The year that changed retail – that’s likely how 2020 will be remembered in the business world. A lot happened, both good and bad. All are in one way or another tied to the most important event of the year: COVID-19. The pandemic impacted just about every aspect of daily life. Healthcare, education, entertainment, and social engagement all look very different today than they did just 12 months ago. Fortunately, each of these is likely to return to at least somewhat normal conditions once COVID-19 is officially behind us. One thing that has changed for good, however, is retail. Over the course of the past year, customers have adopted new ways of shopping, and brands have been forced to change with them to remain competitive. This shift in global commerce is not a one-time event. It’s taking place at this very moment and will continue well into the future. To help brands stay ahead of the curve, Channel Key has compiled the Top Ten E-Commerce Marketplace Predictions for 2021.
1. Online Shopping Will Become the New Normal
It’s no secret that e-commerce has been on the rise for years, but COVID-19 has further accelerated the shift to online shopping. Stay-at-home mandates, in-store capacity restrictions, and fear of contagion have led to widespread adoption of e-commerce marketplaces like Amazon and Walmart. A recent report by consulting firm McKinsey & Company concluded that a decade of e-commerce adoption was compressed into three months during the pandemic. By all accounts, this trajectory will continue. According to eMarketer, online sales in the U.S. will top $765 billion by the end of 2021. With this kind of growth, brands need to prioritize their digital marketplace strategies to capture the increasing purchasing power of online shoppers.
2. Walmart Marketplace Will Expand Services for Sellers
In 2019, Amazon surpassed Walmart as the world’s largest and most valuable retailer. Since then, Walmart has seemingly acknowledged that online shopping is the future, and has taken aggressive steps to compete in the digital shopping arena. Describing itself as the world’s largest omnichannel retailer, Walmart’s online platform expanded considerably in 2020. According to Marketplace Pulse data, more than 25,000 sellers joined Walmart Marketplace last year, bringing the total to around 60,000. This is only a fraction of Amazon’s 2.5+ million active sellers, but the recent growth spike along with Walmart’s well-established base of more than 265 million customers give Walmart Marketplace the potential to become a strong competitor. Channel Key predicts Walmart will continue this e-commerce momentum by expanding services for sellers in 2021.
3. Online Grocery Shopping Will Continue to Grow
COVID-19 has changed the way many people shop, and that includes groceries. Data from Inmar Intelligence shows that nearly eight out of ten consumers purchased groceries online during the pandemic, a 19% boost from 2019. Mercatus reports that online grocery sales in the U.S. increased from $1.2 billion in August 2019 to $7.2 billion in June 2020. With this surge in supermarket e-commerce, retailers are competing to capture online grocery sales. Amazon, Walmart, Kroger, and Target all introduced new online grocery shopping services in 2020 – and they keep getting more innovative. Smart technology has paved the way for retailers to revolutionize the grocery shopping experience with exciting tools like artificial intelligence and augmented reality. Last year saw a lot of change in how people bring food into their homes, but there’s much more to come in 2021.
4. Same-Day Shipping Will Have Greater Influence
One of the greatest improvements of the online shopping experience in recent years is speedy delivery. Thanks to Amazon, same-day and next-day shipping are now factored into the customer’s purchasing decision. Amazon recently purchased 11 Boeing 767-300 aircraft to expand its logistics operations – a sign that the demand for quicker delivery is growing. Other e-commerce platforms are adapting to this trend. Walmart now offers free next-day and two-day shipping for many items on its digital marketplace. Channel Key predicts that Amazon will continue to raise the shipping standard by making it easier for customers to receive same-day shipping, which will force other online retailers to follow suit by placing a greater emphasis on fulfillment logistics.
5. Innovative Marketing Tools Will Become More Impactful
Technology is the foundation of e-commerce. Selling successfully on digital marketplaces requires a forward-thinking mindset and a willingness to adapt to innovations. As the largest e-commerce platform in the world, Amazon leads the digital commerce experience by continually introducing and improving advanced tools like voice-controlled shopping, predictive analytics, merchandising robots, and anticipatory shipping. These innovations improve not only the customer shopping experience, but also the way brands reach their target audiences. Channel Key predicts advanced technologies like artificial intelligence, augmented reality, and programmatic advertising will continue to revolutionize e-commerce for both customers and brands in 2021.
6. Mobile Shopping Will Grow Significantly
Gone are the days when online shopping took place entirely on desktops and laptops. Now customers are increasingly using their phones to purchase products. According to Adobe Analytics, mobile accounted for 46.5% of all online sales during Thanksgiving and 40% during Black Friday, an increase of 25.3% for the latter. In total, mobile sales generated 39% of all digital sales last November, reaching $39.6 billion. This trend is due not just to COVID-19, but technology advances as well. Contactless payment systems, mobile wallets, and mobile POS technology have made it much easier for customers to shop with their phones and tablets. Statista forecasts that by the end of 2021, 72.9% of all retail e-commerce sales will be generated via mobile shopping.
7. Amazon Will Expand into New Industries
In late 2020, Amazon launched an online and mobile prescription medication ordering and fulfillment service called Amazon Pharmacy. The new store allows customers to complete an entire pharmacy transaction on their desktop or mobile device through an Amazon App. The pharmacy industry is just one of many that Amazon has disrupted over the past decade. According to Digital Commerce 360, Amazon is currently considering entering the construction industry. Based on Amazon’s history of rapid growth, along with its massive infrastructure and customer base, Channel Key predicts the e-commerce giant will continue to expand into new industries in 2021.
8. Social Media Will Play a Larger Role in Digital Sales
Social media is no longer just for keeping in touch with friends. It’s become a powerful marketing tool for brands to target and convert customers. Buy buttons are now integrated into Facebook and Instagram, which can be easily leveraged with marketing campaigns built within the platforms. With the spike in e-commerce during COVID-19, it’s no surprise that social media commerce has risen along with it. According to Pew Research Center, 72% of all Americans use some type of social media. Adobe Analytics reported that platforms like Facebook and Instagram drove one out of ten visits to retail websites during Cyber Week 2020, a 17% YoY increase from 2019. Channel Key predicts social media will continue to play a more important role in how brands reach customers in 2021.
9. Reviews Will Matter More to Customers
Product reviews are becoming more important to a customer’s purchasing decision than brand influence, according to a recent report by Forbes. Spiegel Research Center found that about 95% of customers read reviews before making a purchase. In fact, upon visiting a product page, many customers will skip immediately to the first few reviews to determine whether they should read more. This allows smaller brands an opportunity to compete with more established brands by leveraging the power of positive reviews. Channel Key predicts that product ratings and reviews will continue to matter more to customers and become a greater factor in conversion rates.
10. The Holiday Shopping Season Will Start in October
Black Friday traditionally begins the day following Thanksgiving and is considered the kickoff to the holiday shopping season. Neither was the case in 2020. Amazon Prime Day took place in October, generating more than $10 billion and effectively jump-starting holiday shopping. Amazon continued this momentum by offering Black Friday-esque sales through most of November. Other major retailers followed suit by not only launching holiday sales much earlier, but by shifting many of them online – and it worked. According to reports, online holiday sales jumped nearly 50% in 2020 compared to 2019. Amazon reported that the recent holiday shopping season was its most successful to date, with 71,000 small- and medium-sized businesses worldwide surpassing $100,000 in sales. Regardless of how COVID-19 impacts life this year or when Amazon Prime Day takes place, Channel Key predicts that October will be the official start of the holiday shopping season moving forward.
CHANNEL KEY TAKEAWAY
There’s no denying that COVID-19 was the most influential event of 2020. While the immediate and short-term effects of the pandemic are evident in the way our everyday lives have changed, its long-term effects are still unknown. That said, troubling times can lead to positive change. The great business magnate Henry Ford once said, “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” It’s with this optimism that Channel Key forecasts a bright year for e-commerce. People are changing the way they shop in virtually every way imaginable. Embracing these shifts in customer behavior is the key to unlocking powerful business momentum for your brand in 2021.
About Channel Key
Channel Key is a full-service channel management marketplace consulting agency that has helped generate $250M in Amazon sales for retail brands around the world. Complete 360-degree services include marketplace strategies, content development, marketing and advertising, catalog management, marketplace and fulfillment setup, ongoing consulting, and much more. To learn about how Channel Key can help increase sales for your business, contact us today for a free consultation.