Regardless of which part of the world you’re reading this from, the pandemic has probably changed the way you travel, eat, socialize, work, and shop.
Given that the pandemic is still a reality, to look past tomorrow is a bit of a hazard today, but the question we want to try to answer is: what’s in store for ecommerce in 2021?
A lasting shift in consumer preferences to go online
To start with the obvious, the pandemic has induced a dramatic shift from brick-and-mortar to online shopping, across all retail categories. With mobility restrictions in place, many people are no longer able to just pop by their local store to shop. Instead, even the most tech-resistant people out there have adapted to popping open their mobiles and laptops to shop instead.
This shift was indeed significant. According to a Shopify (SHOP) report, at the height of the pandemic, 10 years of ecommerce growth happened in under 90 days. Though this shift occurred in 2020, it’s worth assessing if we anticipate it to stay prominent in 2021, or perhaps even wipe-out brick-and-mortar commerce altogether. According to the Global World Index, almost 49% of consumers say they will continue to rely on online shopping after the pandemic is over.
Growth in marketplace store models
Consumers’ need for immediacy faces backlash as the emerging importance of sustainable, ethical, and socially responsible business practices is being imposed across all industries globally. And so, fast-fashion companies have been forced to introduce sustainable clothing lines to address this shift. Meanwhile, fully sustainable retailers have been taking the opportunity to push their brands amidst their competitors.
In keeping with the trend towards sustainability, it seems that the secondhand market has been on the rise this year. In fact, Thread Up’s report on the future of resale forecasts this market segment to double in the next five years, and includes all aspects of retail from cheap clothes to luxury brands.
With the growth in secondhand shopping, ecommerce also saw the prominence of marketplace stores in 2020. According to an Accenture report, half of all global ecommerce sales (about over $2 trillion in spending per year) happen on marketplaces. And so, existing popular marketplace ecommerce stores, such as Amazon and China’s Tmall and Taobao, may dominate over their direct-to-consumer counterparts in 2021. We may also see the expansion of retailers’ business models to include marketplaces in order to not miss out on this opportunity, as is the case Target and Walmart.
Moreover, as it seems that socially conscious consumers are willing to pay more for brands that are sustainability-oriented, retailers are given the opportunity to make this shift profitably (score for the markets, and the environment!).
Artificial Intelligence will become more integrated into online stores
Artificial intelligence has shown to improve two aspects of ecommerce in particular: payments and customer experience.
With the first aspect, easier payments are achieved using biometrics, as new technologies have been allowing customers to pay using their fingerprints, voice, and face. The biometric market, which has applications for a variety of other industries such as healthcare and security, is estimated to be worth almost $43 billion by the end of 2025 (keep an eye out for investment opportunities there!).
With the second aspect, enhanced customer experience is achieved using augmented reality, as it allows customers to visualize their purchases prior to purchasing (thereby reducing the likelihood of returns). Companies like IKEA use augmented reality to allow customers to see how an item might look in their home by pointing their mobile device towards an empty space for a virtual image to appear. You can do the equivalent with beauty purchases through Sephora’s new app, where you can try out lip gloss (virtually) after uploading a selfie.