You may have read somewhere that 2020 was an extremely disruptive year in every aspect of the retail industry. Ecommerce, already on a rapid trajectory, took off into the stratosphere from March on as consumer flocked online while stores closed or accepted limited visitors, and shoppers feared the spread of the pandemic.
This led to major supply chain issues front to back, as well as overburdened transportation networks and companies struggling to keep up with demand. Forward-looking companies managed to address inventory management issues via previous investments. Even though certain categories saw massive surges in 2020, there were a number of notable business failures as COVID-19 forced already struggling retailers either into bankruptcy or outright closure.
In order to take a look ahead, we asked four industry experts to give us their thoughts on what to expect and make some predictions for the retail space in the New Year.
Mobile Commerce Will Dominate
2020 has changed how consumers think and how they shop. In order to better understand where consumer attitudes stand, ClearSale conducted a survey with Sapio Research. The findings speak to some of the most noteworthy industry trends that should be top of mind for U.S. merchants going into 2021.
Mobile buyers now account for 60.9% of the U.S. population, according to Statista, with this expected to grow exponentially by 2024. Our research found 50% of consumers are most likely to use a tablet or mobile phone when visiting an online store, therefore a bad mobile experience can negatively impact a merchant’s potential revenue by half.
In terms of global ecommerce, 63% of U.S. consumers are most likely to use a mobile device when shopping online, followed by the UK (54%), Mexico (45%), Australia (45) and Canada (39%).
Unfortunately, a boom in mobile commerce also means a boom in mobile fraud, resulting in a loss in customers, negative brand damage, false declines and checkout friction. Merchants need to create a multilayered defense that prioritizes data security and combines deep learning algorithms and manual review of flagged transactions.
During the pandemic, we saw a greater adoption of contactless payments for in-store shopping. Consumers increasingly find contactless payments to be a cleaner alternative to traditional like cash and card payments.
In ecommerce, we’re also seeing an increased demand for alternative payment options. We found only 40% of ecommerce shoppers have their credit card within easy reach while shopping. Furthermore, a recent PPRO report, shows that 42% of U.S. and 44% of UK shoppers abandon a purchase if their favorite payment method isn’t available.
Merchants must make the checkout experience a top priority in 2021, welcoming mobile wallets and localized payment offerings to meet consumer preferences while still maintaining exceptional security and fraud prevention.
While ecommerce fraud has always been top-of-mind, false declines are not as evident. In 2021 I see merchants placing more emphasis on balancing fraud protection and making the customer experience as frictionless as possible. According to Javelin, merchants lose $13 to false declines for every $1 in losses from credit card fraud.
From our experience, anywhere from 60% to 90% of a merchants’ ecommerce declines are actually legitimate transactions. One reason: Automated fraud programs are auto-declining suspicious transactions. This results in not only lost revenue but a negative customer experience, costing merchants in lifetime customer value and brand damage.
Findings from our consumer study found 39% would never place an order with a merchant after a false decline, and 28% are likely to say something negative on social media. Merchants must be cautious when it comes to automated fraud filters, sending flagged orders for manual review to reduce the risk of costly false declines.
Rafael Lourenco, EVP and Partner, ClearSale
Globalization of Retail Will Grow
Retail has historically operated in geographic silos. But the COVID-19 pandemic and climate change have forced retailers to see their approach to selling, supply chain management and operations from a global perspective. Stepping back from a regional mindset and opening up visibility globally will better position them to optimize inventory management for efficient order fulfillment and reduced waste. With countries throughout the world going in and out of lockdown in 2021, more retailers will embrace globalization and streamline day-to-day processes.
Ramping up promotions has been a successful tactic for department stores on the brink of bankruptcy, but for most retailers, this band-aid approach isn’t sustainable. Expect to see companies that were not resilient before the pandemic crumble in 2021, with retailers that have invested in digital solutions emerging on top.
The retail companies that quickly pivoted to digitize their supply chains in response to the pandemic will be successful in 2021. Those who were able to quickly adjust inventory strategies or easily reallocate inventory online or through other avenues stayed the course. While the need to invest in digital strategies is clear, some are still resistant. Over the next year, it will be clear which companies were willing to adapt and which companies were not.
Having an ecommerce presence alone won’t be enough in 2021. Retailers will also need to ensure their online platform is tailored to customer engagement. Expect to see companies double down on ecommerce capabilities and begin developing customer-centric ecommerce websites.
Ronen Lazar, CEO and co-founder, Inturn
Advertisers Will Diversify Publisher Partnerships
In 2020, publishers and advertisers needed to move quickly to meet rapidly shifting consumer demand. Consumer needs changed – more delivery services, less travel and luxury, more home goods – and publishers saw a shift in advertiser inquiries and revenue as a result. Also, consumers were more willingness to try new brands. Rakuten Advertising’s recent data found that almost 60% of shoppers have tried new brands since the beginning of the pandemic. Publishers who looked beyond their core set of advertisers and expanded to more non-traditional brands were among the winners this year.
In 2021, as brands and publishers continue striving to meet their revenue goals and rapidly changing consumer demand, two key trends will continue:
Advertisers will diversify their publisher partnerships to connect to new consumers. Many brands will test the waters with a broader range of affiliates vs. centralizing spend with a small set of publishers. We’re already seeing brands look to more content publishers (long-form news media, for example) recognizing that consumers are spending more time reading online. As part of their diversification, advertisers will look for a competitive edge by leveraging a publisher’s knowledge of their audiences. Sites with rich audience data can use this to help advertisers optimize targeting through message testing and personalization.
Publishers are re-thinking their own relationships and strategies. For example, knowing audience needs are changing quickly, they are reviewing the brands they partner with. In some cases, they’re expanding to a wider portfolio of advertisers, and with others, they are refining their partnerships. More traditional content publishers will expand their affiliate product offerings and put more resources into advertising spend. This expansion, along with adopting more affiliate programs, will marry their desire to provide consumers with trusted content and concurrently drive revenue.
In 2021, publishers and advertisers need to find new ways to work together to generate the highest value from their engagements. Maintaining trust is more important than ever before and this requires publishers and advertisers to think critically about their partnerships in the way forward.
Ceres Cueva, VP of Publisher Partnerships, North America, Rakuten Advertising
Major Moves by Amazon, Google
Here are my four predictions as we head into 2021:
Amazon Will Acquire Shopify
Both Amazon and Shopify empower entrepreneurs to create their own storefront and sell products online, but with a different focus. Amazon gives you unmatched traffic and fulfillment capabilities but less control over your brand. Shopify gives you more control but you are left to drive your own traffic to your site and figure out fulfillment and other logistics. Amazon sees the shift to third-party merchants and is aware of brands wanting more control, so I believe it will acquire Shopify to create the ultimate ecommerce conglomerate.
Amazon will Divest First-Party Retail
Amazon’s role has shifted significantly from being an online retailer to being mostly a marketplace connecting buyers and sellers, as well as a fulfillment company. In 2021, Amazon will spinoff or sell its first-party retail business and become a pure-play third-party marketplace and fulfillment offering. The first-party retail business will live on as a separate entity selling through Amazon’s platform competing for the millions of customers Amazon attracts every day.
Google will Get Big in Fulfillment
In 2021, expect Google to make a bold move to gain relevance in ecommerce as it already has the eyeballs and tech capability. This will likely come through Google acquiring an existing 3PL, but they also have the cash and chutzpah to build from scratch if they can’t find the right acquisition target. It is unlikely that Google — known for making disruptive moves — will sit by and take no action.
Facebook, Instagram Shops Surpass Walmart Ecommerce
Facebook has been focusing on scaling its Shops capability, so expect to see more social media companies use their platforms to sell products. Facebook and Instagram Shops revenue will exceed Walmart’s ecommerce revenue in 2021. Ultimately, social media-based shops may rise above traditional websites in their ability to drive a seamless customer experience and deliver outsized revenue.
Chris Bell, Founder and CEO, Perch
Original article published on Multichannel Merchant website.