eCommerce Business – 2020 Trends & 2021 Predictions [Data & Graphs]

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eCommerce Business – 2020 Trends & 2021 Predictions [Data & Graphs]

March 22nd, 2021

eCommerce Trends 2020

2020 is a year that will go down in history as one of the worst for humankind, yet arguably the best ever for ecommerce business. While brick and mortar stores were struggling to remain open due to the pandemic, e-commerce sales soared to achieve astronomical growth due to the inherently non-contact nature of e-commerce. How much did it grow? See below for a graph of e-commerce penetration in the US market

Grpah of eCommerce penetration in United States

Essentially, from around 15% people who used e-commrece in 2019, a whopping 34% started using it during the pandemic. Interestingly, in the absence of the pandemic, it would have taken 10 years to reach this level of penetration. Every industry saw significant growth in their e-commerce business. Here’s a graph of industry-wise growth of e-commerce sourced from BigCommerce based on US census bureau and some key takeaways.

Graph of eCommerce growth in various industries in Q1, Q2, Q3, Q4 of 2020

Groceries eCommerce Soars

Unmissable on the graph is how Food & Beverage eCommerce or groceries is a tower much taller than the others. Obviously groceries are the most basic need, but it’s not only that. Groceries have really been lagging behind other segments for several years. The trend has been clearly towards omni-channel commerce as indicated by all major grocery retailers adopting delivery and pickup even before the pandemic. However, customers still seemed to want to pick their produce or walk the aisles or just liked the diversion. As a result grocery eCommerce has really lagged other segments and this is another reason for the huge growth

eCommerce Growth in 2020 Q2 & Downtrend

Q2 saw the most growth year on year. As the pandemic hit in late Q1 to early Q2, most people lacked enough information to make informed decisions about whether to step out. As a result, eCommerce soared, but started to drop off as more information became available and some consumers weighed the risks and decided it’s not too dangerous to at least partially step out.

Industries Bucking the Downtrend

Automotive & parts and home furnishings to an extent has continued to grow against the trend in Q3 and Q4. Home furnishing might have continued to grow as consumers continued to spend more time at home and update their homes to make it more comfortable. Motor vehicles and parts are also continuing to grow even though miles driven by people have come down with a large percentage of people working from home. Also, auto parts growth is not as significant as other segments. This points to customers who are handy with their vehicles beginning to do some work on it as they spend less time commuting and find themselves more at home and with more time on hand

eCommerce Trends 2021

So, 2020 was a stellar year for eCommerce, but as vaccines become available and the pandemic wears off, how do we expect the consumers to react. To understand, we collected some data from various sources. Here are a few results

The Channel Shift Is Here To Stay

48% consumers will shop more online. 75% of retailers expect a permanent channel shift. eCommerce share of business will be 17% in 2021 and will grow to 21% in 2025

In a survey of consumers by Global Web Index, 48% of consumers said they will shop online more. Euromonitor International, a market research firm estimates that 17% of all retail sales will be online in 2021. This number will grow to 21% in 2025. Retail is getting ready for this boom too. 75% of surveyed retailers expect that the huge shift that happened in 2020 will cause a permanent channel shift from brick-and-mortar to e-commerce.

eCommerce Competition Heats Up

1-2 Years up to 3 Years of Digitization Acceleration due to pandemic. Top 20 Quintile gains 400 Bn while bottom quintile loses as much

In the same Euromonitor survey mentioned earlier, 72% of retail professionals said COVID-19 accelerated their digitization plans by 1-2 years. 21% said it accelerated by at least 3 years. Evidently, larger businesses are investing a lot more in improving their e-commerce experience. Research by Deloitte found that the top 20% of businesses gained almost 400 billion in revenue whereas the bottom 20% lost almost as much during the pandemic. Not all of it is due to eCommerce, but at least some part can be attributed to eCommerce or ease of purchase in general

Marketplaces Dominate eCommerce

Marketplaces are increasingly becoming the customers’ preferred channel of purchase. Half of all global eCommerce happens on a marketplace and more than 63% of product searches online in the US start at Amazon. This makes marketplaces a great place for businesses to find customers and start e-commerce without much investment. However,  the commissions and fees add up quickly and can make the business less profitable. Also, marketplaces own the customer and makes it harder to see customer journeys or gather other insights about customers. There’s very limited ability to customize the product details too. As a result, your brand loses a chunk of it’s value as compared to a new entrant .

How Businesses Can Adapt

As is evident from 2021 trends, there are some opportunities to be exploited and some hurdles to be overcome in 2021 and beyond. We’ve put together a list as a actions that businesses can take as a starting point with a focus on small to medium businesses.

The Obvious Need for a Good eCommerce Story

Given the trends, it’s obvious that retailers either without an e-commerce store or with a sub-optimal store will miss out and miss out rather heavily. Having an e-commerce store is no longer an option, but something customers expect and demand. While it might seem like a daunting task for smaller businesses, anyone can accomplish this with small steps and little
outside help where possible. Start by taking your inventory to online marketplaces like Amazon, which costs very little to get up and running. Even with the commissions and fees, it’s new customers in the door. Once the store start getting some customers online, setup an eCommerce store on a platform like Shopify. Then start including material in your packaging inviting your customers to visit your online store. Give them an incentive like a free gift, discount coupon or loyalty points to do so. As business grows further, other platforms can also be evaluated if further customization and control is desired.

A store that is not converting or has a sub-optimal user experience is most likely a waste of precious resources spent maintaining it. With the number of slick and easy to use stores increasing every day, any store owner has to either learn about eCommerce conversion and user experience or invest in an expert eCommerce consultant. The investment will be worth the ROI as data from Deloitte shows that customers are more and more willing to try new stores and websites. 75% of customers tried a new store or website during the pandemic and 60% of them will continue to use those brands in addition to their previously favorite brands. With the advent of easy and free returns online, we think customers will continue try new things online. Having a well structure online store will put the business in a good position to gain new business from adventurous consumers.

Invest in End to End Experience

Following the topic of sub-optimal experience, eCommerce customers today are spoiled by the seamless experiences that marketplaces provide. They expect not just a good shopping experience, but a great post-checkout experience as well. It can be hard to compete with marketplaces on your own in things like quick and easy shipping and returns. However, there are options available to outsource some of this experience to third party logistics providers (3PLs). These 3PLs can give you the scale of strategically located fulfillment centers and match the experience of marketplaces or at least make the difference small enough to not be a turn off.

Brand Loyalty is Worth Fighting For

As more and more product searches start on marketplaces and brand loyalty diminishes, retailers have to really personalize their service and provide a human touch to improve brand loyalty. This can be high-tech like AI-powered content personalization or old fashioned memorable customer service experience. Brands can also increase customer loyalty through loyalty programs and discounts on subscriptions. Consumers can also be influenced to buy from a certain brand by aligning with their values. Research by IBM says six in 10 consumers are willing to change their shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible. So, there’s one value a business can align with the build loyalty.

How atmosol can Help

atmosol is a boutique e-Commerce consulting company that has been helping clients emerge stronger in the e-commerce world for over 16 years. Our strength is understanding our customers’ business and using our experience and knowledge of latest trends to come up with unique ideas that help boost online sales, conversion, and retention. To this end, we take up strategy, implementation, marketing and literally Everything Ecommerce®.

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