The impact of this year’s pandemic on e-commerce cannot be overstated. The crisis expedited what was already a rapidly growing market, estimated to have accelerated the shift from physical stores to online shopping by approximately five years. This growth has set a high bar for what is now considered baseline growth, as U.S. digital sales jumped more than 30% year-on-year in the third quarter.
This shift, however, begs the question, “how much of this pandemic-induced online growth will impact long-term forecasts?” Customer needs and business opportunities are in constant flux, creating an environment of uncertainty for sellers. Over half of shoppers (51%) admit to feeling anxious over the returning to in-store shopping post-COVID-19. And, with global sales for 2021 now predicted to grow 6.1% from this year, companies should be aiming to re-engineer their channel mix and supply chains for a predominantly digital future. It is more important now than ever before for online retailers and supply chain executives to analyze the current market and plan for a post-pandemic future.
Here are five key trends set to define the New Year of e-commerce.
Growth of the online marketplace
The recent stellar quarterly results across the major online marketplaces, or “virtual malls,” strengthen the case for the flourishing digital retail landscape, fuelled by the transformation of consumer shopping habits. Despite a global recession, the ever-expanding communities of third-party sellers flocking online will remain relevant in the COVID-19 era.
Small and medium-sized businesses, which have dominated their home market, are now increasingly tapping into global marketplaces to make a move into other, more lucrative destinations. Whilst the United States is a huge market, 85% of the world’s purchasing power lies abroad – fueling a 21% year-on-year rise in cross-border online sales.
This eruption in cross-border sales will be amplified in the New Year, signaling the need for retailers to manage overseas logistics effectively. Having compatible payments methods in place will be crucial to sidestepping common hurdles that can hinder global growth, such as the inability to convert to a suitable currency. Trusted payment providers can create the perfect synergy and make value-added tax (VAT) payments in real-time and in the appropriate currency to comply with global regulations.
Diversifying supply chains
Earlier this year, disruption to global production lines caused retailers to evolve their supply chains in a matter of weeks and months, instead of years. Availability and convenience of purchasing products have now replaced loyalty, as brand-agnostic consumers turn to wherever they can purchase their preferred products, meaning retailers cannot afford to face stock shortages.
With lockdown restrictions likely to vary across nations in the New Year, sellers should aim to coordinate with global suppliers ahead of time to ride future waves of disruption. Encompassing reliable payment partners, a diversified network will allow sellers to remain resilient, capitalize on opportunistic revenue streams, and offer improved quality of service to customers. Diverse supply chains can also encourage healthy competition between suppliers to drive down prices, critical to standing out in an increasingly concentrated market.
Faster and faster delivery
As consumers’ needs continue to morph, so too do their opinions on what constitutes an exceptional retail service. In an age of instant gratification, customer expectations for shipping times are heightening. With nearly 90% of consumers now willing to pay for same-day or faster delivery, we are likely to see these features evolve from “nice to have” add-ons to the norm, as fulfilment offers a greater chance of competitive differentiation.
Diversified supply chains will allow sellers the necessary agility to keep up with evolving fulfilment standards, and ultimately deliver the right items, to the right customers, at the right time. By having logistics and smart inventory management processes in place, retailers can offer the all-important “instant delivery” option and boost their rankings.
The rise of social commerce
To capitalize on the e-commerce boom, businesses should aim to recalibrate their customer service strategy in the New Year and be able to quickly pivot between digital channels. The average user spends 27% of daily waking hours on their mobile devices – up from 20% in 2019. The business case for retailers to reach vast audiences, and sell directly through social media platforms, is becoming stronger. Over time, customers will increasingly trust social media platforms and the selling opportunity for retailers will broaden.
The transformation of key retail shopping events
As online commerce continues in its upward trajectory, the annual in-store retail events – that most Americans historically looked forward to – are losing their relevance. Retailers are nudging customers to start their online festive shopping earlier, by feeding them relevant and eye-catching deals over an extended period. The newly extended “Black November” epitomized this accelerated change, making it possible for consumers to browse and buy from their smartphone without having to hunt for in-store discounts in a single day.
With 64% of consumers admitting to feeling less inclined to shop on Black Friday than they were a few years ago, more importance is now being placed on the broader e-commerce market. Global sales are anticipated to surge by 30% year-on-year this holiday season, after a lackluster 8% growth last year, with cross-border solutions driving much of this growth. Partnering with the right cross-border payment companies can enable businesses to move money to all corners of the world – from collecting international marketplace payments, to ensuring overseas suppliers are paid on time – allowing retailers to pull sales forward and sustainably service a growing audience.
Planning for tomorrow, today
2020 has been a make or break year for sellers. For those who were slower to adopt an online, global approach, next year will be their chance to execute a turnaround and settle into the new normal. Facing an uncertain market, every seller should be in a state of digital transformation and creating multiple contingency plans, informed by the lessons learnt this year. With a strategy focused on local knowledge, regulatory readiness and security – underpinned by the right network of global growth partners – an ecosystem of seamless cross-border growth can be achieved.