5 reasons why 2021 will be a milestone for e-commerce
2021 is hopefully the last year in which the pandemic will dominate our everyday lives. At the same time, not least Corona has led to e-commerce experiencing a boom since March 2020 that has never been seen before. This development also means that the framework conditions for online retailers are currently undergoing major changes. Simon Beyer, Partner and Chief Strategy Officer at Ingager, explains what these will look like in the future and what this means for the digital scope of brands.
- E-commerce has come to grow
The significant growth that e-commerce has experienced in the last 13 months or so is unprecedented. This can be seen not only in the business figures of numerous online shops and the sales of brands on the relevant platforms. The service ecosystem around e-commerce is also bursting at the seams. Whether solutions for the last mile, delivery boxes or SaaS solutions: more and more venture capital is pouring into digital commerce.
How the fabulous upswing of e-commerce will affect the retail sector is something we can still only speculate about. What is clear is that the shift from traditional shopping to a greater focus on omni-channel solutions enabled by digital services is unstoppable. This trend requires a fundamental examination of the future potential of business models and revenue streams – and this in turn applies in particular to stationary retail.
2. The barrier to entry is falling steadily
Shop systems such as Shopify, Shopware or WooCommerce have enabled companies of all sizes to offer their products on a global market not just since the outbreak of the pandemic. The evolution of e-commerce is progressing at a rapid pace, so that more and more social media platforms are now developing and offering a corresponding infrastructure for uncomplicated entry into online trade. The result: falling entry barriers, rising market volume.
If you look at the channels that are ideally suited to act as enablers for e-commerce entry and growth due to their technological basis and user numbers, you cannot ignore Facebook as the largest global social network. The same applies to Instagram with its somewhat younger average age of users Germany is one of the key markets here: Instagram just announced that ads for Reels will be available on the platform over here as one of the very first countries.
3. Social media evolution: commerce instead of just communication
In general, user preferences and behaviour have a considerable influence on the development areas in which the respective social media platforms invest resources. Social trends often have an impact on the functionality of an application, such as the described shift from stationary trade to e-commerce. The introduction of Facebook shops is only one example here; Snapchat and Instagram have also expanded the possibilities for companies accordingly.
The phenomenon of live shopping shows that social media is now about much more than just communication and interaction. Last year, it spilled over from Asia and more and more companies are offering their products in a stream, e.g. via tools like Instagram Live. If one takes the form of the content as a yardstick, one should also not disregard Twitter and LinkedIn as possible platforms for social commerce – also for the B2B sector. Both networks have a story function that enables the uncomplicated creation and distribution of moving images.
4. Brands become e-commerce companies
For many years, before digitalisation began to permanently change consumer behaviour, everything in retail had always remained the same. Big brands like Nike or Levi’s may have had a showroom on the high street, but most of their business was done through affiliated retailers with their own brick-and-mortar shops. Now, however, as consumers become more digital and e-commerce activities are accessible to smaller brands, we can see a new trend emerging: D2C.
Direct-to-consumer has already become big business in the US, with new brands popping up and traditional brands doing their best to keep up with the trend. Many of the D2C brands that have emerged in recent years and are now very successful feature excellent digital marketing and consistent customer centricity.
5. Major challenges that offer opportunities
The transformation to a D2C company is anything but easy for traditional brands. But those who are serious about it and position themselves close to their customers in the course of a strategic realignment will benefit in many ways. Not least because first-party customer data will probably be worth more than ever before in the context of increasing restrictions on tracking and targeting – for example in the wake of iOS 14.
In the future, it will be about getting even more out of a smaller mass of insights. Brands must find creative solutions to address their customers – and those who are to become customers – in a targeted manner and at the right stage of the customer journey. In fact, behind the supposed stumbling block there is also an opportunity: the conditions in the new privacy cosmos will be the same for everyone, and accordingly the consumer will feel who adapts best to the new world.
Conclusion: The outlook is positive!
The new framework conditions, which theoretically enable every retailer to sell their products online, are reflected not only in broad access to effective marketing tools, but also in an improved service offering for e-commerce. These include, for example, logistics services that enable shorter delivery times, the simple integration of a wide range of payment service providers, and AI-based solutions for customer service, such as chatbots.
Consumer behaviour and sentiment are changing, business models and revenue streams are shifting and the technical possibilities are getting even better – so many things are taking a turn for the better. A forecast that is just good in these times. Admittedly: Tracking and targeting will undoubtedly become more difficult. However, the opportunities to build a real relationship with one’s community that goes beyond the classic customer relationship have rarely been greater.