the 20-year-old company took the bold step towards optimizing its processes.

V and B leveraged silos of systems to automate inventory management across its large franchise. By integrating core systems like ERP, Point-of-sale (POS), etc., V and B achieved operational efficiencies. The results include more visibility into individual stock data, optimized reordering, and new product and service options based on customer data.

Next step for eCommerce Franchises

Trends will come and go. But some may become the norm. Forward-thinking eCommerce franchises that stay aware of these changes can future-proof their businesses better than laggers. It does not mean you should plan your strategy entirely around every new development. Instead, having contingency plans around these trends will help you navigate uncertainties and disruptive changes.

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