The year 2020 brought about unprecedented upheavals on all levels of commerce.
We all witnessed the closing down of physical stores that have been around long enough to be considered landmarks. Stable brands declared bankruptcy. And most importantly, shopping made an unprecedented shift to the web. In the US alone, eCommerce sales increased by more than 30% during the first half of the year.
Online marketplaces were the major drivers of this growth, with Amazon at the forefront – generating US$295 billion of product sales in 2020. Following the money, a large number of brands launched their respective eCommerce stores to make their products and services more accessible.
These changes now ask the question – ‘Is this just a trend, or are we looking at the new normal?’ It definitely seems as if the retail landscape may not return to its original form.
Entrepreneurs have been emboldened by the ease of building their own online store. Laid-off employees discovered they can make a living from the comforts of their home by selling products in online marketplaces. Both options offer what physical stores couldn’t – the opportunity to earn without shelling out large amounts of upfront capital on inventory and infrastructure.
Due to the health crisis, they don’t even need to exert that much effort in finding customers – people are already buying through their devices.
Eventually, as shoppers will again enjoy freedom and mobility, online shopping is simply too convenient to give up. Also, it will take time for established businesses to recoup from their losses, and maintaining their online presence might be the only way for them to stay afloat.
Revenues from eCommerce are forecast to reach US$6.54 trillion, almost double from US$3.53 trillion in 2019. Scaling one’s business online is arguably a wiser move for any entrepreneur moving forward.
Each one focuses on the anticipated transformation in the buying behavior of consumers. Even as doors will gradually open and people will explore the outdoors once again, caution will predominate in people’s minds. As well, health and wellness will continue to be a priority.
Here are the eCommerce trends in 2021 that will contribute to the new topography of modern digital marketplaces.
Amazon and eCommerce Trends in 2021
1. Increased Online Shopping
We expect the popularity of online shopping to continue through 2021. This isn’t just because the end of the pandemic is nowhere near, with new and more contagious variants cropping up despite vaccine availability.
Though it does influence shopping per se, in terms of brick-and-mortar stores being unable to reopen, there exist more basic reasons for consumers to prefer digital purchasing: convenience, accessibility, basket consolidation, and zero physical effort.
In fact, Statista concludes that “online shopping is one of the most popular online activities worldwide.” Based on the results of the research company’s studies, eCommerce sales worldwide reached US$4.28 trillion in 2020. This number is projected to increase to US$5.4 trillion in 2022.
And with the rapid expansion of eCommerce, online advertising couldn’t be far behind. Many retailers who didn’t adjust to the new normal of marketing and promoting their merchandise lived to regret it.
But 2021 is the time to correct that mistake. Fortunately, it’s not yet too late. Online shoppers are receptive to digital ads, which have now replaced TV commercials in their lives as they spend more time tuned to devices rather than the television.
2. Private Label Products Will Be Booming
Private labeling is a non-manufacturing business model. It involves purchasing goods in bulk from factories and then labeling them with the business owner’s brand. More and more entrepreneurs are gravitating towards this type of trade as it eliminates the production step of the process. Thus, they can focus on marketing their products and realize ROI earlier.
If we are to observe the movement of privately labeled items on Amazon in 2020, we will notice the steady and rapid growth of health, wellness, and self-care products. It was undoubtedly spurred by the need to stay physically and psychologically healthy during the outbreak.
This industry is anticipated to lead the pack of new private-label merchandise covering multiple and diverse sectors.
The growth forecast is largely due to the penny-pinching consumer behavior that is always a byproduct of difficult times when the economy is unstable and the future uncertain. Compared to established brands, private labels are cheaper and often come in either individual or larger packs. Both are more affordable and suited to the new-normal household sizes.
However, shoppers will remain discerning mainly since they are not able to hold products for close investigation before purchase. Thus, sellers should never forget that premium quality must be apparent in their products’ packaging and marketing material.
Also, the items themselves cannot be mediocre. Otherwise, dealing with returns, replacements and refunds will not only cause a major headache but also hurt the bottom line, the brand’s reputation, and customer trust.
3. Marketplaces Prevail Over Online Stores
What’s the difference? Being the digital equivalent of their physical counterparts, these platforms reflect the same disparities. That is, an online marketplace offers consumer goods that run the whole gamut of essentials and non-essentials, both wet and dry, and from edible to non-edible.
On the other hand, an online store exclusively sells the products of a single brand or several brands of one company.
Shoppers put a premium on basket consolidation, which is the primary appeal of one-stop marketplaces like Amazon, Walmart, and Etsy. Meanwhile, most online stores lack the storage and fulfillment capabilities to meet increasing demand. These can result in frequent out-of-stock inventory and late deliveries, which are the biggest turn-offs for buyers.
This scenario is simply a reflection of “real world” retail shopping. Consumers’ desire to save time by finding everything they need under one roof fueled the concept of malls. And instead of going against the tide, big brands embraced the change. They relocated their standalone boutiques to join the fold.
Today, many private label brands that used to be exclusively offered online in their eCommerce stores have crossed over to Amazon.
4. Growing Fulfillment Capabilities
The revenue growth of online retail has already positively impacted the shipping and delivery industry. In return, the latter is expected to be inspired to improve their services. These include shortened transit times, additional payment options, flexible terms, automation, and sustainable packaging.
Also, with varying fulfillment demands on the local and international levels, more players are predicted to join the game. Each one will provide top-notch benefits to stay competitive and win online store customers.
Marketplaces, of course, will rise to the challenge. Newbie sellers learning how to sell stuff on Amazon, Walmart, and Etsy find that Fulfillment By Amazon (FBA) allows their business to grow faster. With this option, they don’t have to worry about storage, shipping, and returns because Amazon takes care of it all at a reasonable fee. This backend infrastructure is continuously improved.
Last year, the retail giant expanded to fresh produce in their Grocery category, albeit on an understandably limited capacity, and more innovation is anticipated in 2021.
5. Artificial Intelligence
AI technology in the form of augmented reality (AR) and virtual reality (VR) will be in demand on eCommerce platforms as consumers seek to replace the in-store shopping experience. This holds true, especially for the fashion industry.
With online marketplaces and stores, shoppers are unable to try on apparel and footwear. AI solves this challenge by providing virtual fitting. As well, it analyzes purchase and browsing history in order to present customers with options according to their specific preferences.
Using AI as an eCommerce add-on removes the obstacle of touch-before-purchase in consumers’ buying behavior. AR and VR will allow them to see exactly how they will look in any piece of clothing. This ensures that they get what they want and helps decrease returns, refunds, and replacement requests.
The retail application of AI is not new, though. Both physical and online stores have adopted the technology a few years back, spending around US$2 billion in 2018 to provide customers with a more personalized in-store experience.
With a few taps on their phone, or on the screen of on-site kiosks, they get access to instant customer service and product information like available sizes and colors. The retail industry worldwide is estimated to spend US$7.3 billion per year on AI by 2022.
6. Voice Search
Ask Alexa to wake you up in the morning and you’ll never need an alarm clock again. Have Siri call Mom so you can catch up even while driving. Save time and let Google Assistant set up your workout music. Yes, voice assistants are the marvel of our century, not only for the mobile population but more so for the physically impaired and challenged.
The eCommerce industry has greatly benefited from the AI-powered buying channel as well and will continue to do so with voice shopping estimated to hit US$40 billion in 2022.
The hands-free technology is convenient, accurate, and quick when used for purchasing groceries, paying utility bills, and ordering food for takeout or delivery. It’s also intuitive about a user’s frequently bought items.
Currently, most voice search activities happen on mobile phones. But smart speaker usage in dining and kitchen areas of homes is increasing towards the expected 75% of US households by 2025. In response, Google Home and Amazon Echo are beefing up their online shopping services, particularly with expanded suites of languages.
Online stores are catching up. These websites have started optimizing their content for voice search to increase organic traffic. FAQs are now must-haves, with questions carefully composed to match voice queries on search engines. Many have added new skills on voice assistants like Alexa and Google Assistant.
Retailers who already offer mobile apps are incorporating voice-based navigation features on their websites. They are also improving customers’ purchasing experience by making voice commands simpler and more intuitive.
7. Dynamic Pricing
Pricing is a tool used by almost every business owner to stay competitive and push conversion rates in their respective markets. Dynamic pricing denotes the flexibility of price points of goods and services. Before digitalization, it was directly influenced by supply and demand. But with the advent of consumer data, it is now largely dictated by customers’ buying behavior.
Price adjustment can be done faster on eCommerce platforms, thanks to digital tools that provide insights on market trends in real-time. Interestingly, the price wars that big brands engaged in during the pre-technology era are almost non-existent in online marketplaces and stores. This is a reflection of a more discerning consumer base which puts a premium on quality, value, trust, loyalty, and performance.
In 2021, Amazon and eCommerce retailers will increasingly tap into the advantages of dynamic pricing strategies for brand differentiation, customer retention, and profitability. Software providers will continue to offer tools to help business owners determine their products’ optimal prices and achieve these goals.
8. More Shopping on Mobile
What started as shopping expediency grew into a necessity when people were constrained indoors. For many consumers, one of the positive results of limited mobility was discovering the wonderful world of mobile commerce. And they seem to be exhibiting no signs of turning back. In 2021, sales through mobile shopping could make up 73% of all eCommerce transactions by year-end.
To meet this demand, eCommerce retailers will need to up the ante on the buying experience of their mobile customers. The Amazon app, available on both Android and Apple, currently offers an extensive list of services designed for quick, secure, and convenient shopping. These include barcodes you can scan to instantly check product prices, Alexa for tracking orders in real-time, and a chat feature for an easy connection to customer service.
With Amazon’s track record in pioneering eCommerce tech innovations, it won’t be surprising if the app offers new features within the year.
As for online stores, abandoned carts remain a challenge when their websites are not mobile-friendly. Around 30% of online consumers decide to discontinue a purchase midstream once they find the transaction difficult to perform on their phone.
Hence, online retailers will exert extra effort to revamp their eCommerce sites for mobile device responsiveness. This means creating progressive web apps (PWAs) and implementing accelerated mobile pages (AMPs) to enable faster website loading.
Website designs of eCommerce stores will also be customized for mobile devices. Seamless navigation on smaller screens and zoom options are going to be prioritized. Checkout processes will be optimized and simplified as well.
9. Messaging and Chat Apps
On the heels of increased preference for mobile shopping, customers need instant replies to their queries. Indeed, no one enjoys wasting minutes staring at a phone screen. Plus, of course, the uncertainty of the times makes people antsy about their orders’ delivery. Hence, the 12-hour average turnaround time for email and 10 hours for social media just won’t do.
Business owners are starting to recognize the importance of instant messaging and live chat as customer service channels. Replies via these channels take 30 seconds to 3 minutes. They also make real-time customer support possible 24/7 with features like automated and canned responses as well as self-help modules.
Facebook Messenger and WhatsApp are now considered standard features on eCommerce websites. Other similar tools are expected to be used by online businesses to meet customers’ demands.
10. eCommerce and Social Media Will Overlap More
Social media platforms are making it easier for eCommerce to expand its market reach. The introduction of video ads on Facebook, Instagram, and TikTok as well as the stories featured on Facebook, Instagram, and Snapchat provide brands with a captured audience. These are strategically placed above the fold to ensure they won’t be missed.
Likewise, they enable social commerce by allowing consumers to shop without leaving their favorite social media app.
Business accounts make this happen. On Facebook and Instagram, in-app shops allow users to purchase products. Because of these shops, many private label brands don’t even need websites or online stores anymore.
Meanwhile, Amazon sellers are taking advantage of the opportunity to launch promotional campaigns through social media with landing pages that redirect to their product pages. As a bonus, they can connect directly with customers via chat, which is restricted on the Amazon platform.
Pandemics will come and go, but eCommerce is not a fad. It has been around for over a decade and has grown in popularity in recent years. Much of its success can be attributed to Amazon which had bravely defied traditional business models to create a new retail avenue. This made a positive impact on small businesses that found it difficult to penetrate the market due to its prohibitive startup capital requirement.
Slowly but surely, eCommerce is already on an upward trajectory of profitability. But the unexpected global health crisis in 2020 accelerated its growth. And with this expansion, sellers are discovering new and better opportunities to serve their target markets.
The trends outlined above point to the direction of a new normal wherein brands will improve their offers to a consumer base that has shifted its attention from physical shopping to a virtual one. And this behavior is expected to continue long after the outbreak will have been contained.
Gaurav Belani is a Senior SEO and Content Marketing Analyst at Growfusely, a content marketing agency specializing in content and data-driven SEO.