Wow, 2020 was a challenging year! Without sounding too cliché, the Covid19 worldwide shutdown brought a huge silver lining for the retail space--an influx in e-commerce orders. On top of that, it was a great year for consumers who were looking for personalization and top-notch service. We could dedicate a whole blog on both the good and bad of 2020 (and highlight all the shows we binge-watched!), which would result in a very long post. Instead, we’ll just stick to what we know, eCommerce.
2020 eCommerce Overview
Unprecedented Ecommerce Growth
Bank of America and the US Department of Commerce indicated that e-commerce market penetrations grew more in eight weeks than it did in the past decade. Until 2020, eCommerce made up between five and 25% of retail transactions. Yet, with limited access to in-store shopping, we saw consumers buying large ticket items online, which resulted in 50% of retail transactions through online sales. In Q3, US eCommerce sales jumped 37%. Consumers spent $199.44 billion online in the U.S. between July and September. All of this growth came with massive pivoting from retailers big and small. Naturally, companies that had a large focus on eCommerce before the pandemic outgrew their competitors. Additionally, in Q3, Amazon increased their revenue by 37.4%. This revenue includes both commission from their sellers as well as their own inventory.
Not only was there growth in retailer online selling, but companies throughout the supply chain were also growing rapidly. Shipping carriers saw sizeable logistical issues trying to handle the increase in orders. They coped with this by increasing their shipping prices to help offset the massive number of incoming parcels. The full effect of this pandemic on carriers is not yet known, though the estimated growth is around $90 billion --far more than the projected annual growth of 5%. Considering that eCommerce has grown 25%, we can only project similar numbers from carriers. We’re looking forward to reporting on Q4 when those numbers are released.
Like the panic buying of toilet paper, sanitary products, and, weirdly, pasta, there might be some trends better left in 2020. With that said, many believe shopping habits formed in the year of quarantine are here to stay. It’s no surprise that Amazon was the clear winner of 2020 in the US eCommerce market, with 70% of consumers saying they shopped on Amazon.com, while 35% said Walmart.com and 26% said Target.com. Though Amazon is a marketplace giant, omnichannel markets are growing faster. Companies such as Walmart are spending time and money organizing their online and retail space to better suit their consumers. They even took stores and turned them into distribution centers to meet the massive influx of eCommerce in 2020.
eCommerce consolidation has also been a massive trend in 2020. It has been the most efficient way to adapt their businesses over the last year and going forward. When companies consolidate, they unlock the opportunity to accelerate growth, improve operating margins, and shorten the road to profitability. The best way to reduce is through technology. Investing in new technology allows for companies to personalize the online experience and build consumer loyalty.
On top of the better technology, companies have also decided to invest in mobile shopping. Adobe’s data showed that mobile shopping from December 1st and December 9th accounted for 39% of profits. Though mobile shopping, also known as m-commerce, may still not be as high as desktop e-commerce shopping, it shows no sign of slowing down. Target, for example, had been investing in infrastructure to support mobile transactions. The retailer reported same-day services such as order pick up, drive up, and Shipt sales grew 217% in Q3 alone. Target’s overall digital sales increased by 155%. Target is a perfect example of a company that listened to the consumer and followed the dollars. Now the biggest question is how to get the consumers to buy on mobile over desktop. Facebook is heavily invested in Facebook and Instagram shops, making it easier for consumers to purchase directly from the app. Companies have invested in paid search campaigns to increase their mobile conversions. “46% of our ad-driven sales were attributed to phones from Thanksgiving Day through Cyber Monday...” Though Google search ads year over year has decreased, the trend continues to side with easy and accessible ways to shop from your phone.
Looking to 2021
In 2021, technology will be king. Consumers want better and easier ways to shop online. According to Lucy Bennet at iLounge.com, there are three trends to look out for this year in eCommerce technology.
- Voice Recognition
By 2022, voice searching is projected to grow by 1,990%. The main reason that voice recognition is growing is that it’s similar to having a personal assistant. In eCommerce, it is like having a personal shopper. Currently, roughly 35% of all households in the US have at least one smart speaker. In 2019, 26.1% of consumers made at least one purchase through a smart speaker. Currently, voice search for products is used less for purchasing, but rather for research. Though that is a part of the buyer’s journey, it doesn’t help close the deal. Roughly 40% of voice results are pulled from voice search results are compiled directly from search engine snippets. Though every voice search device uses different methods to find search engines results, companies such as Amazon allow companies to learn what works best for their Alexa devices. Research and infrastructure are the best way to jump out in front of this 2021 trend.Headless Commerce
When we first heard this term, we immediately thought of a lack of personalization and putting the consumer second. But in reality, headless commerce means the exact opposite. “Headless commerce makes it possible for business to offer a 360-degree experience by separating the front and back ends of their ecommerce applications.” Developers can use APIs to deliver products, while front-end developers can benefit from more freedom to present it however they see fit. The best example of headless commerce is Amazon Prime. The reason it is so successful is due to its headless commerce system.
- Livestream Shopping
Thinking back to infomercial selling, live-shopping uses a similar approach and brings it into the new age. TalkShopLive is a live social selling platform based on the live social selling premise. Sales went up seven-fold thanks to novel coronavirus economic shutdowns. Streaming creates an emotional and personal connection that tends to be missing from traditional e-commerce shopping. Live selling helps bridge the gap between online sales and brick and mortar shopping. The Chinese retail market is ahead of the live-streaming trend, with 9% of total e-commerce e-sales in the country from live shopping. This marketing output is an easy way to increase sales and helps with creating personalization within e-commerce shopping.
Do you now understand the colossal impact 2020 had on the e-commerce space? As the coronavirus vaccine begins distribution and hopes to open up the economy once more gets closer, how will consumers react? Some experts project that consumers will continue to shop online while others expect consumers to return to brick and mortar. Only time will tell whether economic restrictions lift and consumers return to stores or feel better shopping from the safety of their homes.