What eCommerce Trends to Expect in 2021

What eCommerce Trends to Expect in 2021

After a tumultuous and unexpected 2020, what should online merchants expect of eCommerce in 2021?

Here’s our 10 trends to watch for next year as eCommerce continues to evolve to meet the changing behaviors of consumers. 

1. It will be more competitive to sell online. 

At the height of the COVID-19 pandemic, 10 years of eCommerce growth happened in just 90 days. [McKinsey]

Buying online in 2020 transformed from a convenience into a necessity for connecting consumers with products. 

Nearly 150 million people shopped online for the first time in the pandemic, and the number of eCommerce buyers will only continue to rise. [eMarketer]

While 2021 won’t see the same surge in online sales as brick-and-mortar rebounds, there’s now more brands taking on eCommerce initiatives to satisfy consumers who want to buy online.  

This leads to a more competitive online landscape where brands across all product categories are now looking for their share of a consumer’s digital wallet. 

2. Brands with the best experiences will win. 

75% of US consumers have tried different stores, websites, or brands during the COVID-19 crisis. And, 60% of these consumers expect to integrate the new brands and stores into their post-COVID lives. [McKinsey]

While there’s more brands online than ever before, not all consumers will be satisfied with their experiences with them. Going forward, merchants will have to optimize their buying experiences to ensure they win new customers and keep them. 

In 2021, consumers are still in full control and you need to find innovative ways to provide intuitive and omnichannel experiences. 

To do this, brands are experimenting with: 

  • Augmented Reality (AR) to simulate in-person shopping experiences online 
  • Offer Buy Online, Pick Up In Store for convenience and speed 
  • Personal marketing through email and SMS 
  • Fast and easy online checkout with automated discounts and different payment options 
  • Providing dedicated mobile apps 

3. Brands will use online marketplaces to drive customers to their own websites.

Half of all global eCommerce sales occur on marketplaces. [Accenture]

But, when consumers shop on marketplaces like Amazon, they search by product categories, features, or benefits. They don’t often search by a brand name. 70% of Amazon searches do not include a brand name. [Accenture]

So while selling on an online marketplace can be a great way to expand a brand’s reach, it can be challenging to define and grow your personal brand over time on them. You don’t have nearly as much control over data collection, personalization, and marketing attribution through the buyer’s journey. 

To overcome this issue, more brands are focusing on capturing new customers on marketplaces, but then intentionally driving these customers to make repeat purchases on their own website. Getting a customer to an owned channel ensures you remain in total control of the relationship.

4. You can gain a competitive edge with fast and free shipping. 

With more options to buy online, consumers are increasingly shopping around for the best shipping rates. 

37% of consumers agree that shipping speed influences their purchasing decisions more than it did a year ago. And while almost half are likely to pay for express shipping, 66% of consumers expect merchants to offer a slower, free shipping option. [ShipStation Last Touch Report]

Further, providing a good delivery has a significant impact on whether a consumer will buy from you again. 

83% are less likely to re-purchase from a retailer after a negative delivery or shipping experience. [ShipStation Last Touch Report]

The challenge for merchants is balancing demanding shipping expectations with rising costs. Worldwide, FedEx announced an average 4.9% rate increase for 2021. [FedEx]

Building and managing your own logistics arm is a tall order. So, more brands are partnering with third-party logistic providers (3PLs) to handle their fulfillment needs. 

Demand for 3PLs is set to nearly double to $408 billion in the first half of this decade. [Shopify Plus]

But, if you get fulfillment right, you can gain a competitive advantage online.

Read more about why shipping is so expensive and what you can do to control costs and protect your bottom line. 

5. Consumers look for more payment options at checkout. 

Consumers use peer-to-peer (P2P) payment systems like Venmo and PayPal daily. From Q1 2017 to Q1 2019, Venmo has grown their total payment volume from $6.8 billion to $21 billion. [BigCommerce]

And now these P2P payment systems are making their way to check out pages for eCommerce to make online payment even more convenient. Providing more options can help reduce cart abandonment and increase sales. 

As another alternative payment option, consumers also favor financing solutions to split online purchases into management installments they can pay later. Popular providers are AfterPay, Affirm, and Klarna. These solutions are great options for luxury or lifestyle brands that have higher-cost items. Paying in installments allows consumers to budget for the high-end products they want. 

In 2021, expect check out pages to provide multiple payment options like these: 

6. Start to rely on marketing outside of digital advertising. 

Over the years, digital advertising has been the go-to strategy for acquiring customers, especially on popular platforms like Google and Facebook. But heading into 2021, the digital ad landscape is becoming competitive and cost-prohibitive. 

Even though overall ad spend is forecast to decline 20% in 2020, digital ad spend is estimated to increase 13%. [IAB]

This isn’t a surprise. Advertising research in 2019 showed that Facebook CPM rates have grown 90% year-over-year for marketers. [AList]

On top of rising costs, digital ads aren’t serving long-term goals. While brands can spend significant amounts on digital ads to acquire first-time buyers, they don’t consistently translate into loyal customers who make repeat purchases. 

This fundamental problem is why many DTC brands are dropping their marketing spend and shifting resources to other areas like product assortment, quality, and customer experience. 

Apparel provider, Richer Poorer, cut ties with their VCs and dropped marketing spend to just 30% of their overall budget. Since re-evaluating their product assortment, conversion is up 25% year over year, customer acquisition costs are down 10%, repeat purchase rate is up 50% and average order value is up 35%.

Read more about why DTC brands are turning their backs on VCs.

There’s also uncertainty in how the ad landscape will change over the next few years anyway. For instance, Google is phasing out cookies for its Chrome browser in 2022 and there’s a U.S. antitrust case against Google. Whatever comes of these things, it’ll most likely be harder for brands to target users with ads in the future. 

7. More brands focusing on retention and customer lifetime value (CLV).

While reaching new customers is always important, a competitive (and expensive) online landscape means that it’s more important to keep the customers you do have. 

Experts expect spending on customer loyalty and retention will increase by 30% over the next year, after acquiring plenty of new online customers during the 2020 eCommerce boom.

Historically, acquiring a new customer can be anywhere from 5 to 25 times more expensive than retaining an existing one. And, increasing customer retention rates by 5% increases profits by 25% to 95%. [Harvard Business Review]

Here’s some ways brands are trying to increase the lifetime value for their existing customers:

  • Implementing loyalty programs and rewards
  • Creating mobile apps
  • Offering recurring revenue models like replenishment, curation, and VIP access
  • Using personal email campaigns and product recommendations

8. Focus more on personal customer relationships through email campaigns and SMS marketing. 

Don’t believe that email is dead.

Roughly 80% of businesses rely on email as their primary channel for acquisition and retention. [Emsarys]

Unlike digital ad spend, email is built upon trust and doesn’t have to be intrusive. Using your own data and experiments, you can use email to communicate directly with customers. It can be about everything from helpful tips to product recommendations and transactional info. 

To improve your email marketing, read about these 7 actionable tips and consider investing in tools like Klaviyo, Omnisend, or Mailchimp

To compliment their email marketing efforts, brands are also experimenting with text messaging. You can use it to turn casual browsers on your site into repeat customers. Your shoppers can opt in to receive texts from you, so you can send shoppers back to their abandoned cart or send coupon codes.

Check out leading SMS providers like Privy and Omnisend

9.  Learning how to humanize your brand and tell your story. 

Most consumers are experiencing digital fatigue. While tech can enhance our lives and commerce experiences, many brands are forgetting to create deep connections with their customers.

As people, we crave connection and interactions. Sometimes the modern algorithms, AI, and automated marketing can get in the way, leading to cold and robotic interactions that don’t inspire anyone. 

Going into 2021 and beyond, leading brands will find ways to connect emotionally with their customers and communicate their shared values. They’ll be honest, transparent, and most importantly, human. 

One of the best ways to form deep connections is through brand storytelling, the cohesive narrative that tells the facts and emotions that your brand evokes.  

10. Using financial technology (fintech) to improve your operations.

Financial technology, or fintech, is the digital products and services disrupting traditional financing processes across many industries, including eCommerce. It aims to provide flexible and fast financial services by using the internet, mobile devices, technology or cloud services. 

For growing online sellers, fintech provides new solutions that allow you to smartly scale your business in a fast-paced and competitive landscape. Most fintech startups focus on SMBs that are historically underserved by traditional institutions. 

Here’s some of the fintech solutions helping online merchants grow: 

Online Banking — An alternative to brick-and-mortar banks that offer easy, fast, and affordable financial services. 

Global Currency Exchange — Offering transparent and affordable rates when dealing with international money transfers and currency exchange. 

Cash Advance Solutions — Giving merchants access to an upfront sum of cash to cover expenses like buying inventory, investing in marketing, or covering unexpected shipping costs

Realtime Marketplace Payouts — Many marketplaces like Amazon tie up your money in long payout schedules. Realtime payouts give you access to your own cash, faster to use as you need. 

Accounting Software — Automates bookkeeping, paperwork for payroll, payments, and more to help online merchants manage their finances. 

Blockchain — An electronic way to record data transactions between entities to help manage anything from eCommerce loyalty programs to your supply chain. 

Fintech startups are tailoring their services to meet the unique needs of online sellers. With wider adoption, they can help online brands compete with bigger names and grow. Learn more about the top fintech companies for eCommerce businesses.

Gear Up for eCommerce in 2021

2020 saw a transformation in human behavior that is likely here to stay in 2021 and beyond. 

To keep up on any trends or tips for online selling, subscribe to the Payability newsletter to get insights sent straight to your inbox.

Sources and Citation Info:

To be clear, none of the statistics above are based on research by Payability. This post is a compilation of statistics from various web sources that are cited throughout the article. We hope to give you one, convenient place to find data about 2020 holiday shopping trends. 

For any formal or academic purposes, please cite the original source of the data.

Jillian Hufford
Jillian Hufford has over seven years of educating merchants on digital commerce and marketing growth strategies and best practices. She is a frequent author and thought contributor on DTC and B2B commerce, SaaS software, and B2B content marketing. She also contributes regularly to CMSWire. Connect with Jillian on LinkedIn: @JillianHufford

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