Nine trends that will impact the future of ecommerce

Signifyd’s newly released “State of Commerce Report 2021: Redefining Experiences for a New Wave of Customers,” says that it is probably too early to say for sure whether these new consumer habits are here to stay. Even so, retailers should study the trends and use them to plan moves that will carry them successfully into the future of ecommerce and the new, post-COVID-19 world. Here are nine trends the report identified that you should keep your eyes on.

1. Ecommerce sales are rapidly growing as a percentage of all retail sales

Ecommerce, once a sliver of retail revenue, now accounts for 20 to 30% of it. Ecommerce shopping trends are only expected to accelerate. Ecommerce is no longer a nice-to-have channel. It’s core to your business. The pandemic sped up the expected transition from physical to online retail sales by at least five years, in Signifyd’s estimate. The implications are huge. If ecommerce overall takes a hit—due to recession, for example—you’ll feel the pain. Ecommerce executives have suddenly risen in importance. This means they must pay more attention to strategizing on how to best optimize revenue flowing in through online channels.

2. Growth of buy-online-pick-up-in-store and curbside pickup

As part of the new ecommerce wave, a new way of shopping established itself. As momentous as the rise in online buying was, the enthusiasm with which consumers adjusted to picking up their online orders at the store, either inside or at the curb, was even greater. 

During early phases of the lockdown, non-essential retailers had no choice. They couldn’t let shoppers into their stores. Curbside pickup was a necessity. The number of top retailers offering pickup at the curb increased six-fold during the pandemic. (A case in point, at the end of 2019, fewer than 7% of omnichannel retailers offered curbside pickup. Today, it’s close to half.) This new method of getting goods to consumers was a lifeline during the early days of the pandemic for some big-name brands. For example, after closing all physical stores, Best Buy converted them to curbside pickup and delivery fulfillment centers within 24 hours, CNN reported. The chain became a go-to place for work-from-home and homeschooling supplies. 

If you’re wondering why retailers didn’t embrace curbside pickup prior to the pandemic, it’s likely because the logistics are difficult and the operation is fraught with the potential for fraud. Still, the practice is likely to persist even in a post-COVID-19 world. 

3. New wave of shoppers who had not, or rarely, shopped online before

The pandemic didn’t just cause retail distress. It had a definite silver lining. Large numbers of new customers entered online storefront without retailers having to spend anything to acquire them. The challenge became to turn them into loyal customers with high lifetime value. Interestingly, these new online consumers behaved differently from those who came before them, providing clues for the future of ecommerce. They were very interested in purchasing home goods, in particular. As a group they had larger basket sizes than those who first became serious online shoppers in 2019. They spent more than their 2019 peers by about 6%. They were also the most enthusiastic BOPIS ecommerce 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. Curbside orders had better be ready when promised. Or these consumers might decide they don’t want to do business with you after all.

4. Direct to consumer gained momentum

A direct-to-consumer retailer controls its own supply chains, has access to valuable consumer data, and is able to build closer relationships with shoppers who are buying directly from it. It’s the sort of world that marketing leaders have long dreamed of. 

Direct-to-consumer brands were already going strong, pre-COVID-19. Brands that had a hard time with fulfillment and supply chain operations due to the pandemic found themselves inspired to try direct-to-consumer strategies. These included iconic names like Pepsi, Harley-Davidson, Levi’s, Revlon, and Shiseido. However, selling directly also challenged 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.

5. More fraud, and an increase in fraud pressure

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 stretched thin and likely working from home. Signifyd posts weekly updates to its Fraud Pressure Index to determine how much online fraud is occurring at specific points in time. That index broke all records during the pandemic. Closing in on late May, 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. 

6. Greater varieties of fraud

Not only is more retail fraud being committed, but more types of fraud are appearing as well. Just as the COVID-19 pandemic charted a new future of ecommerce, it spurred a new future for fraud. As retailers pivoted swiftly by coming up with new ways for consumers to buy — such as curbside and BOPIS buy online pickup in store — fraudsters found new vulnerabilities to take advantage of. Fraud rings continued to sharpen their game, turning more frequently to bots (automated software robots) and diversifying their schemes to include scams such as return fraud — taking advantage of return policies and using deception in order to get products for free. For example, fraudsters would offer to secure a refund for consumers without the consumer having to return the product. The criminals tell the retailer a story about a flawed product that results in a refund from which they take a cut, giving the rest to the customer, who also gets to keep the product in question. 

7. More efficient fraud

Signifyd also saw an increase in bot-powered fraud attacks in 2020. A bot is a software robot that is programmed to do automatically – and swiftly – what fraudsters formerly had to do manually (and slowly). Armed with stolen personal information, fraud rings target ecommerce sites with bots that attempt to log in to thousands of sites by rapidly trying different combinations of usernames and passwords. Or they train the bots to conduct card testing on thousands of cards at a time. Once a retailer approves a card, the criminals know it’s fair game for charging – and reselling – valuable items. Although the total number of bot attacks is not substantial, Signifyd detected a 146% increase in attempts in 2020. They are only going to become more common as more fraudsters turn to automation. 

8. Increase in consumer abuse

One trend that was startling in its brazenness – because consumers actually told Signifyd they were doing it – was an increase in consumers lying to get free or discounted products. Signifyd’s Consumer Abuse Index ended 2020 five times higher than what it was before the pandemic. Consumer abuse typically occurs when a customer claims a legitimate charge was fraudulent, or that an online order that did arrive never arrived, or that a perfectly good item was received in unacceptable condition. A consumer makes such claims by filing a chargeback, which is designed to result in a refund of the purchase from the merchant. In a Signifyd survey, 40% of consumers said they’d falsely claimed that a legitimate charge on their credit card was fraudulent. And more than 33% said they claimed an order that had arrived in good condition either hadn’t arrived at all or arrived in unacceptable condition — all to receive a refund while keeping the product.

9. Increase in online sales of non-traditional wares

Finally, Signifyd found that ecommerce data sales of items that haven’t traditionally been big online sellers — such as groceries and furniture – show that consumers are likely to be more flexible in what they buy online in the future. Home furniture demand mushroomed, and sales of home goods and decorative items rose 141% higher than the 2019 numbers. Online grocery sales doubled week-over-week early in the pandemic. Emarketer sees the trend continuing. The market researcher predicts that online grocery sales will grow by nearly 18% in 2021. More traditional online purchases grew in popularity by non-traditional numbers during 2020. In April, there was an extraordinary, nearly 700% 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. 

In summary

Will these trends persevere after the pandemic ends? Experts are telling us that it will be hard to predict what the online trends will be once we return to some semblance of normal. Outside factors will always come into play. Maybe not a pandemic, but something will happen. Will retail be ready? 

Photo: Getty Images

Want to learn more about the current state of commerce? Join us for a March 30 webinar “Key Findings from Signifyd’s State of Commerce Report 2021.”