Pattern's Global Ecommerce Predictions for 2021

Pattern’s senior leadership team have reflected on the past year’s learning to make their global ecommerce predictions for 2021. The rapid acceleration of ecommerce fuelled by COVID-19 has highlighted new standards of excellence for consumer brands and retailers to meet the needs of today’s digital customer. Below, we outline the trends that brands and retailers can expect to take shape as they finalise their 2021 plans.

What’s in store for Europe?

Europe’s retail economy has been hit hard, and an over-reliance on bricks-and-mortar stores has become obvious for many consumer brands. Pattern’s General Manager for Europe Nicola Hollow explains how COVID-19 finally made digital a top priority for many brands, and the impact this will continue to have in 2021.

She says: “The impact of the pandemic has itself become the “Chief Digital Officer” for several businesses in Europe. Brands have been forced to shift their focus to direct-to-consumer and marketplace channels to ensure that sales from stores were not lost; whilst also taking advantage of the rapid growth in online sales in the short-term.” “Europe’s shoppers in more mature markets have bought products online much more than previously, and in the less mature markets it has encouraged shoppers to buy online for the first time.

In general, marketplaces, online retailers and omnichannel retailers who have been able to pivot to focus on quickly scaling their online operations have been the winners. I believe a new omnichannel experience will be established over time as the uncertain future of physical retail plays out, and brands seek alternative routes to market.”

‍Pattern Global Head of Marketing Joanna Perry adds that with Europe facing continued restrictions on its citizens until the COVID-19 vaccine has been widely rolled-out, the bounce back to shopping in store some had predicted for the first half of 2021 is now unlikely to happen.

The role of D2C

The COVID-19 crisis has enhanced dynamism in the ecommerce landscape globally, and has expanded the scope of ecommerce; with new businesses, consumer segments and product categories. More shoppers are buying everyday necessities online, and so a direct-to-consumer (D2C) online channel is one we would recommend every brand investigates.

‍Director of Consulting for Europe Kerry Lee explains how a D2C website can pay dividends for brands who understand how to maximize their value as a channel to market. She says: “Investment in D2C channels for brands and retailers will continue in 2021. There is a nervousness about the power wielded by marketplaces; many brands see a benefit in strengthening their D2C proposition, which can deliver higher margins and provide insightful customer data. A re-evaluation of channel strategy will see many brands adapt their marketplace assortment and pricing to ensure that they can fully optimise their overall D2C activity to reflect how customers will shop now, but also in the near future.”

“In addition to this, brands and retailers will need to work hard to meet increasingly high growth targets, therefore getting the basics right will continue to be key. Since COVID-19 hit, consumers have been more forgiving of longer delivery times and less responsive customer service but, as the impact of the pandemic wanes, the need to meet high customer expectations will return. Meanwhile, investing in recreating offline shopping experiences online will continue to be a focus not only in the short-term, but also as part of every brand’s long-term digital strategy.”

Global marketplace dominance: Amazon, Tmall and Walmart

Online marketplaces have picked up demand that offline channels could not service in every region that we operate in 2020. In 2021, they will be seeking to continue their growth by adding new customers, as well as selling more to those they already have signed up. Improved product selection and improved customer experience are both crucial to this strategy, and underpin several of the global ecommerce predictions made by the team.

‍Pattern’s Chief International Officer Chris Vincent shares his global ecommerce predictions on what to expect from Amazon in 2021: “The net effect of the pandemic showed that traditional shopping habits have changed. The longer this goes on, the more permanent the new behavior will become with all online businesses benefitting from it - marketplaces most of all. Amazon is expanding rapidly onshore into new markets across Europe, South America and South East Asia. The failings of traditional retail businesses plays to Amazon’s strengths and I can only see its offer get stronger in the New Year.” “It is clear that Amazon is targeting South East Asia as its next big push, thanks to its growing middle class and very large population. Having learned some valuable lessons about localisation in harder-selling markets like the Middle East and India, I believe Amazon will thrive in this region by using Singapore as its hub. Their willingness to fail fast in order to learn and grow makes me think Amazon will be successful in the region in the long-term.”

Alibaba will be Amazon's key competitor in the region, and so we expect it to leverage its existing relationships with brands selling on its China marketplace Tmall, to encourage them to also list on Lazada; Alibaba's marketplace which operates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Pattern's General Manager for Asia Arthur Cheung predicts that online sales in China will continue to grow overall in 2021, with continued demand for luxury and premium Western brands. The major players Tmall, JD.com and Pinduoduo all continue to innovate their customer experience at a fast rate, and so marketplaces will maintain their dominant position in China. Much like China, marketplaces make up a majority share of total online sales in the USA, and customer experience is where there competition is at there too.

Our Director of Marketplaces George Hatch, shares his US ecommerce predictions for 2021: “Brick-and-mortar businesses will continue to struggle in the first half of the year as they contend with how to make consumers comfortable returning to shop in person with mask mandates, limiting the number of shoppers in person and increased sanitation and cleaning protocols. I suspect US ecommerce sales will continue to grow in 2021, though at a much slower growth rate when compared to previous years.”

“US online marketplaces including Amazon, Walmart and Target+ will continue their expansion in 2021 with Amazon setting the pace. I believe Walmart and Target+ both have opportunities to grow their market share and expand on the triple digit growth they enjoyed in 2020, via programmes such as Walmart + and Target’s Drive Up, Shipt and same day Order Pickup offerings – in their bid to compete with Amazon’s plethora of services.”

Global Ecommerce Predictions: A new online sales growth trajectory

For the Australian ecommerce market, 2020 saw a rise in online adoption greater than most anticipated. A report by Australia Post identified that its forecast of 12% of consumer spending online by 2021 was hit by March this year, with the pandemic altering the trajectory of the ecommerce industry. ‍

Pattern’s Head of Customer Marketing for ANZ Kathryn Coleman draws on the results from our Australian Ecommerce Benchmark reports to make her predictions for 2021 ecommerce growth trends: “Having monitored a subset of Australian retail websites, we reported a 76% increase in ecommerce revenue vs. last year, driven by 29% more online traffic and a 37% increase in conversion. Melbourne’s 112-day lockdown also drove historic online adoption with Victorian conversion on average 73% higher than the rest of Australia between July and October 2020. Key trading dates such as Amazon Australia’s Prime Day and Cyber Weekend did not disappoint, with a number of our clients enjoying a record sales performance when compared to previous years.”

“Based on these results, I believe 2021 is likely to set new highs, records and benchmarks that did not seem possible until the pandemic forced customers to turn to online. Looking beyond the impact of the pandemic, I expect this shift to online spending to stick throughout the next year. With that in mind, brands must recalibrate and prepare for the possibility of future lockdowns, putting higher pressure on their ecommerce department, logistics and fulfilment.”

Similarly in the Middle East, this past year has seen huge growth and focus applied to ecommerce, with many retailers who may have previously been reluctant to embrace digital change, now broadening their horizons. Pattern’s General Manager for MENA David Quaife tells us how the shift from offline to online has meant there is no longer a choice to be made between physical and digital retail. “COVID-19 has done what most didn’t think possible in this region and moved customers away from shopping in malls and got them comfortable shopping online. This trend shows no signs of slowing down and the region’s two largest ecommerce players, Amazon and Noon will be making sure they capitalise on this. For consumer brands, it is more important than ever to ensure their digital distribution strategy is clear moving into 2021 as pricing becomes more visible and competition stronger on these highly viewed marketplaces.”

“Furthermore, 2021 will continue to see Amazon and Noon expand out from their current countries of operation and scale their businesses into the wider GCC and North Africa. We’ve already seen this happen this year when Amazon launched cross-border orders from its UAE site into Kuwait, Oman and Bahrain, effectively doubling its potential customer base. I expect to see more logistics solutions like this in place soon as Amazon plans to launch in Egypt, following in the footsteps of Noon who has already seen success in the market.”

Private equity to continue investing in digital

Pattern Director Jeremy Wilson who leads our Private Equity Practice outlines his global ecommerce predictions for what to expect from private equity in 2021. He says: “Online brands who have performed well this year, will be looking to “lock-in” a good valuation on their businesses. We are already seeing this trend emerge with the due diligence work that we’re currently carrying out.”

“Aside from being particularly interested in those brands with strong online propositions, and that have shown resilience during lockdown, private equity investors will go further up the chain and invest in the infrastructure supporting the operations. This has already been the case with major investments going into distribution centres and operations around the UK. I see this expanding into 3PL operating companies, carriers, and support technology."

He adds: "Technology is likely to be the most interesting area to follow. I would expect to see investments going into technologies that make it easier for consumer brands to manage and trade on multiple channels, whether owned or via 3rd party.” For brands and retailers who may have previously viewed digital commerce as a secondary channel, having an online presence has never been more important. For those looking to prepare themselves for the 'new normal', having the right capabilities to adapt and strengthen your existing offerings and drive channel shifts is essential. If you would like support on how to reassess your ecommerce strategy - or with optimising specific online channels such as your D2C site or marketplaces - please get in touch here.