2021 was a challenging year. We already know that the pandemic has had a lasting impact on the consumer sector. In just a few weeks, changes have taken place that would usually have taken years to develop: offline activities have generally moved online.
What trends made themselves known in 2021 and are continuing? See this article, or read the full report from Shopify Plus.
Trend 1: The ecommerce boom drives high competition
At the height of the COVID-19 pandemic, ecommerce grew 10 years in 90 days.
Source: Shopify Plus Report 2021
Despite countries locking down and retailers closing, ecommerce reached an all-time high of 16.4% of global retail sales. During the pandemic, nearly 150 million people shopped online for the first time, and the number will only rise in the future.
Moreover, the pandemic has transformed the role and importance of digital experiences in customers’ lives – consumers today expect intuitive, easy-to-use digital experiences across channels.
In response to the growing popularity of online shopping, more and more brands have become interested in being online, so competition has begun to grow. Even the fact of higher customer demands did not scare the new suppliers. However, many new competitors are not prepared to compete on customer experience, the main differentiating factor online, giving an advantage to brands with immersive omnichannel experiences.
Trend 2: Consumer behavior reshapes retail
Consumer behavior has also evolved. As a result of the pandemic, their spending habits and lifestyles have changed. In addition, it reinforced consumers’ growing desire for convenience, immediacy, and simplicity.
Source: Shopify Plus Report 2021
Worldwide, consumers buy items rarely purchased online before the pandemic, such as groceries, health and hygiene products, and home essentials.
75% of the surveyed consumers say they tried different online brands during the pandemic, and 60% expect to integrate the new brands and stores into their post-COVID lives. Shopping online, mobile payments, and video conferencing will persist.
Source: Shopify Plus Report 2021
Trend 3: Customer satisfaction emerges as a competitive advantage
The four pillars of today’s fulfillment mandate are: fast, free, sustainable, and branded shipping.
Despite booming e-commerce and tough same-day shipping cutoff times, 64% of consumers worldwide want their orders shipped for free. In addition, 72% of global consumers want brands to use sustainable packaging, while 67% of U.S. consumers expect same-day, next-day, or two-day delivery. However, today’s shopper wants shipping that’s not only free and fast but also environmentally friendly.
Source: Shopify Plus Report 2021
This trend is going global, and it’s led by China, where 67% of respondents would be more likely to purchase a product or service from a company with a good environmental reputation.
Source: Shopify Plus Report 2021
The increased interest in online shipping has also caused a bit of a setback, including increased costs and the desire to meet all customers’ requirements, which is sometimes impossible. What’s more, the global nature of trade, though strained by U.S.-China relations and Brexit, is also adding complexity.
Source: Shopify Plus Report 2021
Brands realize this, so they strive to be better and better and improve their services. They partner with third-party logistics providers (3PLs) to tap into their vast fulfillment networks. The focus of businesses today is on increasing order fulfillment productivity, improving picking and handling processes, and streamlining inventory management.
Source: Shopify Plus Report 2021
Trend 4: Marketplace dominance challenges brand building
The importance and difficulty of building a brand have never been greater in an era where marketplaces and unbranded search are the norm. Over half of all global ecommerce sales occur on marketplaces, and brands are compelled to participate because of the contact with customers.
Source: Shopify Plus Report 2021
Virtual marketplaces are one of the fastest ways to scale globally. Additionally, they make it easier for smaller businesses to fulfill orders. Although these concerns exist, transaction volume forces brands to participate in marketplaces.
People aren’t searching for the brands – they search for solutions. According to observers, consumers can find anything except your brand in digital marketplaces.
But, the good news is that socially conscious consumers are willing to pay a premium for brands with purpose. Nearly 40% of consumers are purpose-driven and willing to pay a premium for products and brands aligned with their beliefs. In addition, Gen Z, now the largest consumer group, cares about sustainability and recycling issues and is willing to change its shopping habits.
To be competitive, brands need to offer experiences not available on marketplaces. That’s why personalization is so important. Whether delivered by a human or an algorithm, it is too lucrative to ignore. Many brands are already aware of this and want to personalize their channels.
Source: Shopify Plus Report 2021
Brands can personalize storefronts by collaborating with artificial intelligence. By using tailored microsites, responsive promotional videos, and interactive livestreams, all generated content promises personal online experiences.
Marketplaces are also offering new opportunities for brand building. Walmart, for instance, is improving the marketplace experience by enabling lifestyle photography. What’s the goal? Instead of a massive product dump, they want to make the marketplace more local and personal.
Trend 5: As acquisition costs rise, retention becomes a top priority
There was a short-lived decline in customer acquisition costs caused by the pandemic. In late 2020, paid search increased by 17% and paid social advertising by 24%. Moreover, the growth in digital ads is accelerating because of competition fueled by the move to ecommerce. Paid search, social, and connected TV spending are also on the rise.
Source: Shopify Plus Report 2021
Advertising has always helped in retaining customers. So it doesn’t help that Google and Apple made it more difficult to target ads across multiple channels. Google planned to phase out cookies for Chrome by 2022. Apple has also made it more difficult for Facebook advertisers. Facebook warns that iOS 14 updates could cause a 50% decline in its audience network advertising business.
To combat rising acquisition costs and advertising uncertainty, brands are experimenting with new channels like voice-powered shopping. In addition, experimenting with relatively new channels such as connected television and messaging apps can act as a hedge against the uncertainty of digital advertising.
Video commerce is also an attractive way to retain customers. The fact that Instagram has Reels, its TikTok rival, indicates that Facebook believes video is the future of social commerce. Also, Facebook plans to add in-app purchasing capabilities to WhatsApp as a shopping channel.
To sum up
The ecommerce industry is at an all-time high. Competition is growing, and products rarely purchased online are now a staple of ecommerce. Consumers are more demanding and expect immediacy, convenience, and speed. Companies are trying to create more personalized experiences to avoid being swallowed up by marketplaces. They are also using ever newer ways to reach customers to keep them with them.
Sound familiar? We think so, too. But we continue to watch ecommerce evolve and wonder what the future holds.
