COVID-19 continues to reshape the world as we know it. In the long run, eCommerce will inevitably turn out to be a winner of the current situation. However, it is not so easy to join the race, as the industry is going through significant changes.
According to IBM's U.S. Retail Index, the trend of people moving from traditional shopping to eCommerce has been accelerated by approximately five years in 2020 and eCommerce is forecasted to grow by nearly 20% in a single year.
The report authors have no doubts that retailers need to speed up the pivot to omnichannel sales and point out that it is an absolute must in order to stay relevant in the new, "contactless" environment. He who hesitates is lost.
Examples of some giant retailers prove that statement. Walmart and Target defended themselves against declines thanks to their earlier investments in eCommerce. In Walmart's case, the pandemic drove eCommerce sales up 97%, and Target set a sales record as its same-day fulfillment services grew 273% in the quarter. Not to mention Amazon, which noted record quarterly profits and 40% sales growth.
Given the dominant position of marketplaces in the eCommerce landscape, it is clear that the bar has been set high for the newcomers. On the one hand, the customers are used to UX on a certain level of advancement and will not settle for less; on the other, web owners have no time to research expectations, conduct tests, and undertake the time-consuming implementation of the best solutions. Time-to-market is everything.
Social media platforms have taken their chance
The social media platforms, whose flirt with eCommerce started a few years ago, have observed the opportunity in the market and been quick to exploit it. Social media commerce, even though it is hardly a new concept, is now on the rise.
According to a McKinsey report, 34 percent of people say they have shopped on Instagram based on an influencer recommendation.
Facebook, with the launch of Facebook Shop, was among the first to jump on that train, but the rest were not far behind. Snapchat has allied with Shopify to enable brands like Kylie Cosmetics to provide in-app payment options for U.S. users. Pinterest leveraged its existing Product Pin technology by adding "Shop" tabs connected to in-stock inventory. YouTube recently announced a new ad format to make video ads more "shoppable" by adding browsable product images underneath the ad. There is also Instagram, which launched its Checkout a year ago, and - of course - TikTok, which allowed users to feature links to eCommerce sites in their profiles in 2019.
According to eMarketer, social commerce sales in China totaled $186.04 billion (RMB1.285 trillion) in 2019. That is nearly ten times the number of sales in the U.S., which reached $19.42 billion last year.
The entry of social media platforms into the eCommerce industry will be a game-changer for brands. We currently use our social feeds to get inspired and boost purchase intentions but we leave the app to fulfill them. Social media platforms want us to stay as long as possible and not leave the news feed, which is why they develop features that enable us to make purchases inside apps. They also win big through diversification of their revenue streams and it is a win-win-win situation as customer journeys become smoother and retailers enjoy faster and better conversion rates.
Social commerce is thriving in these difficult times but is not a one-size-fits-all solution. For local businesses, it may be a good start, as they can start selling directly on Facebook in just a few minutes.
However, neither household names nor aspiring brands should rely entirely on social media eCommerce features. They can certainly use them as a significant part of an omnichannel strategy, but taking care of a strong brand is a must. Small and medium companies can probably look for SaaS platforms because they are easy to buy and use, but - again - for enterprises, it may be not enough. SaaS platforms typically come with severe limitations in building brand identity. Blurring it in the name of quick time-to-market does not pay off in the long term.
Large companies need to find solutions that provide both flexibility and low TCO. The trends are already visible.
There are more and more flexible solutions based on a modern microservices approach. They are quick to start (and stop), convenient to use by non-technical teams, adjusted to fulfill the omnichannel strategy (with easy-to-add Headless CMS), but don't imply painful limitations in terms of further customizations.
Read the article:
"What is headless architecture, and why is it the future of eCommerce solutions?"
"Be pragmatic" not perfect
eCommerce managers must act fast. Previously, the time pressure was not so overwhelming. eCommerce was (and still is) just a fraction of worldwide retail, and many brands treated it as just an addition to the primary, traditional sales channels.
Now, some companies have paid dearly for neglecting online channels and are looking for a way to catch up quickly. Fortunately, there have got some options to choose from.
We had the opportunity to watch this thesis play out in the real world recently. One European retail chain has around 1,000 brick-and-mortar stores across the world. The chain, owned by a private-equity fund, had no eCommerce presence. Although it had previously considered eCommerce, there were serious concerns about whether it could ever work, given the assortment, concept, and even brand constraints. Despite these issues, a variety of pressures—from consumer demand to competitive constraints—forced the company to take action.
Thirteen weeks later, it had a functioning eCommerce business in one key region. Not only that, its launch was successful from the first month, generating almost 3 percent revenue growth within the chosen region, tripling average basket size compared with retail stores, and maintaining a high customer-satisfaction score.
When COVID-19 started disrupting daily routines in Europe, the eCommerce revenues jumped threefold almost overnight.The McKinsey report "Building an e-commerce business: Lessons on moving fast," left this in no doubt.
In the next few months, the eCommerce platforms will try hard to decrease Time to Market, probably by eliminating intermediaries or/and selling cloud versions. We will definitely see more "flexibility" on the market, and composable commerce will lead this approach as eCommerce projects must be easy to start and run by remote teams.
It looks like eCommerce is on the verge of significant change, and the reign of monoliths, powerful but also demanding, is coming to an end.