If businesses weren’t at least dipping their toes in the world of ecommerce pre-2020, COVID-19 has proven they are dangerously behind the times. Offline the effects of the pandemic have been devastating for many brands. Business Insider reported in August 2020 that more than 6,300 brick and mortar stores will be closing in 2020, including Pier 1 Imports (450 stores), Walgreens (200 stores), and Tailored Brands (500 stores). Brick and mortar retailers across the country are facing bankruptcy and financial uncertainty.
Online, however, there’s a different story being told.
Propelled by massive shifts in consumer behavior due to shelter-in-place and social distancing measures, ecommerce has jetpacked itself into the future, and not just by a few years, but by a decade! McKinsey reports that ecommerce market penetration jumped forward by ten years in the first quarter alone, leaving many brands to quite literally adapt or die.
These changes have revolutionized the market, and they’re also begging the question: where do we go from here? A look at the numbers can give us an idea of the ways COVID-19 is changing the future of ecommerce and if those changes will be sustainable.
Limited by shelter-in-place orders, shoppers are purchasing products on digital and omnichannel markets in unprecedented numbers—a study by Adobe Analytics found that online spending hit $434.5 billion in July, and 2020’s online sales are expected to surpass the total online sales in 2019 by the start of October. Consumer behaviors have shifted to meet the demands of a crisis economy, and as a result, brands are shifting more attention to the digital space to meet increasing demand for online products.
According to a study by McKinsey, consumers across the globe have shifted their focus to essential products, like grocery and household supplies, and products with value. Many are battening down the hatches for impending financial uncertainty, so much of the shift has turned away from high-priced and luxury items. It isn’t just durable products like shoes or headphones that consumers are buying, but consumable products (products like sanitizer that you buy more than once) as well.
Something that has noticeably changed due to the COVID-19 crisis is consumer purchasing behavior among 55-74 year olds, or the baby boomer generation, who’ve been most affected by the pandemic. According to the National Retail Federation, baby boomers typically made less than half of their purchases online pre-pandemic. Two thirds now say their shopping experience has been improved by online technology, in-store, and curbside pickup. Baby boomers have also embraced delivery services. Six out of ten baby boomers say they are using services like Amazon Prime or Shipt more often because of COVID-19.
Ecommerce brands have seen leaps in traffic and growth across the board during the COVID-19 crisis. According to McKinsey, most categories have seen more than 10 percent growth in their online customer base during the pandemic, and it’s translated into sales in big ways.
In July, Amazon posted second quarter earnings of $88.9 billion, blowing away its expected $81.24 billion. Walmart Marketplace has doubled its pool of sellers to over 50,000 since July 2019, and eBay reported a 26% GMV growth in its second quarter, it’s highest quarterly growth rate in 15 years.
Dotcom sites are also taking a lot of search traffic from sites like Amazon, with websites like Lowe’s, Home Depot, Macy’s, and others seeing big spikes in traffic share. Walmart, Instacart, and Target.com have won many new customers with their online grocery services, and Walmart’s much-anticipated Walmart+ could give unprecedented competition to Amazon’s Prime services in the near future.
According to a study by the Cleveland Research Company, brands expect Amazon to account for 64% of their digital business in 2021 versus 83% in 2019, showing diversification to omnichannel markets is also on the rise. According to CRC, general merchandise categories expect to see a similar concentration with Amazon in 2021, with around 65% of their digital sales flowing through the platform.
CRC found that the COVID-19 crisis has led to an enormous mix shift towards digital commerce (these findings amount to four plus years of mix shift compared to where the market was in the U.S. pre-pandemic). In April, manufacturers expected ecommerce to reach 21% of their U.S. retail sales in 2121. That number is up from 15% in 2019.
The growth digital channels have seen is exciting, and it indicates that the future is very much now when it comes to ecommerce shopping, but not everyone is optimistic that this unprecedented growth will stick around for digital channels. One case study is the home furnishings retailer Wayfair.
Wayfair is a COVID-19 crisis success story in many ways: they saw their number of shoppers skyrocket during the second quarter. Wayfair revenue jumped nearly 84%, their number of delivered orders went up 106.2%, and they saw five million new customers on their site. Wayfair’s stock has more than tripled (it’s up 246%) this year to date, and Wayfair executives are confident that this trajectory is continuing upward and that new customers will continue to spend money on the site long after the pandemic ends.
Neil Sanders, managing director of GlobalData Retail, is skeptical that Wayfair’s numbers are sustainable. He attributes much of Wayfair’s online sales boom to the fact that many stores were closed during the pandemic, a reality that could slow post-pandemic online growth for thousands other brands that have seen unprecedented success online.
In an interview with MarketWatch, Saunders said, “From our data, consumers have already started to return to physical stores and online penetration levels in furniture and home furnishings have dropped from their peak in April. While we believe online sales will remain elevated in home related categories . . . the trends of this quarter will not be repeated indefinitely.”
Adobe found similar data. While online sales increased 55% year over year in July, Adobe found online sales have begun tapering off in the summer months with the reopening of many brick and mortar stores.
Saunders said that in addition to a recent drop in the number of online sales, competition is also a concern for businesses like Wayfair, especially now that so many other retailers are in the online space and loyalty shock at the start of the pandemic pushed many consumers to new retailers.
“A lot of retailers are now investing more in digital and this inevitably means that online competition in home will rise over the next few years,” Saunders said. “This will place even more pressure on Wayfair to maintain market share which possibly means higher spending on advertising and customer acquisition: the very thing that it can’t afford.”
Ecommerce brands are excited about the success they’ve found online during the pandemic, but there’s also concern from market experts that any gains will be tempered when brick and mortar locations reopen. Regardless, consumer behavior shows that many of the changes made during COVID-19 may be here to stay.
McKinsey estimates over 60% of global consumers have changed their shopping behavior, and of the respondents surveyed in the U.S. and U.K., 73-80% intend to continue their adopted behavior.
Brands across the country are re-evaluating personnel, technologies, and capabilities investments to support their businesses when they emerge out of the pandemic. Having a digital presence and an omnichannel presence matters more than ever, especially in times of crisis.
While much of the future of ecommerce is uncertain, shoppers are proving to be more online than ever.
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Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.
In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.
From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.
According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.
From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.
It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.
A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.
Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.
The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)
Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.
Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.
Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.
Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.
Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.