If you haven’t acted on these seven digital commerce learnings from 2020, they should be at the top of your to-do list for 2021.
In 2020, traditional consumer habits were disrupted and shopping online became the default way to buy. U.S. retailers were swarmed by online consumers, and digital sales for 2020 were boosted by $183 billion, up 42% from 2019. Just a few years ago, it would have been hard to envision a merchant environment where over one-third (34.3%) of retailers sell the majority of their products and services online.
In response to this fundamental change in how people buy, businesses across all industries innovated at breakneck speed. They added new web stores, adopted new technologies, and tested new strategies. Most importantly, they learned a lot as they embraced digital selling and discovered what their customers really needed from an online shopping experience.
Based on these trends as well as feedback from Magento Commerce customers, we identified seven key lessons that businesses should take away from 2020. We believe that it’s imperative for your business act on them now, if you haven’t already.
Lesson #1: Page load times can make or break your sales
Now that shoppers are spending more time online, they have less tolerance for slow-loading web pages. Performance problems can cause potential shoppers to abandon your site before it even loads, but these problems can have other impacts as well. Slow page loading speeds can affect your Google search rankings—which can lead to less organic traffic and lower sales. If it takes your web pages three seconds or longer to load, speeding them up can quickly boost your bottom line. As a benchmark, Google itself aims for under half-a-second load time.
The practical implication of this lesson is that—if you want to remain in the race for customers—your organization must make performance monitoring a top priority for your digital storefront. It also means that infrastructure upgrades are critical to support web traffic and online sales increases as your business grows.
If you’re a Magento Commerce customer, see the Four Ps of Peak Season Performance blog post for tips to quickly triage site performance.
Lesson #2: Curbside and in-store pick-up are here to stay
The rapid growth of curbside pickup is one of the defining eCommerce themes of 2020. Grocery stores adapted quickly to the new system, and it proved popular with virtually every type of retail business with brick-and-mortar locations. A year later, curbside services are expanding to include merchandise returns as well.
It’s clear that customers love curbside and in-store pickup and don’t want it to go away. As of August 2020, 43.7 percent of the 245 retailers with stores ranked in the Digital Commerce 360 Top 500 offer curbside pickup, a sharp increase from 6.9 percent at the end of 2019. Our research (Adobe) shows that 23 percent of online shoppers prefer some form of buy online, pick up in-store (BOPIS) to receiving deliveries at their homes.
The bottom line is that your customers expect curbside pickup or BOPIS, or both. If your business doesn’t already offer these options, you’ll want to start soon. Magento Commerce users who are ready to add these delivery options have a head start since Magento version 2.4 natively supports BOPIS.
Lesson #3: Mobile shopping trends continue to accelerate
Many of us envisioned people shopping at home from their desktop or laptop, perhaps reclined on the couch, with their feet up. Actually, the opposite happened as the mobile-revolution continued to show its strength, and consumers spent even more time on their phones. Increases in phone use also led to more sales on mobile devices. By September 2022, mobile spend is projected to account for more than 50 percent of online sales.
However, online sellers have not kept up with the growing volume of mobile traffic. Although mobile devices account for 60 percent of visits to eCommerce websites, they only represent 40 percent of sales. The problem is that mobile web stores may not deliver a truly excellent shopping experience. Some common issues include:
- Site speed
- Small text and images that require shoppers to zoom in and out
- Limited functionality which requires mobile users to switch to desktop mode
- Insufficient product information
If your mobile web store isn’t converting buyers as much as you think it should, it may be time to look into mobile-first technologies like Progressive Web Applications (PWAs). In addition to providing an “app-like” experience through any web browser, PWAs can help you decrease page load times and increase search engine rankings.
For more detail about PWAs and how businesses of all kinds benefit from them, see the The ABCs of PWAs blog post.
Lesson #4: B2Bs that don’t sell online will be left behind
Like their B2C counterparts, businesses that focus on a B2B model were also disrupted by COVID-19. In response, they turned to digital models to find success. This shift was dramatic. Among those who made the move, 89% indicate they are likely to continue with new digital methods for B2B sales going forward.
This trend accelerated in 2020 as traditional direct sales models—in which sales reps make calls to customer locations and place orders on their behalf—were turned upside down. B2B businesses that added online selling are benefiting from increased revenues. eCommerce is helping them to:
- Offer new, flexible selling models like subscriptions and automatic reordering, and digital products, such as documentation and warranties.
- Build marketplaces for their resellers and distributors.
- Reach smaller businesses and buyers that don’t order enough to have a dedicated account rep.
- Make sales reps more productive. For example, sales reps can place orders on behalf of customers using their eCommerce site.
If you sell to businesses and are still oriented to an offline model, launching an eCommerce website should be at the top of your to-do list for 2021. For help getting started and learning more about how B2B companies in most industries are winning online, see The 6 biggest trends in B2B commerce for 2021 blog post.
Lesson #5: Direct selling and drop-shipping can fill the brick-and-mortar retail gap
Online sales accounted for 101 percent of all gains in retail in 2020, which indicates that sales through all other channels—stores, catalogs and call centers—actually declined. This dichotomy is causing pain for manufacturers and other B2B sellers that rely on brick-and-mortar retailers to move their products.
Manufacturers facing declining wholesale orders and growing inventories are adopting two major strategies. The first is creating their own direct-to-consumer website. If your eCommerce platform supports both B2C and B2B web stores as well as multi-site selling, starting a new consumer-facing web store can be a fairly straightforward process.
The second strategy is drop-shipping, in which you fulfill orders for your products made on retailers’ websites. With this strategy, you can take advantage of retailers’ online success without having to market directly to consumers. To make drop shipping work, however, you need an eCommerce portal to manage relationships with your drop-shipping partners. It also helps if your retail partners use Magento Commerce, because it lets organizations actively manage all sources of inventory, including drop-shippers.
Lesson #6: Artificial intelligence (AI) and augmented reality (AR) will power increasingly personalized experiences
As more companies get online and competition heats up, today’s buyers will continue to encounter more and more personalized experiences. Among consumers online, 36% say they want better personalization from retailers.
AI and AR can both help businesses create distinctive online experiences. AI allows organizations to provide personalized product recommendations, promotions, and content. Likewise, AR allows virtual objects to appear in real-world environments. With more people working and shopping at home, more retailers have been using AR to deliver a unique and personalized experience. Some examples of AR in eCommerce include:
- Virtual makeup counters and fitting rooms
- AR-powered pop-up stores
- Virtual appliance installations—consumers see what appliances would look like in their own home
- Virtual home show rooms—consumers see what their living room might look like with new furniture
- Virtual office makeovers—businesses see what a new coffee machine would look like in the break room or how new chairs might complement a conference room
Ideally, your commerce platform should work with both AI and AR technologies. Magento Commerce already offers built-in AI in the form of Product Recommendations powered by Adobe Sensei. You can also find AR extensions that integrate well with Magento at the Magento Marketplace.
Lesson #7: Everyone wants flexible payments
The pandemic reminded both businesses and consumers of the need to be cautious with their money. For example, consumer savings increased while business capital expenditures dropped by 11.4 percent. Compounded by certain sectors of the economy facing disruption and delay, payment options that offer greater choice and flexibility have been welcomed by consumers and businesses alike.
Installments, zero-interest financing, and low-interest lines of credit can all make it easier for customers to buy on their terms, which is why these options are so popular. Industry analysts predict the “buy now-pay later” market will reach $680 billion by 2025.
With global return-to-normal expected to still be a year or more in the future, we recommend that you offer customers some form of flexible payment program. If your site is built on Magento Commerce, check out the Magento Marketplace, which offers many different flexible payments solutions. Another tool available in Magento Commerce is to take advantage of PayPal Credit.
Get ready for 2021
We’re all happy that 2020 is over. But some of what eCommerce businesses learned over the last year will echo long into the future. If you take action on the seven lessons identified in this post, you will be well positioned to grow your business and engage with your customers in a more personalized and frictionless way no matter what 2021 brings.