Read the State of Commerce Report for 2021
Chief marketing officers and other marketing leaders will remember 2020 as the year of the Great Pivot. It was when COVID-19 closed traditional brick-and-mortar channels, ecommerce trends shifted and online was truly switched on.
It was a year when regular online customers devoted more of their time and dollars to online purchases. Newbies poured into ecommerce storefronts. Direct-to-consumer became more than just a niche activity. Here was opportunity, amidst the chaos.
Signifyd’s recently released State of Commerce Report 2021: Redefining Experiences for a New Wave of Customers,” concluded that although it’s too early to say for sure whether these consumer habits are here to stay, retailers should study the ecommerce data trends and use them to plan moves that will carry them successfully into the new, post-COVID-19 world. Here are six trends in particular that CMOs should keep their eyes on:
1. Devote marketing attention—and spend—to ecommerce
Ecommerce, once just a small slice of retail revenue, now adds up to as much as 30% of it. This trend is only expected to accelerate in the next 12 months. The pandemic sped up the expected transition from physical to online sales by as much as five years. The implications for CMOs and other marketing leaders are tremendous. You’ve suddenly become much more important. Your job now: strategizing on how to best optimize revenue flowing in through online channels, and how to make sure the customer experience remains stellar—and your NPS high—when you don’t see your customer face to face.
2. Rapidly convert store operations to accommodate buy-online-pick-up-in-store and curbside pickup
During early phases of the lockdown, non-essential retailers had no choice. They weren’t allowed to let shoppers into their stores. So curbside pickup became a necessity. Today more than two-fifths of omnichannel retailers offer curbside pickup. (Before COVID-19 hit, it was less than 7%, according to Digital Commerce 360.)
Marketing leaders are obviously involved in such a massive shift in ecommerce trends. Marketing campaigns and promotions have to be designed around knowing which stores have which items in stock in which geographic areas. They have to be sensitive to regional or even local preferences to ensure that the right products are sent to the right stores. And they have to contemplate ways in which to encourage the sort of impulse buys that happen in-store all the time, but are hard to envision with curbside pickup.
These in-demand fulfillment channels aren’t necessarily an easy strategy to embrace, because the logistics are difficult. Plus, these kinds of operations offer many opportunities to be exploited by fraudsters. Still, Best Buy, after closing all its physical stores, converted them to curbside pickup and delivery fulfillment centers within 48 hours, CNN reported. That’s quite a feat and quite a pandemic success story.
3. Focus on experience excellence for online newbies
The pandemic did offer some benefits. Large numbers of new customers clicked their way into online storefronts without retailers having to spend anything to acquire them. The challenge became turning them into loyal customers with high lifetime value. This meant focusing on the customer experience. Are you investing in recommendations engines to cross-sell and upsell your new customers? Have you updated your store search and checkout experience so that they’re easy to navigate?
Interestingly, these new online consumers behaved differently from those who came before them. As a group, they had larger basket sizes than those who had been serious online shoppers for a couple of years, spending more than their 2019 peers by about 163%. They were also the most enthusiastic buy-online-pick-up-in-store (BOPIS) and curbside shoppers.
But as with all new customers, retailers have to work hard to deliver the right kind of experience to get these consumers to come back. They are in that super-sensitive, first-impression territory. For example, products need to be dispatched on time and curbside orders had better be ready when promised. First impressions mean a lot, especially when you need to attract and retain customers solely through digital channels.
4. Reach out to customers directly
Direct-to-consumer (DTC) brands were already going strong, pre-COVID-19. The pandemic only strengthened the appeal of this ecommerce trend and caused many brands to consider it as a viable channel.
As a marketer, you need to be aware that a DTC retailer controls its own supply chains, has access to valuable consumer data, and is able to build closer relationships with the shoppers who are buying directly from it. These are all good things, especially the fact that you own the customer relationship—and all the massive amounts of data that comes from it. For marketers, this is a treasure trove for future strategic planning as well as personalization of marketing outreach campaigns.
Iconic brands like Pepsi, Harley-Davidson, Levi’s, Revlon, and Shiseido realized that, and jumped into the DTC business. However, selling directly proved challenging to brands used to selling through established channels, especially when it came to fraud. Many brands had little experience with fraud protection and little historical data to determine who among their customers were legitimate shoppers and who were fraudsters. This led to more losses and revenue shrinkage than these retailers were accustomed to writing off.
5. Stop refusing legitimate orders
Retailers who had little to no experience with online sales prior to COVID-19, faced a dilemma. Card not present (CNP) fraud is riskier for merchants than taking a credit card from a shopper in your physical store. When a consumer uses a credit card to buy online, the retailer is liable for fraud losses. In-store, of course, fraudulent charges are the banks’ responsibility.
Increases in online orders are inevitably accompanied by increases in fraud. When COVID-19 arrived in full force in March 2020, fraud rings were right behind them, knowing that traditional fraud teams were likely working from home and stretched thin. Signifyd updates its Fraud Pressure Index weekly to determine how much online fraud is occurring at specific points in time. That index broke all records during the pandemic. By the end of May 2020, fraudulent activity rose more than 320% compared to pre-pandemic levels. Although these levels continued to fluctuate for several months, in the early holiday shopping season, they reached heights more than six times pre-pandemic levels.
Unfortunately, some new—and even experienced—online retailers saw these trends and shrank back. They became more conservative about which CNP orders they would take. This unfortunately put a damper on revenues, as a lot of legitimate orders were refused. Retailers need to take a more balanced view of fraud and find ways to mitigate losses without turning away potentially valuable customers. This impacts CMOs directly because too-stringent anti-fraud measures can reduce your click-throughs and conversations, and definitely inhibit bottom-line sales. So it makes sense, if your marketing numbers are inexplicably disappointing, to check on your fraud detection policies.
6. Don’t skimp on marketing non-traditional online wares to consumers
Finally, Signifyd found that items that hadn’t traditionally been big online sellers — such as groceries and furniture – began to fly off the digital shelves during the pandemic. This ecommerce trend hasn’t ceased in 2021.
It’s a sign that consumers may be more flexible about what they buy online in the future. Home furniture demand skyrocketed, and sales of home goods and decorative items rose 141% over 2019 numbers. There was also an extraordinary nearly sevenfold year-over-year increase in the online sales of media, toys, hobby items, and games. Orders for musical instruments escalated. Sales of electronics, sporting goods, gym equipment, and, toward the end of the year, major home appliances, were also off the scale as consumers seemed to have lost their hesitancy to buy online for even unconventional, big-ticket items.
What’s the message for marketers here? Don’t come to hasty conclusions about what consumers will or won’t buy online. Necessity, after all, is the mother of invention, which is why so many unconventional items suddenly became acceptable online purchases when they couldn’t be obtained any other way. But now that consumers have tested the waters for such items, and presumably found them convenient and safe, there’s no telling what they won’t buy if sufficiently enticed in the right way by the right messages.
Freelance writer Alice LaPlante contributed to this report. Photo by Getty Images
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