If you have an ear to the ground in the retail industry, you will have been hearing a lot about eCommerce and the evolution of commerce as a whole throughout 2020. Across the year eCommerce has dramatically grown when compared to 2019, with the 2nd & 3rd quarter of 2020 eclipsing 2019 eCommerce sales by 44.4% & 36.7% respectively. This growth is incomparable to 2019, in which YOY growth averaged 17%. On the other hand, non eCommerce retail only grew by 2% in the same period. This axiom represents the coming change in the marketplace, consumers are demanding a new way to shop and this is rapidly affecting every channel of retail.
Platforms such as eBay, Amazon, Shopify and Farfetch are creating a new generation of future focused retailers, lowering the barrier of entry into a world of omnichannel shopping and retail in general. The landscape is no longer controlled by monopolized e-tailers, but is actually favoring brands of all sizes that leverage these platforms to drive connected shopping experiences.
eCommerce and Covid in 2020
It has been commented on at length but Covid has changed the way retail operates; permanently. Consumers have transitioned to eCommerce and flexible fulfillment options to access the products they are searching for, safely conveniently and quickly, empowering increased convenience and reducing prospective friction from the shopping journey. With the emergence of social media shopping, accessible eCommerce platforms and a range of backend tools enable a more effective process for retailers to effectively connect with customers and this has come at the right time for retail.
“Around 77% of consumers said that they have ordered a purchase to a store for pickup. Around 13% of participants had their items shipped to an Amazon locker.”
77% is a huge number, and there are a myriad of reasons for this, primarily convenience: 44% of the same respondents noted that they abandoned a shopping journey because of the associated delivery time. Consumers are migrating to Amazon, picking up orders in store and avoiding retailers with fragile delivery timelines for the same reason: convenience.
Consumers have voted with their wallets for convenience consistently throughout 2020. BOPIS, BOSHIP & flexible fulfillments are trending upwards. 34% of retailers already offer one day delivery solutions, 12% provide same day delivery to customers. Returns are also becoming a more significant facet of the fulfillment ecosystem with 20 - 30 % of online orders being returned, merchants need to master the reverse logistics if they plan to offer free returns without driving customers away from their brand.
Retail As A Service: Shopify, Ebay, Amazon, Facebook Marketplace, Instagram Shops
Retail as a service platforms are rapidly accelerating & empowering small businesses to take a targeted approach to connect with customers and drive engaging customer experiences. Many emerging brands lack the resources to make the investments they need to scale online, many brands are afraid of leveraging Amazon (a direct competitor) as their fastest path to scale the brand. That is why retail as a service is rapidly becoming a key trend within the eCommerce space.
Shopify, BigCommerce & Magento are all examples of platforms that are well positioned to support small businesses emerging in the space, their platforms are designed to provide enterprise level functionality but do require some level of marketing awareness and the ability to effectively manage the platform.
“60% of instagram users found new products on instagram”
This is not a surprising statistic with the rise of personalized advertisements and consumer focused content marketing, products are increasingly visible within the feed as one more post for users to consume and then move to engage further as needed. For retailers the opportunity to make commerce more accessible is essential, and provides an additional level of security and resilience in the face of challenges in the marketplace.
These expansions have been accelerated by the onset of COVID retailers have stepped up heavily to leverage these tools and effectively connect with their customers social media platforms and accessible entry level retail technologies are vastly expanding the opportunity for retailers to sell their products and build lasting relationships with their customers.
The emergence of social media marketplaces such as Facebook & Instagram shops is enabling retailers to take this access a step further and scale up their approach to the landscape rapidly to meet consumer needs. Consumers are already on social media, connecting and communicating with their favorite brands to drive sales across channels, retailers are now able to take advantage of an easy to use platform that is already full of consumers that are ready to purchase within an easy to setup & manage framework. It is highly likely that the growth of Instagram & Facebook shops will only continue, and this trend is already expanding to other platforms in China for example WeChat has become a popular platform for eCommerce in conjunction with live shopping experiences. The possibilities of social and native commerce are expansive, now is the time for retailers to act.
Effective omnichannel is all about removing friction for customers across channels, by enabling an additional sales channel retailers can circumvent the traditional requirement to build awareness and cultivate leads to drive them through the sales process. Optimal marketing efforts are always the ones that seek to reach customers where they are, engaging customers on social media and then directly driving this engagement and interaction to sales empowers retailers to sell and communicate more effectively.
The Future Of eCommerce
The future of retailing and eCommerce is customer facing, eCommerce sales are at an all time high, the impacts of lockdowns, travel bans and retail closures have driven the consumer online. Not all eCommerce newcomers have the infrastructure in place to deliver a world class customer experience. To better compete with marketplaces and retail giants, brands are also investing in personalized experiences.
Humanizing retail experiences is now a top priority as acquisition costs rise along with consumer uncertainty. Though global growth will slow over the next few years, the way consumers are connecting with brands is changing rapidly.
“eCommerce will reach 14.5% of total retail sales in 2020 representing both an all time high and the biggest share increase in a single year.”
It's not just Gen Z & millennials that are moving online, older shoppers are also shifting their behavior online, overall 84% of consumers shopped online during the pandemic.
Jill Manoff from Glossy noted that “If you’re waiting for this to end, you say we are gonna be back to normal in two months, that we are just biding our time and getting through it, then you are gonna be screwed”
The changes in the marketplace are going to be permanent, consumer preferences will likely revert in some form or another, but it is unlikely that the base behaviors will not develop further. Retail Brick & Mortar will bounce back from the pandemic plunge in the first & second quarter of 2021, but eCommerce will continue to grow significantly despite a slightly decelerated expected growth rate of 7.8%.
eCommerce is the economic sweet spot for brands & consumers as they continue to rush online, nearly 150 Million consumers shopped online for the first time, the number of eCommerce buyers will only continue to rise, taking a bigger piece of the pie over the next five years this will surely be a tailwind for retailers of all kinds, if they are ready to raise their sails and shift perspective.
eCommerce is no longer a one platform effort, retailers can dramatically expand their reach and potential ROI by pushing products onto every potential retail platform. This starts from the Brick & Mortar store but extends through all consumer accessible channels, retailers have to cast a wide net and offer their consumers an engaging, communicative and consistent shopping experience.
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