Deepak Shukla, Nelly Dedelaite , Pearl Lemon
If you’ve been keeping track of the eCommerce market, you probably have noticed some new fascinating trends that have popped-up since 2020.
One of which is increased competition due to the explosion of online sales.
Initial takeaways are the following:
Current eCommerce sales have never been higher:
Research shows that consumers have accelerated sales growth during the height of the pandemic and have condensed ten years worth of growth into 90 days. Yes, global eCommerce will be slowing down now as countries (hopefully) come out of the lockdowns, but this is an unprecedented development.
Highest eCommerce competition is seen to date:
Fierce competition amongst wholesalers, long-term retail giants, and products that were not usually bought online has been driving up customer acquisition costs. Many retail shops were forced to close as countries were going into lockdowns, and during this time, eCommerce made up 16.4% of total global sales.
This was not just millennials or Gen Z driving up sales – old shoppers were changing habits and moving online as well.
Usually, small or offline businesses are just not equipped to compete and so don’t have the edge over brands that are already established. Customer satisfaction is a huge rating booster, and if there isn’t enough of that, a business cannot hold on to a vast customer base.
2021 predicts a decrease in online sales in the US as brick-and-mortar businesses open their doors again. Generally, eCommerce growth will no longer be relatively even spread as some products gain and lose popularity.
The world will recover a lot more slowly after COVID-19 than back in 2008 after the financial crisis. eCommerce remains the target spot as companies and businesses will continue to build online profiles.
In the UK alone, the eCommerce industry made up 27.5% of sales in 2020. That number is expected to reach 32.1% in 2024, so you can see that eCommerce is just going to get more popular.
Even overall, eCommerce as a percentage of total global sales will continue to rise over the next few years and start to envelop digital branding even more than before.
Spike in Ad costs due to competition
As more big brands are heading online, competition is ramping up. Retail giants like Walmart have seen a 74% increase in online sales during the pandemic. Similarly, retailers for products not usually sold online before have been inundated with online demand – mostly a shift in the need for household essentials, personal care products, other health essentials and books.
There are also high-levels of competition coming from outside of the UK or the US. Cross-border sales have increased by around 21%, especially in luxury goods (an increase of 39%). This is not so unusual as many consumers can find cheaper alternatives in other countries.
Cross-border eCommerce also doesn’t seem like it will be slowing down. Indicators such as increased downloads of translation and currency converter apps show that many people will continue buying overseas products.
With all this increase and shift to digital shops, marketing has also greatly shifted from more TV aimed advertising to digital platforms. These changes have made it more expensive to advertise on certain platforms, including Facebook – with prices higher than pre-pandemic.
The price of cost-per-click ads on Facebook rose by 58% in November 2020 compared to January of the same year. In 2021 it will decrease again, but the growth is the highest on record.
Customer experience as a key consideration to stay in the competition
An increase in digital sales and advertising has, in turn, created the need for positive experiences for customers.
There are several expectations from the consumers, including but not limited to ease of use, good UI, integration across devices and even shipping. If your brand meets those demands, you are likely to see the best returns.
However, herein lies the challenge. There is a massive difference between DTC brands and new eCommerce businesses – just 38% of the large companies can meet the customers’ demands and stay in the competition.
5 Things to do in 2021 to stay ahead of the competition
To get the most out of eCommerce right now, you should have an excellent omnichannel strategy. Assess the risks, but do invest in technology to immerse yourself, your team and the customer into your brand.
This will help with organisation, keep your customer base and allow you to quickly shift your business online (and offline) based on customer demand.
Consistent data collection
Creating data about your customers and products will allow you to spot trends and, by default, allow you to provide a consistently good customer experience across all channels and devices.
Having information on one single organised platform helps with information flow and management.
Have a product inventory platform
This is a no brainer for everyone in the business who has physical products that you sell. Keep product data in one place, and you can always track inventory levels, sales, prices and other data.
Mobile shopping experiences
If everything is going digital, then obviously mobile shopping is becoming the new ‘it’ thing. Most people have access to a phone, so having a fast mobile shopping experience is imperative. If a customer has a negative experience with you through mobile, they are 62% less likely to shop with you again.
If, before COVID, mobiles were responsible for 92% growth in the eCommerce market, then during and post-Covid, this should see an even more significant rise.
So invest in optimising your mobile platform to ensure things run smoothly.
Whether on mobile or desktop, your site needs to be attractive and integrated. Bounce rates are highest on mobiles, but even desktop sites can usually be revamped to run better.
A responsive website helps improve SEO, site speed and generally boost the user experience on your site. You want your customers to be happy no matter what device they find you through.
eCommerce is still at an all-time high as we finally step out of lockdowns and ease restrictions. Travel band and retail shut down have forced customers to flood the online markets, and many large retailers have followed the crowd – some for the first time trying the direct-to-consumer approach.
Not everyone can deliver on the expectations of a great customer experience. To stay on top, brands must compete like never before to capture consumers’ attention and provide them with a personalised experience every time without fail.
As you have seen, this has had positive and negative effects on businesses as some are thriving, and others cannot stay afloat.
There are some things you can do in 2021 to help yourself as much as you can, but nothing is guaranteed. Coming out of the pandemic will bring new challenges and trends caused by the sudden surge in the eCommerce market. Those will not be apparent until later in the year, but marketing and competition will still be a top priority to help with customer retention.
Global Banking & Finance Review
Why waste money on news and opinions when you can access them for free?
Take advantage of our newsletter subscription and stay informed on the go!
By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
Top Stories3 days ago
BoE’s Bailey says getting inflation to 2% will be ‘hard work’
Top Stories3 days ago
Marketmind: Markets turn risk-averse after bumper month
Top Stories3 days ago
Baer says exposure to single group tops 600 million francs, as Signa crisis deepens
Top Stories3 days ago
UK’s FTSE 100 dips on miners, energy drag