Commerce in 2021:

How can you prepare?

As we venture into 2021, happily leaving last year in our rearview mirror, it’s suffice to say, 2020 wasn’t a boring year for e-commerce. From conquering logistical challenges to dealing with the technical concerns of online surges, e-commerce has grown exponentially throughout 2020. And it doesn’t look to be stopping any time soon, so what questions should we be asking ourselves to successfully prepare for the year ahead?

Will shopping habits revert to physical retail?

The forced closure of non-essential businesses, and stay at home orders turned once bustling high streets into ghost towns. This year we’ve seen the collapse of iconic high street brands, from Debenhams to the Arcadia Group, with the former being snapped up by online fashion retailer Boohoo. Boohoo has already acquired Oasis, Coast and Karen Millen, but refrained from also purchasing their physical stores, and as the highstreet reopens, will brands be able to tempt customers back into their “bricks and mortar” stores?

The highstreet will return, but may look slightly different. Challenger brands and Pop-Up boutiques will replace some of our well known names, but there may be an element of much needed simplification. Rather than mega monolith stores offering a multi-brand bazaar, the smaller, single offering brands focused on in-store customer experience, could take advantage of any potential high street rent decreases.

The reality is many people became first-time online buyers in 2020. Some will revel in the newfound convenience, and some will still enjoy a physical shopping experience, especially for luxury goods, maybe combined with a cup of coffee with a friend, the truth is most will prefer a hybrid of both. For larger brands, hybrid experiences are the future, and companies set for true omnichannel, rather than an often disconnected multi-channel approach, will capitalise on the footfall return.

Is it time to reimagine your demographics?

Another consequence of the pandemic is that it has driven many people, who would have rarely shopped online previously, to now start doing so. Elderly and vulnerable have been told to stay at home, with families often supporting grocery shopping and medication deliveries. Whilst that covers basic needs, what about clothing, homeware, beauty and entertainment? 

A recent survey carried out by Statista and released in August 2020 showed that the use of online shopping in those aged over 65 in the UK jumped to 65% in 2020, up from 54% the year before. Whilst not an entirely untapped market, and with some added consideration needed towards accessibility, it has traditionally been a bypassed demographic.

For many shoppers, it will be a completely new experience, and brand and customer support will help capture customer loyalty from the start. Demand and expectation may be lower, that DPD order later than it’s assigned 1 hour slot is doubtful to produce a Facebook rant, however a poor or confusing customer journey will. Many e-commerce giants will find interesting UX information by studying new demographics online journeys, things Millennials consider to be second nature might not be so evident as first thought for other users. 

A positive effect could be a reexamining of accessibility and e-commerce, not just for the new generations joining, but for the wider multi-aged, multi-abled community.  Accessibility adjustments have for a long time been seen as a compliance necessity, now they are a new revenue stream, more attention should be paid. Branwell Moffat, our Director of CX Consulting, has investigated the topic further, read more about it here, Accessibility is about more than just compliance.

Will the demand for home goods continue?

Reimagining our living spaces, seeing as we’ve spent a lot of time in them, has been a much welcome distraction throughout 2020.  As a result, companies selling furniture and homeware online in the UK and Ireland witnessed a 318% YoY increase in traffic in Q2 as lockdowns continued – yet as stores reopened in Q3 these online surges continued and traffic remained at a heightened 113% up on the previous year.

Traditionally, buying a sofa, or any big purchase for your home, would tend to be an omnichannel experience. Online and app behaviours reflect browsing prices, colour swatches and accessories, whilst those retailers with physical stores or showrooms, help nudge the consumer once they’ve seen the product in situ. 

Sofa.com showed great innovation at the start of the Covid pandemic. The biggest challenge for Sofa.com was how to keep customers engaged with physical products and continue to purchase without a showroom presence. They more than tripled their at home swatch samples, to compensate for closed showrooms, with online traffic on sofa.com increasing by almost 150%. They expanded their e-commerce offering to include a range of outdoor furniture for gardens and balconies, and at present, the homeware trend is still rapidly rising.

Will the homeware bubble burst? The answer is, not yet. Large homeware goods traditionally have a longer lifetime value, and how many more desks, laptops screens and other working from home equipment will be needed? Forward thinking firms will be capitalising on additional accessories, home perks, and looking towards connected homes, so we can manage our space, even when we return outdoors.

Will digital marketing costs continue to rise?

While the market for e-commerce has been expanded due to the pandemic, so too has the competition. In March, advertisers started noticing an increase in online ad costs, especially through Google Shopping and Facebook Business. Google Shopping ads saw a +19% Shopping conversion rates YoY throughout lockdown and with Facebook’s Q3 earnings announced at $21.5 billion. Television adverts have boomed again, with a captive audience guaranteed on Friday and Saturday nights, the average cost of television advertising has tripled over the last year.

But there’s also a lot of noise. Brands competing for retargeting, small businesses struggling to be heard against companies with deeper pockets, inboxes full of sales and special offers. When will consumers simply stop listening?

The 2021 focus needs to be on retention and customer experience. In line with the e-commerce boom of 2020, retaining new customers, through either loyalty programs or outstanding customer experiences, will be key to capitalise on the opportunity. This will require personalised marketing, greater data segmentation and real time understanding of customer needs.

The e-commerce boom of 2020, showed the keys to successfully prepare for the year ahead. It’s safe to say retention and customer experience are key focal points that will help you in making the most of opportunities that may come your way. Whether that’s through introducing a loyalty program, adopting a new form of marketing or integrating new technology such as a chat-bot, it will require personalised marketing, great data segmentation and real-time understanding of customer needs. 

65
of over 65's shopped online in 2020
318
YoY increase in online traffic for homeware retailers in 2020