August 2020 Ecommerce Trend Analysis for Decision Makers

Newel Cobb

August 5, 2020

What a month it's been for ecommerce. In the ever-changing landscape of the "new normal" since COVID-19, our monthly blog is designed to help ecommerce decision makers stay in the know of the most important and impactful ecommerce trends.

Ecommerce market penetration jumped forward 10 years

In our last post, we made it clear that, “in a matter of months, COVID-19 has leapt ecommerce forward by a couple of years.” Though everyone knew the market had moved forward by about 3-5 years, the actual numbers have come out and are remarkable. According to McKinsey, ecommerce market penetration jumped forward 10 years in Q1 alone!

US Ecommerce Leap Forward 10 Years | Pattern, McKinsey Analysis
Image by McKinsey

The truth is, nearly everyone in ecommerce is growing. Amazon posted second quarter earnings that blew out Wall Street estimates. Walmart marketplace has surpassed 50,000 sellers, doubling in size from July 2019. eBay reported a 26% GMV growth for the second quarter—the highest quarterly growth rate in 15 years. Shopify’s GMV outpaced eBay.

CNN put it best when they said, “Our pandemic shopping habits are here to stay.” For years, many companies have lacked the necessary focus on ecommerce because of its P&L share. That will change. The companies that invest in ecommerce will likely gain the greatest market growth.

More people are shopping online, and how they shop is evolving

As more people shop online, the old playbooks are changing. More and more customers are looking for consumables (products you buy more than once like hand sanitizer) over durables (one-time purchases like Apple Airpods). Below you can see how these search trends have changed on Amazon by rank over the course of a year.

Pattern Graph of Ecommerce Trends | Pattern
Image and data by Pattern

Amazon is not the only place where shopping habits are evolving. Though Amazon is growing in sales, they are losing search traffic market share to other ecommerce platforms. Amazon share is down from 52% in January to 47% in June.

Amazon Marketshare Down | Pattern Trends
Image by MarketplacePulse

We are seeing dotcom traffic share spikes for sites like Home Depot, Lowe’s, Macy’s, and others. This does not mean you need to hit the brakes on your Amazon account. It is common for industry leaders to lose market share as the market grows. We suggest you simply hit the gas on every other market by diversifying across ecommerce. More people are shopping online, and how they shop is evolving.

Habit changes are not only changing how we shop or where we shop, but also what we shop for. Some of these increases can be expected, like cleaning tools or masks, but others are a little less intuitive. For example, Kellogg raised its annual sales and profit forecast Thursday, anticipating higher profits from people eating more cereal at home during the pandemic and related shutdowns.

Ask yourself, “How has my shopping habits changed during the pandemic?” Look through your assortment; if you see any positive changes, lean into them.

Brick and mortar is getting hit hard, including Amazon, but many are adapting

Brick and mortar locations may forever be changed. Mall owners across the country are filing for bankruptcy, rent costs are free falling in some of America’s glitziest shopping districts, and over 6,000 brick and mortar stores will be closing/closed in 2020. The list of casualties include the following:

  • Tailored Brands (Men's Wearhouse, Jos. A. Bank): 500 stores
  • Tailored Brands (Men's Wearhouse, Jos. A. Bank): 500 stores
  • Pier 1 Imports: 450 stores
  • GameStop: 320 stores
  • Signet Jewelers (Kay Jewelers & others): 300 stores
  • GNC: 248 stores
  • Victoria's Secret: 238 stores
  • Gap: 230 stores
  • Tuesday Morning: 230 stores
  • Walgreens: 200 stores
  • Forever 21: 178 stores
  • PVH Corp (Calvin Klein): 162 stores
  • JCPenney: 155 stores
  • A.C. Moore: 145 stores
  • Macy's: 125 stores
  • Microsoft: 83 stores
  • Sears: 51 stores
  • Brooks Brothers: 51 stores
  • Bath & Body Works: 50 stores
  • Kmart: 45 stores
  • Bed, Bath & Beyond: 44 stores
  • Neiman Marcus: 20 stores
  • Nordstrom: 19 stores
  • Hallmark: 16 stores

Brick and mortar is getting hit hard, but many, including Amazon, are adapting. There has been a major omni-channel play by Amazon. Amazon recently announced that they would be commercializing their “just walk out” Amazon Go technology. This technology uses phone-location, cameras, and RFID technology to allow a customer to simply walk in, put an item in their cart, and walk out without checking out physically. Amazon has also developed similar shopping cart-based technology that is able to be used in existing stores without the camera installations necessary for Amazon Go.

In the UK, Amazon is looking at opening 20+ convenience stores. In Philadelphia, they are looking at piloting a brick and mortar expansion. Amazon is getting serious about the brick and mortar omnichannel play.

Amazon is not the only retailer looking at expanding their omnichannel. Kroger is building a DC Metro distribution center despite not having any nearby physical stores. Bill Bennet, the head of ecommerce at Kroger, recently stated that “[Kroger is] building some amazing, industry-leading stuff, including our Ocado sheds opening soon, Nuro delivery tests in flight, and our incredible grocery pickup/delivery capabilities bringing Fresh for Everyone.”

Look at your ecommerce sales through the lens of the total market. As your brick and mortar partners close their doors, those customers do not disappear. Ecommerce is the likeliest place for you to make up in terms of growth.

Walmart is changing their game for the omnichannel experience.

Walmart is also optimizing their omnichannel play. After a move early this year to have ecommerce buyers report through the store organization, Walmart brought hundreds of ecommerce jobs back to their corporate HQ in Bentonville, Arkansas. Many of these associates were dotcom buyers who will now be managing as omnichannel associate buyers.

In addition to these omnichannel changes, Walmart seemed to officially launched Walmart+. For under a hundred dollars a year, Walmart will offer same day delivery on a wide assortment, including grocery. Walmart has delayed the launch more than once, and further tested the program across a number of specific regions. Some report that the actual implementation may still be delayed.

To further improve their omnichannel coordination with vendors, Walmart has created a one stop advertising dashboard said to rival Amazon. The tool should allow vendors to see if their online advertising leads to instore purchases. Walmart is changing their game for the omnichannel experience.

Walmart dotcom has largely been ignored because of its size compared to Amazon and Walmart stores. By viewing Walmart as an omnichannel, you will be able to experience the most YoY growth.

Amazon is making changes in prep for holiday 2020, some good, and some hard to work with

Like Walmart, Amazon has also improved their advertising dashboard, adding ROAS to its metrics. This will allow advertisers to move away from the Amazon favored ACoS to better measure return on ad spend.

Amazon now measuring ROAS | Pattern

This may be some of the only good news coming out of Amazon. To prevent a second wave of shipping restrictions, Amazon has created SKU level shipping restrictions across several categories. Starting at 200 per seller per unit, Amazon is limiting assortment in prep for holiday. Limitations are based on forecasted demand. Amazon says they will open up the restrictions come holiday. We recommend being ready to send in most of your inventory once the doors open. These will not be the last inventory restrictions we see this year.

Jeff Bezos digitally appears before congress to address antitrust allegations

Much can be said about Bezos’ testimony to congress. Jeff Bezos put out an 8 page written statement where he shared some of the following insights.

“Who do Americans trust more than Amazon ‘to do the right thing?’ Only their primary physicians and the military, according to a January 2020 Morning Consult survey,” he said.

“Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners. For example, more than 80 retailers in the U.S. alone earn over $1 billion in sales.”

“There are now 1.7 million small and medium-sized businesses around the world selling in Amazon’s stores. More than 200,000 entrepreneurs worldwide surpassed $100,000 in sales in our stores in 2019. On top of that, we estimate that third-party businesses selling in Amazon’s stores have created over 2.2 million new jobs around the world.”

Despite the statement, Bezos was grilled on how they use their sellers’ data. Days later, states like New York announce they are looking at investigating Amazon.

This will likely not be the last time we hear about Amazon being questioned by law makers. We will keep an ear to the ground if there are changes that could affect selling on Amazon.

All in all, retail is changing daily, especially in the new climate since a global pandemic. Come here the first Wednesday of each month to keep up with our Pattern Forecast and stay in the loop. To learn more about what Pattern does, contact us below or subscribe to our biweekly Insights newsletter.

Explore Our Ecommerce Resource Library

Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.

Sept 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 20, 2022

4 Ecommerce Consultant Must-Haves

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. 

What is an Ecommerce Consultant?

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.

1. Brand Obsession/Specialization/Passion

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. 

2. Proven Results

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.

3. Wide Range of Marketplace Expertise

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.

4. Network of Resources

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.

Achieve Your Ecommerce Goals With Pattern

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.

Sept 15, 2022

The 3 Tmall Metrics That Every Brand Needs to Know

If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.

At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.

What is Tmall’s Detailed Seller Rating (DSR)?

Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.

Why DSR Determines Success on Tmall

DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.

Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.

DSR Score Elements

1. Service

Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.

So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.

2. Delivery

Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.

So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.

3. Content

As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.

The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).

Expand Internationally With Pattern

As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter. 

It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.

Set up a call to get your international expansion strategy in motion.