On Shopify’s Future of Commerce Report — Powerful Insights to Harness
Here’s how the e-commerce giant sees the space evolving through next year, based on global insights from 1,000,000+ merchants and surveys.
In 2020, nothing is what it used to be. This is particularly true for merchants and retailers who need to make up ground lost to the COVID-19 pandemic. To succeed, companies have to be timely and receptive to change in an evolving landscape.
But that’s just one side of the coin. We’ve seen an equally powerful evolution in consumer behaviour. From how – and why – they conduct research, to the brands they choose to support and the mediums through which they convert, we’re smack-dab in the middle of a new age for commerce.
The multinational e-commerce platform, Shopify, has illustrated how the commerce space has and will continue to progress over time. Their inaugural annual report explores global consumer insights and data from over one million Shopify merchants. They’ve laid out 5 macro trends that are changing the way business is done.
Let’s dive right in.
Younger consumers are forcing ecommerce brands to evolve
COVID-19 has changed the way consumers around the world shop. According to Shopify, 84% of consumers in general have shopped online since the pandemic. While we’re all hoping to get back to “normal” ASAP, this change in behaviour isn’t a temporary blip.
And younger consumers who prefer to shop online are now a bigger piece of the proverbial pie. Brands need to be proactive in harnessing the digital media through which younger consumers discover new products, identify with unique value propositions, and ultimately make purchases.
- 67% of consumers under 35 migrated more of their spending to online shopping, compared to pre-pandemic trends
- 54% of younger consumers who purchased from independent retailers discovered brands on social media
From understanding which platforms your customers engage with to creating a seamless online shopping experience, it’s on companies to strengthen their multichannel promotional efforts by optimizing and investing in their digital presences.
What your brand offers beyond products and services is another key in engaging younger consumers. In an age where shoppers look past products to discover what a brand really stands for, consider how your company positions its involvement in key social issues and make this a more central focus of your identity.
Case in point: 62% of younger consumers prefer shopping for sustainable or green products, while 32% of these consumers shopped to have a positive impact on society.
If your brand falls behind, you won’t build meaningful connections with and engage younger demographics for that extremely desirable brand loyalty. You’ll struggle to foster trust and confidence in and communicate what makes your brand special. Achieving staying power in the face of evolving consumer behaviour should be the number one goal for merchants. Cut through the noise and help your brand stand out by creating an immersive digital identity to showcase what makes your company unique – something that goes beyond the products you offer.
Retail transformations are benefiting local businesses
The customer-business relationship is so much more than a one-off dollars-for-product transaction. It’s the glue that allows savvy ecommerce brands to maintain customer loyalty as shopping preferences continue to evolve.
For brick-and-mortars, there’s an opportunity to harness local communities and awaken consumers to the power of shopping local by anticipating consumer comfort and needs. By knowing the needs and desires of their customers, local retail outfits can outcompete larger brands through their proximity and connection to local customers.
Let’s get into the offerings brick-and-mortars can leverage for a leg up.
Taking Local Businesses up to 100
- Pickup and delivery. Proximity is now a profitable selling feature for merchants. Since 2015, Google searches containing “near me” have spiked 900%. And even if a consumer buys something online, the convenience and safety of local delivery/pick-up is now a top priority.
- 64% of consumers who purchased online and picked up their items in-store or curbside said they are doing so more often than pre-COVID-19
- 57% of online shoppers who opted for local delivery said they were doing so more often than before COVID-19
- 64% of consumers who purchased online and picked up their items in-store or curbside said they are doing so more often than pre-COVID-19
Data shows that offering local pickup/delivery options can also have a huge impact on bottom lines:
- From May to August 2020, online shoppers who chose local pickup or delivery options spent 23% more and had 25% higher cart sizes. From January to September 2020, online shoppers that chose local pick up had a 13% higher conversion rate and those who chose local delivery had a 19% higher conversion rate, when compared against shoppers who selected shipping options.
- Contactless payments. Make your in-person check out process as consumer-friendly as possible.
Based on Shopify’s data, 62% of consumers are more comfortable making a purchase in-store with digital/contactless payment. When compared to the same period in 2019, the number of shops offering contactless payments on Shopify increased by 122% during the pandemic.
Leverage integrations that facilitate a wide range of payment methods and make those options widely known across local communities through your messaging. Show you’ve taken the extra effort to eliminate stress on the consumer’s side. This is sure to have a positive impact on your brand’s perception and could be the difference between earning a new customer and having them walk away.
- In-store shopping appointments. The nuance of shopping in-store won’t be lost despite the global spike in online purchases. But businesses will have to go above and beyond to ensure their customers feel safe when they’re shopping in-store. The demand is there.50% of customers globally say they would like the option to schedule a time for in-store shopping.
- Independent demand on the rise. COVID-19 has spurred consumers to seek new companies to identify with and support. Independent brands that improve their discoverability and fulfillment capabilities will reap the benefits. Since the pandemic’s onset, 50% of consumers have sought out independently owned stores to support while 65% say they would like to support small businesses.
As pandemic-era shopping habits stabilize, independent retailers have a chance to close the gap on traditional big-box retailers. With 57% of consumers willing to shop with new brands for the first time, growing support for independent businesses is more than just a trend.
- In Canada alone, 47% of consumers said they seek out independent retailers to support while 40% purchased from an independent retailer since the pandemic was declared
Next up: How your store can get back in the ring with big box retailers as consumers become more keen to shop independent.
Getting the Most Out of Your Home-Field Advantage
- Leverage convenience and reliability. Consumers love that big box retail makes it easy to find what they’re looking for and get their products fast. 59% of online shoppers say free delivery improves their shopping experience, while 40% say free returns and 34% say faster delivery would have the same effect.
- Engage in conversational commerce. The idea here is creating a meaningful connection with your customers, especially through the often nameless technological barrier of online shopping. Encourage customers and new leads to interact with your brand online. Whether your social media accounts are actively managed or you have a live chat function on your website, it demonstrates that your business is taking initiative to connect.
- Sales attributed to Shopify Ping, Shopify’s customer messaging platform, grew 185% from March 16 to July 1
- Shoppable Social. Take a deeper look at how your customers and broader audience spend their time online. Meeting them at those halfway points is critical by providing clear value and ease of access for new customers. Shoppable social reduces the steps needed to generate a conversion and lets your brand use powerful narratives to sell.
- At the onset of the pandemic, marketing on Facebook and Instagram via Shopify’s channel integration grew 36% in active users, a trend that has continued to rise
These are just a few ways how independent retailers can pump up their value prop in the face of more consumers looking their way.
Wallet voting + E-commerce activism
As we touched on above (and in previous articles), the idea of shopping with a purpose—or “E-commerce activism”—is hugely important. Shoppers’ purchases have become a social force to support unique values and causes they care about. They also view the opportunity to shop local as a chance to make a positive impact on their community.
- 53% of consumers prefer green or sustainable products
- 57% of consumers said strengthening the local economy factors into their purchase decisions, while 41% said supporting local job growth was a factor
To have your company win more “wallet votes”, augment your brand messaging with specific examples of how you’re making the world and local communities better.
- 49% of consumers relate positively to retailers making a donation to a cause with each purchase
Perhaps your company just hired someone new or collaborated with another local entity on a wicked campaign; why not showcase these as examples of your community involvement? Or maybe a percentage of your sales goes to supporting a cause that both you and consumers can get onboard with. Always remember to keep it authentic — it’s about doing good for the community, not just serving your community empty words.
Whatever your brand’s defining social causes are, make sure your customers know about them.
Attention banks: This affects you too!
Financial firms are grappling to keep up with the needs of modern businesses. Traditional institutions are falling short of comprehending these companies’ needs, especially in the brave new world we find ourselves in.
- 36% of merchants facing COVID-19-related challenges said “My bank or financial institution doesn’t understand the needs of my business”
That’s more than ⅓ of impacted retailers. It’s clear that while consumer behaviour has shifted to digital, so too have the preferences of businesses. Companies now demand a user-friendly and seamless online/mobile banking experience when choosing their banking partner.
Without this, you’ve taken yourself out of the equation entirely. Not only will you struggle to sign new businesses, but your current clients may look elsewhere if their needs aren’t met.
- 48% of merchants point to a “good online banking experience” as one of the top three factors when determining a bank for their businesses, second only to “low banking fees”
- 60% of merchants with a business tenure of five years or more are using online payment services (i.e. PayPal, Venmo) to pay their business-related expenses
Across the US, Canada, and UK, cumulative funding from Shopify Capital reached approximately US$1.4 billion at the end of September. And with an array of digital-first funding options now available for startups, financial institutions need to go above and beyond to retain relevance in the funding landscape.
Buy now, pay later: Sweet nectar for today’s consumers
On the consumer side, the number of Shopify merchants who offer “buy now, pay later” has increased 60% since the start of the pandemic. For young families or anyone on a budget, this installment-based payment model offers huge value.
- According to Shopify, the top 3 reasons why consumers choose “buy now, pay later” are:
- “It was easier on my budget to pay in chunks”
- “I wanted to take advantage of a good deal now”
- “It’s better than a credit card because it’s interest-free”
Of the US consumers that have used “buy now, pay later” options, 41% are 18-34 years old, 56% are men, and 52% have children at home.
“Buy now, pay later” has also created a subset of online shoppers called “Power Users.” These consumers purchase at least three items a month, and the number of them is growing quickly: 25% of Power Users use the option at least three times/month and 60% of “buy now, pay later” purchases are on items between $100 and $500 USD.
It’s clear that the “buy now, pay later” model not only provides a budget-friendly payment model for consumers, but may also increase: 1) the number of purchases a customer makes over time and 2) the value of the individual items they choose to buy.
Let’s wrap this up
In the last year alone, merchant and consumer behaviour has evolved massively in a permanent way, and we expect that to continue in 2021 and beyond.
The world benefits when we champion and empower entrepreneurship and independent businesses. These institutions are the heart of local communities, driving economic growth and dazzling their customers by embracing and leading ideas that inspire change. But businesses have to do their part too, in helping us move into the future as happy consumers.
Hopefully this forecast gives your company an edge looking at the year ahead. Would you like to realize your businesses’ potential by harnessing these trends? We’ve empowered hundreds of brands to do just that. Drop us a line and we’ll help you move at the speed of culture.
Categories | e-commerce , Featured , Trends