2021 is going to be an eventful year for online retailers. 2020 forced millions of retail stores to drop curtains on their operations. Many retailers started selling online for the very first time. A plethora of new players entered the D2C market.
On the other side of the coin: consumers all over the world are more comfortable shopping online, including seniors. People are warming up to secondhand goods again, and rentals are making inroads as well.
It’s no secret that eCommerce is at an all-time high right now. Embracing the sudden change, the eCommerce sector seems to have embodied the saying: where there’s disruption, there’s opportunity.
But, this also means more competition. Big retailers who never operated online have full-fledged websites now.
If you’ve been considering D2C, this is the right time.
If you’re not doing “human” customer service, you could fall behind.
If you’re not accepting cryptocurrency, you could lose out on tech-savvy consumers.
If you’re not riding the AI and voice search wave, your competition is already a step ahead.
We’re covering these, and more trends in this book.
We’ll also tell you how to make the most of everything that’s going to change in 2021.
Let’s dive in.
1. D2C is gaining momentum
In the past, discovering a brand meant finding it within an Amazon or a Walmart ecosystem. Merchants used to rely on such marketplaces to get their products noticed. Their success was dependent on how they position themselves in comparison with other similar sellers — selling on the same platforms.
Now, merchants have started reaching consumers directly, and managing the entire commerce experience, from marketing to payment to shipping.
Businesses that never had a website — came online in 2020. It’s getting that easy to build an eCommerce store. And the phenomenon will only soar in 2021.
Moreover, eCommerce platforms like Shopify have enabled merchants to sell directly, giving them the tools they need to sell and build a customer base.
The pivot in consumer behavior this year and the fast adoption of online shopping has solidified one fact: D2C is the future of commerce.
Last year, D2C online sales reached an impressive $14.28 billion, with that figure expected to grow more than 24% in 2020.
And why is going D2C a brilliant idea?
Better brand-consumer relationships: Brands will be able to focus more on building relationships with their customers, and going beyond the regular sales experience.
62% of eCommerce professionals say that increasing D2C sales is a strategic focus.
Data-driven personalization: D2C brands can tap into data from their native websites and their acquisition and retention channels to understand consumer behavior and set up better on-site and messaging experiences.
Fostering loyalty and prioritized feedback: With rocketing acquisition costs, D2C brands can lower costs by focusing on retention and using owned channels to increase the LTV of their customers.
Adaptability: Brands using the D2C model can easily adapt their strategy, introducing new categories and pivoting during crucial times.
“Disruptive companies are identifying gaps in traditional retailers’ offerings and delivering solutions around desires consumers didn’t even know they had.”
Agility and control over sales: Unlike traditional retailers, D2C brands are flexible in how they sell, adopting new strategies as consumer needs change and having more control over how shoppers buy.
“In 2021 though, more and more brands will continue to launch D2C stores of their own, if they hadn’t already, and the marketplace will become more and more competitive as brands will need to be hyper-effective with their marketing efforts in order to win over consumers. To win, they’ll need to ensure a highly competitive and engaging shopping experience with next day or same-day delivery options and multiple order methods.”
Calvin Lammers, VP of eCommerce at Health Ade
Doing it right: Igloo Product Corp
Started in 1947, Igloo is an outdoor recreation brand, best known for its coolers. In 2017, as eCommerce was slowly moving mainstream, Igloo launched its D2C vertical, adopting online selling.
The impact of going D2C was apparent — in 2019, they saw a 2.4x increase in traffic and a 20% decrease in acquisition cost.
“The net result is operating a profitable business unit, having a closer relationship to consumers, understanding what triggers purchase behavior from which cohorts, and realizing a long term plan for building a more profitable D2C business while also gaining insights that are incredibly valuable for new product development and leading indicators to wholesale customer sell-through.”
Brian Garofalow, VP of Marketing and Ecommerce at Igloo.
How can you go D2C in 2021?
- Pick your preferred eCommerce platform to set up your independent business.
- Curate your product catalog and structure them into collections and categories. Set up high-quality product assets, from images to descriptions to increase appeal.
- Test your on-site experience to set up frictionless customer journeys.
- Use marketing channels like Instagram and Pinterest to acquire customers.
- Once acquired, ensure that you’ve set up engaging messaging within owned marketing channels like email.
- Building loyalty through rewards programs, online communities, and value-driven content.
- Tap into user-generated content by asking customers for reviews and photos to build credibility.
- Keep an eye on trends, from consumer needs to new selling and continuously optimize your strategy to scale your business.
2. More focus on unified experiences across channels
The future of D2C is omnichannel. Only selling through one channel limits your opportunity for both brand visibility and revenue generation.
In this age, a customer-centric approach to selling beats out discounts and flash sales. While setting up a multi-channel sales strategy, you can go the extra mile to integrate your different sales touchpoints and provide an omnichannel experience.
It’s fairly straightforward — plan your strategy based on the way different consumers buy and make it as easy as possible for your shoppers to access your products. With omnichannel, you can deliver a seamless and consistent experience across different channels.
Omnichannel is not just having things work technically across channels – it’s about providing an incredible experience across channels.
Steve Deckert, Co-Founder, Smile.io
Why omnichannel is the way forward:
Higher customer retention: Customers want a convenient shopping experience, picking the channel they are comfortable with. So it’s good to have multiple channels to suit different personas.
73% of all customers use multiple channels during their purchase journey.
Better customer data collection: With a connected shopping experience across different channels, you can understand your customers much better and use this insight to improve your strategy.
Integrated online and offline experiences: Allow customers to buy wherever they please and keep their shopping sessions connected, whether they are in your retail store or within your online store on desktop or phone.
Doing it right: Sephora
The beauty giant, Sephora is known for its integrated experience across its retail and online stores. Shoppers can view all their online and in-store purchases in one place, earning rewards for purchasing regardless of where they bought the products from.
The brand also provides a touch of online shopping experience in-store. The shoppers have access to their “Beauty Bag” account through tablets placed within Sephora’s physical stores.
Thinking of adopting an omnichannel approach?
- Understand where consumers are shopping for products similar to what you sell — and how they are discovering them.
- Define these different types of customers, plan user acquisition channels — where you want to sell your products — and plan ideal customer journeys.
- Enhance shopping experiences by integrating features across channels like rewards programs and customer accounts, and automating messaging across the customer journey.
- Monitor your behavior flow and customer data to understand the effectiveness of omnichannel approach and gaps in your strategy.
3. Voice search will become the norm
While it isn’t a focus yet, voice search is predicted to become one of the biggest opportunities for higher sales in the coming year.
With more consumers adopting voice-enabled devices like Amazon Alexa and Google Home, they are also starting to use these home assistants to search for products. More than one-third of these consumers use their devices to search for products, and 28% use them to purchase products.
64% of online buyers own a voice-enabled device
Why voice search is gaining popularity?
Consumer-led change: Voice shopping is a trend that was brought on by consumers, making it a key part of online search experiences.
New ways to rank on search: Voice search optimization is a completely different game from search engine optimization. By optimizing your store for voice searches, ahead of your competition, you can capture purchases via this fast-brewing channel.
“We’re starting to see adoption of shopping by voice, typically in the CPG vertical where customers are buying replenishable items”
Ryan Mayward, Amazon Advertising
Doing it right: Esteé Lauder
Esteé Lauder is a prestige makeup, skincare, fragrance, and hair care brand. They partnered with Google Home to create a voice-activated skincare expert name “Liv,” who answers people’s questions about all things beauty related, from skincare routines to best practices.
How can you be ready for voice search?
- Structure your content based on how shoppers ask questions, including FAQs.
- Optimize Google Maps and Google My Business listings for voice search ranking.
- Enable Google Shopping and list your products for discoverability.
4. Stores will use AI and AR to improve experiences
Advanced technologies like Artificial Intelligence (AI) and Augmented Reality (AR) are making your work more efficient and enhancing shopping experiences. With these features, you can set up dynamic personalized recommendations, understand how a product looks for the consumer, and turn your store data into actionable tips.
36% of US consumers have tried augmented or virtual reality.
Why are AI and AR the future of shopping?
Save time with AI-driven data insights: With AI, you don’t have to spend time slicing your data to understand customers better, it will do the job for you.
Better product visualization: AR empowers shoppers to visualize how to use your products without having to see it in real-time.
Personalization without manual effort: AI lets you personalize your store experience using your customer and store data and without requiring time and effort from your end.
Doing it right: Magnolia Market
A famed home and lifestyle brand from Waco, Texas, Magnolia Market set up a unique digital experience to let their shoppers see how the brand’s furniture products would fit in their home and office spaces with an augmented reality app.
35% of people say that they would be shopping online more if they could virtually try on a product before buying it.
Getting started with advanced tech:
- Allow shoppers to try your products with an easy AR visualization filter with Instagram
- Use analytics tools that use AI to turn your data into actionable ideas.
- Set up dynamic personalized recommendations based on customer behavior.
5. Sustainability will become a strategic advantage
In the past year, the conversation around climate change has become much more pressing. This has impacted the way consumers shop.
Customers are focused on buying from brands that align with this greener mindset, expecting brands to make environmentally conscious choices and taking the effort to pick sustainable brands when they shop.
Nearly 2.5X more consumers plan to shift their spending to sustainable brands.
How does sustainability impact your business?
Intent to buy: 65% of consumers say they want to buy products from purpose-driven brands that advocate sustainability.
Active advocates for sustainability: 70% of online purchasers are aware if the packaging they receive from an eCommerce order is recyclable or not, and when it is, 80% of those consumers, in turn, are recycling.
Doing it right: Amazon
Being the world’s largest eCommerce company, Amazon leaves an undeniably large carbon footprint. However, the online marketplace has pledged to bring their carbon emissions to zero by 2040.
How can you prioritize sustainability?
- Use recyclable packaging and minimize extra packing material.
- Review existing manufacturing practices to reduce energy waste.
- Offset your carbon footprint created through shipping.
- Opt for sustainable shipping practices.
- Reward customers for sending back products they bought in the past but have grown out of or lost interest in.
6. Omni-channel personalization will grow like never before
How well you communicate with your audience plays a vital role in converting them. Shoppers feel frustrated over impersonalized recommendations and messaging, with 63% of consumers choosing to not purchase from companies providing poorly executed personalization.
There’s no doubt that personalization is crucial. However, with more brands adopting a multi-channel approach to marketing, personalization must be a part of this multi-channel strategy.
Why does omnichannel personalization matter?
Show shoppers what they are interested in: Your customers aren’t interested in generic messages and ads. By suggesting items they have shown interest in, you can convert them better.
Improved customer experience: 48% of shoppers are actually comfortable with sharing data in order to be able to receive personalized service.
Consistency across channels: Stay consistent across channels by using personalization to increase brand recognition.
Doing it right: Zappos
Zappos is an American online shoe and clothing retailer known for its exceptional customer service.
The brand has a highly personalized cart recovery strategy. Once an item is added to the cart, the brand shows ads reminding the customer about their cart across different devices that they use.
A few days later, the brand sends an email alerting the shopper about their waiting cart, and displaying the item they left behind.
Getting started with omnichannel personalization
- Use customer data to send triggered and targeted messaging across email, SMS, and other marketing channels
- Display personalized recommendations on-site based on shoppers’ browsing and purchasing behavior.
- Set up retargeted ads to show relevant products based on the customer’s on-site behavior.
7. The love for secondhand will come back stronger
In an attempt to move towards sustainable practices, consumers are choosing to buy second-hand items. The recommerce segment is so popular that it is expected to hit US $64 billion within 5 years!
52% of shoppers plan to spend more money on second-hand items in the next 5 years.
And if you’re thinking we’ve already seen this with eBay and Gumtree: in 2021, consumers will be more motivated by sustainability, and not just price.
There’s an exciting opportunity for eCommerce businesses to turn secondhand shopping into a great experience.
Doing it right: The RealReal
Recommerce is no longer only about low-value or undesirable products. The RealReal is a luxury outlet that sells slightly used, high-end designer clothing. And they’re on a mission to make recommerce authentic — by taking serious measures to ensure no counterfeit products enter their website. It’s a clear sign that the industry is here to stay.
How can you consider recommerce within your existing strategy?
- Promote the sustainability and durability of the goods you sell. This will get your attention from socially-aware consumers with a strong desire to be environmentally responsible — even if they’re not looking for secondhand products.
- Try keeping an open mind to possibilities of trading programs and pre-owned sales within your store for your products.
8. Companies will deliver more “human” customer experiences
Even before the crisis, a PwC research revealed that 59% of global consumers felt that most companies lacked the human touch in customer service.
Post-COVID, consumers have become more concerned about brands. A McKinsey research shows that people want to buy from socially responsible brands. They are interested in HOW a company builds its products — as much as the product itself. And when people start looking at brands as groups of responsible people, they subconsciously also expect a better experience while working with them.
Doing it right: Zappos
Zappos has always been known for its great customer service. And they did something magical during the coronavirus crisis. They opened up a customer service line that people could call for anything at all — even to just chat, or share.
Ms. Wang (left) called customer service to know the status of an order and noticed that Crystal Mouzon (right) was making small talk about how she found it nearly impossible to buy gifts for her mother. They began chatting, and it went from mother-daughter relationships, to a favorite Brazilian restaurant in Las Vegas and a girls’ trip to Hawaii. And the call went for 45 minutes.
Here are a few things brands must do in 2021:
Make every conversation more human
Until now, you’ve probably focused on making customer conversations more efficient via automation. But, in 2021, people are going to expect a more human customer experience. The key reason is that people generally have fewer human interactions than before. And they would want interactions to be more honest (and less salesy).
What’s really going to work in your favor: video calls. It’s about time we encouraged customer support representatives to go on video with customers.
Go easy on marketing, especially when they’re looking for mere assistance.
In 2021, trying to cross-sell to a customer is surely going to backfire. It’s the year when we can all go a little easy on “selling to existing customers” targets. And especially in situations where they’ve come to you with a problem.
It’s time to slow down, listen, empathize, and actually solve their problem. You’d want to show them that you understand.
9. User-generated content will gain massive popularity
UGC is not new or anything. Brands have been focussing on if for close to a decade now. But, 2020 took it to a new level altogether.
In times of a crisis, brands have used UGC to tap into people’s desire for human connections. More so when people are looking for uplifting content that makes times like these a little easier. And the best part is that it can be done remotely.
Doing it right: Facebook
Facebook did a brilliant UGC campaign: We’re Never Lost If We Can Find Each Other
Their idea was to show how people are staying connected more than ever, especially during the pandemic. And how folks are coping with multiple lockdowns and other restrictions.
And the idea was simple: they stitched together videos and photos uploaded by users – in a documentary-style video – that is interesting and motivating at the same time.
How can brands use UGC to build stronger connections with their customers in 2021:
- Give preference to product images clicked by users on product pages, as opposed to the usual hi-res professional photos. They’ll help you look more human.
- Get customers to engage with your product, and feature them in your advertisements. KFC did a great job at it when they asked users to cook their own version of the brand’s famous fried chicken.
3. It will still be a good idea in 2021 to make your employees shine. A great inspiration is “We are Cisco” which highlights employee stories — and tells powerful stories that usually don’t come to the forefront.
10. Cryptocurrency to become a common payment option
It’s no secret that the pandemic has made digital transactions a norm. Even older and less tech-savvy customers who were not comfortable with online transactions — have gradually become used to it.
Digital wallets like Google Pay, Apple or Samsung Play have already become the norm. They are no longer enough to create differentiation.
The next frontier in eCommerce payments is cryptocurrencies, like Bitcoin. Many shop owners have already started accepting them as a payment option. And they come with major benefits, such as low transaction fees, and no reverse transactions.
Doing it right: Overstock
Overstock has already started accepting crypto payments. And, they’re doing a great job at educating customers about the cryptocurrency ecosystem at the same time.
Why it’s the right time to start accepting cryptocurrencies on your store:
More reach: It will give you access to a whole new generation of tech-savvy consumers. And they’re a strong community. The word – that you accept crypto – will quickly spread.
Fast transactions: Unlike credit cards that take a few days to process, cryptocurrencies are paid out almost immediately.
Low fees: The transaction fees are always going to be significantly lower than Paypal or credit cards.
Super secure: Unless one has the merchant’s consent, cryptocurrencies cannot be reversed. Naturally, there’s less risk of eCommerce fraud involved here. There are no middlemen, like banks, involved.
11. Third-party selling and multi-channel are still going to be hot
Chances are, your shoppers have different preferences about when they want to buy your products. Some may pre-order from your website, others may want to pick it up in-store, or even buy from marketplaces like Amazon. In this scenario, a single sales channel isn’t going to cut it.
With a multi-channel approach, you can diversify your reach and reach customers where they find it convenient, rather than making them buy from the one channel you’ve set up.
Brands with multi-channel presence make it easier for 72% of customers to stay connected.
Moreover, besides selling on your website, you also need to be where customers shop, rather than expecting them to come to you. While more shoppers are choosing to buy directly through the website or in-store, many aren’t aware of brands they would be interested in due to their lack of visibility on popular 3rd party curators like Amazon.
More than half of Amazon’s $280 billion revenue in 2019 was fueled by its third-party sellers.
Why is third-party selling and multi-channel important?
Higher brand visibility: With multiple channels, you can get your brand out to a larger audience, increasing brand visibility and having more opportunities to sell.
Scale better in your initial days: For new brands especially, third-party selling can help you broaden your reach and capture interested customers through smartly optimized product listings.
Lower acquisition costs: By using multiple channels and listing your products on third-party sites like Amazon, you can increase discoverability without spending large amounts on ads.
Doing it right: Olay
Olay is an age-old beauty brand, known for its science-based skincare products.
The brand has been able to set up a highly visible brand presence by setting up multiple channels to sell:
- Getting shelf space within big-box retailers and popular pharma stores.
- Establishing its own eCommerce store for direct buying.
- Getting listed within third-party marketplaces like Amazon.
- Acquire and engage new shoppers through Instagram.
“With 3P listings, you have the flexibility to edit your product detail pages in real-time, generate retail margins rather than wholesale, and test and learn new product ideas and launches with speed and agility”, said Reid Greenberg, executive vice president of digital at Kantar.
How can you set up multi-channel and third-party selling?
- Set up multi-channel funnels within your analytics dashboard to track important KPIs.
- Identify common third-party platforms that your audience frequent and go through the process of getting yourself recognized as a seller.
- Track the performance across channels, using your analytics to understand which channels bring in higher revenue and order values. You can then optimize your strategy based on this data.
12. Brands will focus on making shopping easier for seniors
A recent study by Mintel showed that the seniors (65+) are really going to drive eCommerce growth for some time to come.
And there’s no surprise there. It started from medicines and grocery shopping — and that got the seniors a hang of the internet, and the world of online shopping.
In 2019, just 16% of 65+ folks shopped online.
In 2020, 43% of those in this age group are shopping online.
Doing it right: SSE Energy
SSE Energy is a good example of a big brand working towards a more inclusive user experience. The entire website offers large, clearly visible fonts all around, along with the use of clear formats and an impactful white background.
Simple at first glance, but peer into the details, and you’ll notice that it accomplishes something far more valuable for the customers. You have all the essential information at your fingertips with clearly visible plans and their key highlights.
No matter what age you are, simplicity will never get out of fashion and SSE Energy brings just that to its website!
How you can make the shopping experience easy for seniors:
It’s time to make your website as simple as it gets. You’d want to make sure there’s nothing that drives seniors away. No navigation barriers.
- Logging in through social media can become the norm.
- Run pop-ups? Make sure the close button is prominently displayed.
- Larger text sizes everywhere.
- Big and bright images.
It would make sense to do a bit of usability testing with senior folks. Find what could be a hassle for them, and garner suggestions on improvements.
13. Luxury goods to make a comeback (athleisure will continue to grow)
Luxury brands are usually the first ones to be hit whenever a global crisis shows up. And, the pandemic situation in 2020 did impact the industry to some extent.
However, it is also the one to see the fastest come back when things start getting on track. The 2008 financial crisis showcased this, and the current trends of 2020 also concur to it.
The luxury goods industry showed impeccable resilience during the ongoing coronavirus pandemic — with perfume manufacturers quickly shifting to producing sanitizers. We also saw many big brands donating funds to hospitals for medical supplies.
In 2021, the luxury goods industry will make a massive comeback — with new trends emerging in the aftermath of the current crisis.
However, consumer sentiments now sway towards longevity and luxury products that are more of an ‘“inventment.” Products that add long-term value to their life and have a good resale too.
We’ll see a surge in sustainable practices from luxury brands as consumers get aware of the environmental impact of their buying decisions. There will be a surge in recycled luxury goods and premium athleisure clothing — ideal for varying social settings.
The athleisure market is projected to see sales of $105.1 billion by the end of 2020. Although it’s 9.2% lower compared to 2019, it is expected to grow by around 7.9% in 2021.
It’s the right time to strike for brands aspiring to move into luxury goods.
Doing it right: Summersalt
Summersalt – initially launched as a swimwear brand – is making some bold moves with its recently launched luxury activewear collection. The brand seems to be ahead of the curve by shifting its focus towards its promising athleisure sustainable line of clothing.
The luxury clothing brand is introducing new product portfolios at a time where most will be skeptical of the outcome. The brand’s approach is backed with a compelling UI and well-executed marketing and branding strategy.
“More and more companies are entering the athleisure category … attracted by [its] strong growth opportunities,” says Coresight Research’s CEO and Founder Deborah Weinswig.
How can you ride the luxury wave like a champ?
Before jumping into the industry, aim to achieve the following:
- Keep a watch out for upcoming luxury trends and their market value. You can take a leaf out of Summersalt’s book — a swimwear manufacturer offering quality athleisure fashion.
- Match consumer requirements with your capabilities and if you can fulfill customer aspirations to the highest of standards.
- Focus on the sustainability quotient of your products.
14. Demand for health and beauty products will keep growing
2021 will also push the health and beauty industry into new avenues. The major players in the sector are Alibaba and Amazon, with projected 2020 sales to clock $43.2 billion and $28.8 billion, respectively.
At this point and time, it is good to ask how you can fit into this $93.5 billion industry? The major trends dominating the health and beauty domain are inclusivity, VR and AR technology deployment, recurring beauty box subscriptions, etc.
Brands that offer a wide range of color palettes to cater to different customer needs are gathering a lot of praise and recognition — even the new ones! The inclusivity approach also makes sure that the brand has more reach and appeals to a wider audience.
The health and beauty industry’s online share of sales is projected at 23.3% by 2025, more than 6% than it is now.
Doing it right: Maybelline
The American multinational cosmetic, skincare, and personal care company has a few things to teach us. It’s a behemoth when we talk about fashion and beauty products, and it’s also quick to adopt emerging technology trends.
With more people having access to advanced hardware – in terms of smartphones – it’s becoming ever more easier to integrate AR features into your mobile apps.
Maybelline offers a unique “Virtual Makeover Tools” section that lets you upload your selfie and also try its products in a virtual setting.
How can you bet big on the health and beauty industry?
The domain is quite diverse and you need to realize a few things before you jump into it, which are:
- How do you navigate the regulations and create products that comply with them?
- Once you have a great product or portfolio, how do you market it?
- How do you integrate modern marketing and technology into your business architecture?
- If you offer advanced VR/AR tools, how do you go about data protection and security?