2020 accelerated the adoption of ecommerce. Companies that are obsessed with customer experience are among the most successful, with Amazon being a prime example. This is true for brands selling on Amazon as well: with more choices than ever before for both products and marketplaces, online shoppers have high expectations for product selection, shipping speed, listing content, price, and more.
Many of the trends that emerged in 2020 and persist into 2021 can be traced back to how well customer expectations are met.
Kaspien’s CEO, GM of Retail, and VP of Business Development sat down for a roundtable discussion of how 2020 changed the ecommerce landscape and what’s likely to come in the year ahead. You can watch their conversation below or keep reading for a summary.
Trends & Predictions for Ecommerce in 2021
Ecommerce Growth Rates Will Slow
With all its turbulence, 2020 did bring strong tailwinds for ecommerce. As that turbulence gradually subsides, so too will the tailwinds. We expect that US ecommerce sales will continue to grow throughout 2021, albeit at slower rates than seen in 2020.
Greater Fulfillment Diversification
2020 exposed the surprising fragility of ecommerce fulfillment networks, with FBA taking the spotlight. A sudden spike in demand for certain goods led Amazon to temporarily restrict entire categories from shipping new inventory into FBA. Amazon also temporarily prioritized Fulfilled by Merchant (FBM) orders over Fulfilled by Amazon (FBA) orders. Impacted brands that lacked alternative fulfillment methods were left out to dry.
Many brands learned the hard way not to be dependent on only one fulfillment strategy. This lesson will likely persist into 2021, with brands diversifying their fulfillment strategies through FBM, dropship, and third-party logistics providers.
This situation also led to the emergence of local fulfillment providers who stepped in to fill the excess demand. It will be interesting to see if these local fulfillment providers maintain a foothold as larger networks restabilize (Amazon increased warehousing space by 50% in 2020).
In a similar vein, many brands saw shoppers trying to buy products in different quantities than their standard unit sizes. We expect that more brands will cater to their audience by updating their product preparation capabilities to allow for more options.
Omnichannel will Become More Important
COVID-19 showed that Amazon FBA is not impervious. Delivery times were delayed by weeks on Amazon in late spring and early summer, and shoppers turned to other marketplaces to fill the gaps. Capitalizing on Amazon’s stumble, Walmart, Target, Shopify, and more experienced strong growth in ecommerce sales in 2020.
Modern commerce is a game of meeting shoppers where they are at. As more shoppers use more marketplaces, the most successful brands will be those that are there to meet their target audience, regardless of platform.
Brand Representation Matters More
With more brands, more sellers, and more marketplaces to choose from, shoppers have a plethora of options. To win them over in 2021, brands need to make strong, positive first impressions. The best way to do that is through high-quality copy, images, and videos that help shoppers understand important product details, like color, size, ease of use, etc.
If shoppers cannot easily understand such details when they are unable to inspect products in person, they’ll seek another product. It’s also critical that brands provide a consistent experience no matter where shoppers encounter their products, as inconsistency can lead to confusion or doubts about authenticity, resulting in lost sales. This includes consistent branding across direct websites, social media, and marketplaces.
Retention Strategies will Grow
Because shoppers have more choice, the cost-of-acquisition will continue to increase. To counteract rising customer acquisition costs, brands will develop more robust retention strategies to keep customers in the family. This will include dedicated efforts for retargeting campaigns, customer newsletters, nurturing engaged social media communities, and more.
- Intro to Amazon Sales Tax for Non-U.S. Sellers - August 5, 2021
- Amazon Q2 Earnings Analysis: Amazon Advertising Boasts 87% Growth - July 29, 2021
- Amazon Demand Side Platform (DSP): How to Use Programmatic Advertising on Amazon - July 29, 2021