30-second summary:
- Despite 2020’s challenges, ecommerce sales increased over the 2020 holiday — up 49 percent over 2019, pointing to a dramatic shift in 2021.
- Brands employed new strategies, like curbside pick-up, to increase shopper’s comfort levels in the midst of a pandemic.
- To leverage large quantities of customer data from multiple sources, brands will seek solutions that enable them to extract value from the data to drive intelligent decisions on delivering the right products at the right time at scale.
- Despite the explosive growth of ecommerce brands must continue to invest in multichannel business models, optimizing the customer experience both in-store and online.
- Retailers can boost ecommerce growth even more in 2021 by using AI to deliver highly relevant customer experiences.
It’s impossible to sum up 2020 in one word, but “unpredictable” is a good place to start. Looking back to last January, very few of us could foresee a pandemic that would sweep across the globe. As a new year starts, we’re all looking ahead with hope for a return to normalcy. Travel, hospitality, and retail were a few of the hardest hit business sectors in 2020. However, even before the pandemic, retail was going through a “reset” or “transformation” which some called the retail apocalypse. The pandemic accelerated ecommerce growth and the transition as consumers turned to online shopping, with their favorite stores temporarily shuttered and then for their health and safety as they re-opened.
As the 2020 holidays approached, no one could predict how it would play out. Given the economic downturn due to business closures, unemployment, and the subsequent drop in consumer confidence, would the holidays, normally the yearly peak shopping period, be a bust? We now have some answers thanks to a new Mastercard SpendingPulse report which provides insight on 2020’s holiday retail sales. According to the report, total retail sales increased by three percent over the 2020 holiday shopping season, which expanded (October 11-December 24) due to early sales and special offers. Even more impressive is the growth of online sales, which were up by 49 percent as compared to 2019. This very rapid ecommerce growth did come with some hiccups, including a crushing number of packages leading to shipping delays at public and private carriers, including the USPS and UPS. However, this doesn’t take away from the promising and continued growth of online shopping among digital-first and multichannel brands going forward.
Retailers proactively worked to make shopping safer and more convenient for customers, leaning heavily on strategies such as Buy Online Pick-up In-store (BOPIS) and leveraging technologies that enabled contactless pick-up. Among the most surprising findings in Mastercard’s report was how well the home furniture/furnishings and home improvement sectors performed over the holidays. Online sales of home furniture/furnishings increased by 31 percent and ecommerce sales of home improvement items were up by nearly 80 percent. This growth may be attributed to generous sales and offers, or that consumers had been “window shopping” for some time and took advantage of holiday sales to click “buy”.
Regardless of the factors that contributed to the enormous growth of ecommerce, it’s imperative that brands continue to invest in their multichannel business models by optimizing the shopping experience both instore and online, nurturing and deepening relationships with customers who are new to shopping online and their longtime VIP patrons as well.
Looking ahead, brands will be using what they learned from a year of ups and downs and applying these lessons to the new year. Keeping in mind that driving continual business growth takes much more than sales, coupons, and offers, there are four key trends that brands should seriously consider as they map out business strategies and roadmap for 2021:
1. Consumers will expect instant gratification when sharing their data
Consumers will continue to grow more comfortable sharing preference data with brands so long as they receive value from the exchange. They will also increasingly expect relevant experiences to modulate in real-time, with consumers receiving almost instant gratification for their data sharing. Consumers will grow less loyal to brands they engage with but relevancy will be a key differentiator and source of revenue-driving value for companies.
2. Brands will begin using multiple sources of data to create value for customers on the fly
Brands have more data than ever – on their customers, products, sales and purchases and from a multitude of channels including online, in-store, in-app, via email, third party, etc. We know that having the data isn’t synonymous with deriving value from the data as it oftentimes exists in silos, in different structures or schemas and accessible to different teams within an organization. Brands will need to look for solutions that unlock vast quantities of data from multiple sources to enable decisions over what and when to show to a customer; and then execute that decision at a web-scale. In other words, brands will begin to use exactly the right data at exactly the right time to amplify and extend their abilities to create immediate value for their customers
3. Retailers will increase focus on data privacy compliance as this issue continues to gain momentum
As brands collect more customer data and look for ways to best unlock its value to power relevance, ensuring compliance with various laws and regulations becomes more complex/difficult, especially when operating across different geographies. Brands will continue to focus on properly and regularly assessing their organization’s compliance with GDPR, CCPA, and various other evolving regulations, which includes vendors and third-party applications that organizations work with.
4. Brands will lean more on AI-powered product recommendation solutions to generate revenue and online sales
One way in which brands can create real-time relevancy is through better enabling product discovery with product recommendations. With so many channels and so much information being pushed to consumers, the ability to help them find and discover the items of most interest to them has become paramount. Product recommendations are ubiquitous across ecommerce and typically account for two-to-three percent of ecommerce revenue. However, traditional recommendations powered by collaborative filtering don’t really provide the most relevant product selection to the customer as they’re anchored on a product-to-product relationship. Solutions such as Google Product Recs-powered deep learning adapt to real-time in-session behavior of the customer, anchored on the individual’s shopping journey, and use key context (such as time spent on a product, the order in which products are browsed, and more) to adjust to changes in signals of buying intent.
We predict companies will look more closely at personalized product recommendations to deliver more value to customers and in turn, drive significantly more revenue for the business compared to traditional recommendations.
As a new year begins and we regain some of the normalcy we lost in 2020, brands must not waste the opportunity to forge even deeper relationships with new and existing customers. Retailers supplied shoppers with the products they needed during the height of a pandemic, confirming their commitment to their customers and building a bond of trust that will continue long after COVID-19 is history.
Tracey Ryan O’Connor is Chief Revenue Officer at Qubit.
