E-commerce predictions for 2015

It is the time of the year when seemingly everyone is making predictions for the following year. And obviously we don’t wanna feel left out! The challenge with making predictions for the next year is that in actuality 1 year is, all things considered, quite a short amount of time for major changes to happen. So if the goal was to simply make predictions that turn out to be true it would be the best to make very conservative predictions, e.g saying that e-commerce continues to grow in 2015 (doh!). However, that type of predictions are no fun – so we will make 3 slightly more bold predictions (that are still plausible).

1: Alibaba goes shopping in the US

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Alibaba entered the New York Stock Exchange with a bang in late 2014 and raised over $20 billion in cash to boost their bank accounts. The US investors have welcomed Alibaba with open arms and at the time of writing this article Alibaba has a market cap of over 260 billion dollar, which marks over a 10% improvement from the initial floating value. It is no coincidence that Alibaba decided that it wanted to get listed in NYSE: the company has big ambitions for the US e-commerce market.

However, the problem from Alibaba’s point of view is that their brand is still relatively unknown among the regular consumers in the US. And they really only have 2 ways to improve this situation: either launch a massive marketing campaign promoting the Alibaba brand or acquire a company that is already well known and well respected in the United States. Predicting the outcome of launching an absolutely massive marketing campaign is hard, so we believe that they will opt for the likely safer route of acquiring an US company.

Alibaba won’t be able to acquire Amazon (it is simply too big for them) and a merger between Amazon and Alibaba is out of the question for several reason, among which the biggest is regulation. So what are the companies that Alibaba could buy?

Lot of people believe that Alibaba is aiming to buy eBay, and that is completely possible, but we are predicting that Alibaba buys BestBuy instead. That might sound slightly weird at first, especially as Best Buy is still mainly a brick and mortar store, but that is actually one of the reasons that, in our opinion, makes it an attractive target for Alibaba: When buying Best Buy Alibaba gets a significant presence outside the internet in US, which gives it an excellent chance to make it’s brand more well known (especially) among the more conservative consumers. In addition to the offline presence that it has, it is worth mentioning that Best Buy actually seems to have an increasingly good understanding of the importance of e-commerce.  That is for an example evident in their massive and still increasing online marketing budget, which means that there is already a culture in place at Best Buy that is open to the future likely being, at the very least, offline and online side by side or maybe even online being the bigger thing in the future.

2: Amazon increases their margins

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Amazon is one of those few companies that made it alive through the early 2000’s and it’s stock has actually gone up over 700% in the last 10 year. Due to the stock’s extremely good performance most of the investors haven’t really worried about the fact that the company hasn’t really made significant profit (considering the market cap company) during the mentioned last 10 years – despite of the increasing turnover. However, in the last year the Amazon stock is down around 20% and the investors seem to be getting little anxious. So we believe that in 2015 Amazon will be increasing their margins on selected products / product categories, either by increasing the prices of by re-negotiating deals with the suppliers. Obviously, we don’t think that they will make significant price increases as that might pose a risk to their long term goal of dominating e-commerce globally.

3: Venture capital firms will invest more into the Indian e-commerce market than to any other country’s

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For a long time the e-commerce industry in India has been struggling with the fact that the broadband infrastructure in India simply isn’t on the same level than it is in the more developed economies. However, now thanks to the proliferation of smartphones equipped with internet access e-commerce is absolutely booming in India. The big venture capital (VC) firms have began taking notice of this and already in late 2014 started pouring money into companies such as FlipKart, and now we predict that in 2015 VC firms will invest more into Indian e-commerce companies than into any other country’s businesses.

India photo by Flickr user Thangaraj Kumaravel

About the Author Bros

Hi! I'm passionate about helping people get started in e-commerce. The hope is that over time this site will become one of the leading resources for people opening an online store or wanting to become more successful. I hope you enjoy the content!