22 JUL 2020
18 MIN READ
eCommerce: Lockdown and Beyond
Back in 2019, before we’d ever heard of COVID-19, industry forecasts were already confidently predicting a steady eCommerce growth with a 24% share of total retail sales for 2020. A year later and after months of lockdown, the revised figure suggests eCommerce share will be closer to 27.5% this year. This hadn’t been forecast to happen until 2023 and would mark a 14.7% YoY increase from 2019 sales. Given forecasts are not only predicting continued growth in eCommerce, but also an increased rate of growth, we can comfortably assume some buyer behaviour shifts will never revert to pre-pandemic habits.
In part, eCommerce boomed as our high streets closed. In 2019, nearly eight in 10 retail pounds were being spent in bricks & mortar shops. By 2024, this will have dropped to well below seven in 10. Even with lockdown measures easing, the damage already done to our high streets is significant. Anecdotal evidence from China also suggests large numbers of the population were reticent to venture out into shared spaces after months of isolation and so a more cautious U-shaped recovery is more likely than a V. And with the potential of a second wave in the winter, the UK economy will only have a matter of months to get people back into physical stores and make an attempt at recovery.
Opportunities for brands: 5 growth areas under the spotlight
D2C is no longer monopolised by pure play as businesses are innovating to survive. Typically launching a D2C platform, for either new or established businesses, takes months or sometimes years of data crunching, research and analysis. However, necessity has once again proved to be the mother of invention during COVID with new D2C platforms popping up frequently.
Social Commerce may be a good opportunity to tap into this space quickly, without the extra cost & additional challenges of setting up a site. Alternatively, Shopify are rapidly becoming a force to be reckoned with. Shopify’s Q1 earnings reported the number of new stores being set up on their platform grew by 62% in the second half of the quarter compared to the first half, with the number of new stores created in under 3 days jumping 85%.
For end-to-end support scoping, building, and optimising a Shopify site, please contact Louis Georgiou from MediaCom’s Code division.
WHAT MIGHT THE FUTURE OF D2C LOOK LIKE?
For established D2C brands that already have robust site infrastructures, fully integrated CRM systems and always on, data-driven conversion rate optimisation programmes, the focus is on striving for ways to fine tune the customer experience and find new ways to drive relevance through personalisation.
QUESTIONS TO ASK:
- Are there improvements we can make to our technology and infrastructure if demand increased to those volumes again?
- Where can we streamline our customer journeys?
- How can we move more quickly in this space through partnerships and SaaS solutions?
Forecasts suggest the global social commerce market will increase upwards of 34% by 2021; in China, Social Commerce already makes up 11.6% of retail eCommerce sales. Social offers huge opportunity to drive eCommerce growth for businesses – in driving qualified prospecting traffic, retargeting cross-sell/repurchase communication messaging or encouraging consumers to check-out in situ. (eMarketer, June 2020; Blazon, 32 Stunning Social Commerce Statistics for 2020, May 2020)
Facebook Shops are a game changer for eCommerce within Social, offering customers the opportunity to browse and purchase products directly from a business Facebook/Instagram profile with customisable colour themes and flexible product catalogues. Post-purchase customer service can be directly linked in via Messenger, WhatsApp, Instagram or Facebook. Social apps can then integrate payment options (e.g. Facebook Pay) to create a more seamless customer journey.
WHAT MIGHT THE FUTURE OF SOCIAL COMMERCE LOOK LIKE?
To a certain extent we can take our cue from China. In-situ social shopping is now standard through the likes of WeChat. One major area which has taken China by storm is the use of live streaming in eCommerce. Live streaming isn’t a new concept for the UK, but it lacks anywhere near the scale it sees in China, let alone its current adoption rate within the eCommerce space.
China saw a 71.2% YoY growth in livestream eCommerce from 2018 to 2019 which is an estimated $63 billion and growing (Everbright Securities & Coresight data). There has been speculation of a potential cultural difference slowing the rate of adoption in the UK, but it doesn’t take much imagination to see the power this could have as the social platforms continue to improve their respective products in this space and it becomes a more streamlined influencer tool.
QUESTIONS TO ASK:
- Is adding Social Commerce as a sales channel going to help drive business growth – now or in the future?
- Will Social Commerce enhance my customer’s experience of my brand?
Amazon has changed customer expectations forever. 1 in 5 Gen Alpha won’t buy from any business who don’t offer next day delivery and 3 in 5 want a future with deliveries within 2 hours (Not A Delivery Business? You Are Now… Wunderman Thompson Commerce, 2020). However, customer choice was compromised during lockdown. Consumers switched products, switched brands, switched businesses and switched sales channels due to availability challenges – shopping out of necessity rather than brand loyalty in some categories and experiencing new types of customer service. The rate of consumers switching from their typical brand grew by 75% to as high as 127% between January and April (Profitero, The Cheating Consumer, 2020).
Customers are now back in the driving seat and choice is paramount. As of 2020, half of online shoppers (51%) prefer retailers and brands to have both physical and online stores vs. 48% in 2019 (Wunderman Thompson Commerce, Future Shopper Report, 2020). Bricks and mortar retailers can bridge physical and digital for a genuinely boundaryless omnichannel customer experience. They offer additional click & collect opportunities when fulfilling home deliveries is not possible, they can act as mini warehouses and distribution centres, and, ultimately offer consumers that crucial choice.
WHAT MIGHT THE FUTURE OF CUSTOMER EXPERIENCE LOOK LIKE?
The pressure will be on businesses to make better use of customer data and improve relevance in a bid to drive personalisation. Investments into recommendation engines will help improve positive sentiment levels towards a brand whilst simultaneously supporting businesses with cross and up-selling. As eCommerce continues the staggering growth accelerated by COVID, customers will be spending more through digital channels with more points of comparison. In turn, customers will expect a consistently high level of experience across all sales channels and to be able to seamlessly swap between devices & channels without interruption in their shopping journey.
QUESTIONS TO ASK:
- Is my point of sale customer experience as optimised as possible – where are the barriers to purchase?
- Is my CRM data being fully utilised to improve my customer’s experience of my brand?
- What are the next steps to improve personalisation at all stages of the customer journey?
- What could be done to sure up systems and tech in case we face an additional winter lockdown?
Supply Chain & Fulfilment
The FT estimate it costs £10 to do a grocery delivery, primarily down to the use of vans for order fulfilment. As online grocery shops are typically serving the need of the ‘big shop’ for the week, especially for those living in urban areas without cars; this means the orders are large and therefore only limited numbers can fit into one van, which in turn means fewer deliveries can be made on one route and some vans are sent out with wasted space.
Businesses have also had to face critical additional costs to protect their colleagues – buying PPE equipment, deep-cleaning, hiring additional staff and the increased fulfilment costs associated with such a huge increase in demand in all their markets, all at the same time. These additional and unforeseen costs have only partly been offset by increased volumes. Therefore, whilst eCommerce demand is unquestionably there, it raises important profitability questions.
COVID has starkly highlighted every weak link across the supply chain and fulfilment process for millions of businesses globally. Some have managed to double down and fix things relatively quickly, others have suffered serious, if not irrevocable damage, missing out on crucial sales for months. In retrospect, those that were able to quickly adapt to the unprecedented demands placed upon them during this crisis were nearly all able to do so because they had a robust, healthy, well diversified set of options across both the supply chain and their distribution strategies and were able to pivot easily between them.
WHAT MIGHT THE FUTURE OF SUPPLY CHAIN & FULFILMENT LOOK LIKE?
Automation will be key here. Tasks that are inefficient will increasingly be automated, robotic technology will be tested and scaled and the use of often controversial drone services will be much more common. The pioneering usage of drones for the delivery of medical supplies & for essential supplies in hard to reach regions during a time of crisis has helped tip the argument more in their favour.
QUESTIONS TO ASK:
- Did our supply chain & fulfilment process withstand the shifts in demand and the different requirements – how adaptable were we able to be?
- How well does our fulfilment process link with our D2C or reseller product listings, CRM and customer data?
Amazon dominate at both ends of the customer journey. They warrant their own section here as their impact on the UK eCommerce market cannot be understated. Even though proportionally they don’t yet have the same market share in the UK as they have in the US, it’s a case of when, rather than if.
A trifecta of price, selection and convenience, Amazon’s success is intrinsically linked to a customer centric strategy and a very popular loyalty programme. 79% of British consumers wish more brands and retailers offered a similar level of service as they get on Amazon (vs. 66% in 2019). Prime, Amazon’s well-known loyalty programme, is a key driver of this perception which directly impacts buyer behaviour on the platform (Wunderman Thompson Commerce, Future Shopper Report, 2020).
WHAT MIGHT THE FUTURE OF AMAZON LOOK LIKE?
Undoubtedly, whatever direction the company takes, we can be confident they will keep the customer at the heart of all business decisions. A large part of their success over the years has been a combination of staying relevant by listening to customers, enormously successful product diversification, genuine innovation at speed and data-driven decision making, all whilst fiercely protecting their customer experience. Jeff Bezos has continuously signed off his annual shareholder letters the same way since 1997, ‘…our core values and approach remain unchanged. We continue to aspire to be Earth’s most customer-centric company.”
QUESTIONS TO ASK:
- Does Amazon present an opportunity to develop better partnerships as either a sales channel, a media owner or both?
- Is my business getting the best out of the whole Amazon ecosystem?
Click here to read the full report.
MediaCommerce is MediaCom’s performance and eCommerce specialist division, offering our clients 25 years of performance-related experience, across a wide range of markets, categories, emerging and established brands. Our suite of tools support our clients across a wide range of sectors and business goals, including, but not limited to Digital Shelf Analytics, eRetail SEO & Media Optimisation, Amazon Vendor/Seller Central Management; D2C Performance Media, D2C eCommerce Store Builds, and Onsite Personalisation.
To learn more about these services or any topic covered in this document, please contact:
Jenny Carrick, [email protected], Head of Commerce, MediaCom UK