COVID-19 has completely transformed e-commerce. Changes to the industry that would have normally taken 10 years to materialize have happened in a matter of months. Growth in the number of people shopping online has been rapid and massive and may continue well into 2021. Businesses and brands are being pushed like never before to be innovative and efficient in order to stand out from the crowd and capture their most profitable audiences. The competition is fierce, but the opportunities are huge.
To help us better understand what’s happened in the last few months and what will likely happen in the year ahead, Shopify released its annual “The Future of E-commerce Report” for 2021, which analyses information from:
- Reviews of multiple third-party data sources including Statista, Deloitte and McKinsey & Co
- Two dozen interviews with industry leaders and subject-matter experts
- Internal surveys of Shopify Plus merchants around the world
In the report, Shopify identifies 5 trends (as reported by Shopify Plus) it thinks will shape the future of e-commerce:
Trend #1: E-commerce boom fuels record online competition.
- Because of the pandemic, e-commerce sales are at an all-time high as years of growth happened in just weeks. However, global e-commerce growth may slow down marginally in 2021 before picking up again in 2022.
- Record e-commerce competition, fuelled by legacy wholesalers, global retail giants, and product categories not traditionally purchased online, is driving up customer acquisition costs.
- Many new competitors are not equipped to compete on customer experience (a top differentiator online), which gives an edge to brands with immersive omnichannel experiences.
Trend #2: New consumer behaviours are reshaping the future of retail.
- Since the pandemic, consumers worldwide are buying items that were rarely purchased online, like groceries, health and hygiene products, and home essentials.
- The pandemic has amplified the consumer’s desire for convenience and immediacy. The permanency of these shifts will be determined by how satisfied consumers are with online experiences.
- Unlocking the future of retail means developing offline-online innovations that allow consumers to try on products with augmented reality (AR) and buy anywhere they shop, as well as engineer virtual versions of retail shopping experiences.
Trend #3: Fulfilment emerges as a competitive differentiator.
- Today’s brands have a four-pronged fulfilment mandate: fast, free, sustainable and branded shipping.
- Brands will need to establish free-shipping thresholds to protect profit margins as consumers worldwide expect e-commerce orders to be delivered quickly.
- Brands can turn fulfilment into a competitive advantage by placing inventory closer to customers, automating returns and offering flexible options like curb side pickup.
Trend #4: Brand building challenged by marketplace dominance.
- Half of all global e-commerce sales occur on marketplaces, where consumers search for solutions rather than brands.
- Building a brand has never been more important—or more difficult. The good news is that socially conscious consumers are more willing to pay a premium for brands with a purpose.
- Brands should turn their marketplace product pages into rich, immersive experiences, while offering unique customized products through their own channels.
Trend #5: Retention becomes a top priority as acquisition costs spike.
- Customer acquisition costs are increasing worldwide across channels, with rates on Facebook rebounding to pre-pandemic highs.
- Globally, consumers and regulators are wary of big tech, prompting Google and Apple to consider making it harder to target ads across channels.
- To combat rising acquisition costs and advertising uncertainty, brands are experimenting with new channels like voice-powered shopping. They’re also prioritizing retention as well as rewarding and incentivizing existing customers to spend more.