Visual asset expert Pradip Lal on the outlook for retail and e-commerce in 2024 and beyond
As we face another year of economic uncertainty and cautious consumer spending, how should retailers best prepare for the year ahead? In these especially hard times, some might say making predictions is a reckless game. Yet, technology is offering some very promising bright spots. This is evidenced by our research, including our 2023 State of Visual Media report, our global e-commerce consumer survey, and the ways in which tech savvy retailers are succeeding despite the challenges.
The long held power of AI meets the promise of gen AI
AI has helped retailers automate and personalise digital experiences at scale for years. Our customer Neiman Marcus, for example, leverages AI to streamline its photoshoot-to-web process by an impressive 50%, a four to two-week reduction.
Similarly, retailers are seeing great potential with the latest gen AI tools, which offer even faster and easier ways to edit and customise dynamic visual experiences at scale. Instead of reshooting an entire campaign, for example, developers and digital marketers are exploring how they can easily remove unwanted elements in a photo, or change backgrounds to create new versions of existing images. What’s more, AI-powered image captioning instantly creates intelligent summaries of images to improve accessibility, asset searchability, and SEO ranking, while increasing productivity and reducing production time.
For all its very real upside gen AI still comes with caveats: it has known limitations and requires human oversight to ensure brand accuracy and visual media authenticity – a theme I’ll touch on more later.
Consumer pressure and ESG awareness will help drive brands to build lighter, greener digital presences
In our e-commerce survey, 57% of consumers surveyed told us they now prefer to research and buy products online, and 28% do the same then buy in-store. To do that, they want to see what they are getting; 63% of the key Gen Z demographic say a great shopping experience has to have user reviews with images, and 52% a detailed product gallery.
That means images and video have the power to make or break conversions and brand loyalty targets. But today’s customers are researching more than just price and aesthetics. They increasingly care about the environmental impact of brands they buy from. And surprisingly to some, e-commerce sites, with their bandwidth-hungry images and videos, can generate a lot of CO2. Retailers grapple with striking the ideal balance between visual media quality (associated with large, heavy file sizes) and performance (associated with small, light files). Fortunately, optimisation technology like ours, along with new, lightweight, and greener image and video formats like AV1, AVIF, HEIC and JPEG XL mean retailers don’t need to compromise on customer experience or carbon footprint targets.
And we’ve seen how this works in practice. A top international sports apparel brand, for example, was able to reduce bandwidth consumption by 40% by adopting such an approach—and is now generating the equivalent of 1,890 tons of CO2 less annually as a direct result.
The ESG and green agenda will increasingly dominate the retail conversation, so it would be wise to get ahead of the curve here and start optimising your digital asset process now.
Don’t resign yourself to high returns
With inflation and the cost-of-living crisis hitting British consumers’ wallets, 2023 was a tough year. Many CMOs I spoke with these past few months were doubling down on efforts to save costs, win sales, and increase market share.
On the costly issue of returns, many retailers still view it as the cost of doing business. But better visual media can help reduce returns by a lot. We found that 30% of consumers we surveyed returned goods because the products did not look as expected on the website. If you always show in sharp, real-world detail what your trendy tops and trainers actually look like, you can cut those costly returns. Even better, increase your chance of making that sale to the customer in the first place.
Going back to the environmental concerns, the negative impact of returns are pretty sobering. Returned clothing enters a reverse supply chain process that emits even more CO2 than the original order. According to Optoro, product returns generate a staggering 16 million metric tonnes annually. In the US alone, five billion pounds of returned goods end up in landfills every year. And as they decompose, they emit more greenhouse gases.
With authenticity on the rise, UGC no longer just a nice to have
Today, consumers not only want to buy products that appeal to them, they want to see shoppers who look like them using, reviewing and wearing them. Our global e-commerce study found that videos from real customers demonstrating product usage is the second-most important type of information Gen Z evaluates when considering a purchase.
This means retailers need to be open not just to wider representation, but allowing reviewers and users into the conversation by embracing user-generated content (UGC). Managing images and video, including user generated content (UGC), should be a top priority for retailers. Technology has a big role to play in cutting down the admin associated with managing visual media, but as mentioned earlier, human judgement and oversight is essential to ensure authenticity.
So while 2024 will certainly have its challenges to navigate, technology offers retailers some big opportunities to improve engagement and conversions with today’s highly cautious consumer. Gen AI promises to enhance visual experiences and e-commerce efficiency, though human oversight remains vital for authenticity. Consumers favour greener digital practices, but optimising visual assets and adopting eco-friendly formats are real solutions. Slashing returns doesn’t have to compromise sales and hinges on accurate visual representations. And authenticity reigns supreme, urging retailers to embrace UGC efficiently.
Putting all this together, the verdict’s clear: retailers who resolve to fine-tune the way they manage and deliver their business-critical visual assets will be at a big advantage in 2024.
Pradip Lal is senior product marketing manager at Cloudinary, which provides an image and Video API platform that allows brands to deliver visually engaging experiences.
