It’s been a long, crazy year. You threw a lot at us, and for better or worse we are now here, at the end of you. While we are glad to see you go, we wanted to take the opportunity to revisit some of the changes you brought about, and highlight how we intend to make the most of the opportunities in 2021.
To say 2020 brought a few changes would be an understatement. The past year has been a lightning rod to consumers, businesses, and industries across the globe, bringing new challenges, new demands, and an increased focus on what can and will be purchased through digital channels.
Never before have consumers or businesses felt the pressure to do so much of their business online, or to shift their consumption habits at such an accelerated pace. With those shifts came new needs to not only be able to effectively deliver products, but to portray them in a realistic and cost effective manner. As we look to 2021 and beyond, we predict a seismic shift in consumer shopping expectations, and demands for more immersive and complete online experiences.
Let’s take a look at some of the biggest change drivers of 2020, and how brands did and will continue to adapt moving forward.
US eCommerce Sales Expected to Increase Over 40% Year Over Year
Stores shut down, stay at home orders in place, and servers crashed from an unanticipated influx of online traffic. These were the scenes back in March and throughout the spring. According to the Food Industry Association, online grocery sales spiked 300% in the first few months of the pandemic. Retailers who had previously relied primarily on foot traffic were now heavily reliant on eCommerce. The trends continued in sectors such as home goods and apparel as consumers adjusted to more time at home. According to eMarketer, 27% of consumers surveyed had purchased household goods and decor online in the past month in June 2020, compared to 17% in February.
These increases are not expected to drop to pre COVID levels. Office supplies and equipment, which prior to COVID-19 represented 26.6% of US ecommerce sales, jumped to 39.3%, and is expected to remain around 36% in 2021.
On the whole, furniture and home furnishings saw a 12.4% jump in eCommerce sales year over year. While buying furniture online was fairly common prior to 2020, increases such as these highlight the importance of brands having the ability to accurately showcase stock and options in a digital environment. IKEA, which has long been known for its in store experience, saw online sales surge 60% in 2020 and began online sales in three new markets.
These dramatic shifts call for brands to not only evaluate their ability to sell online, but to begin to offer a quality online experience. Buying the last chair off a site because you need to not be working from your dining room chairs may satisfy a consumer during the pandemic, but as work from home becomes a more permanent situation or consumers make less hastened purchases, settling for what is delivered will no longer be the trend. Brands will need to focus on delivering an exceptional online shopping experience and more truly representative product imagery to keep up with consumer expectations.
One brand that has already seen the impact of a more immersive consumer experience is Houzz, a design and homewares site. Alon Cohen, president and co-founder of Houzz, stated that Houzz users that viewed products in 3D were 11x more likely to purchase than those who did not. Further, Cohen believes that with technology such as augmented reality, which allows consumers to see how products will actually look in their home, e-commerce is reaching the point where the online experience is better than the offline experience.
Before 2020, many brands looked at commerce as transactional and primarily for commoditized goods. This makes a lot of sense with the efficiencies that are created in the moment of monetization. Now we are at an inflection point where experiential journeys can be embedded with transactional capabilities. This provides greater ability to monetize the expression of the brand which is crucial for products you actually care about.
-Justin Scott, ATLATL CEO
Double Digit Increases in Outdoor Equipment Sales
Get me out of the house!
The shout heard round the globe as the weather improved and cabin fever hit an all time high. While many industries struggled with the effects of COVID-19, outdoor recreation thrived, with sales dollars vastly increasing year over year for categories such as bicycles (+63%), paddle sports (+56%), golf (+51%), and camping (+31%). These increases represent both online and in store purchases, but with such high demand, the value of eCommerce was proven as floor inventory was wiped clean and wait lists extended from weeks to months. Particularly for paddle sports, which traditionally struggled with maintaining the balance between inventory and carrying costs, the ability to leverage online sales and product selection eases some of the stress placed on retailers.
Looking forward, utilizing tools such as product visualization and visual configuration will allow retailers and brands to optimize in store inventory with the most popular choices while allowing consumers to opt for the more specialized products in an immersive customer focused experience.
These benefits do not have to be limited to big box products either; Shopify’s Daniel Beuachamp recently chatted with Deloitte’s Allan Cook, stating that Shopify merchants using 3D are seeing customers that are up to 2.5x as likely to convert as those who do not engage with 3D products. For brands and products of all sizes, those are significant jumps in conversions, and much less inventory sitting idle.
Consumer Expectations Are Higher Than Ever
If there is one industry that can currently speak to the state of consumer expectations, it is shipping. Gone are the days of consumers understanding the struggle of managing the immense volume of packages, forgiving slow deliveries, or being patient with lost packages. Buyers want their items, they want them yesterday, and while brands may not be able to control the nature of shipping, they must be able to deliver on shopping experience and products that are worth the wait. Consumers who wait 3 weeks for a package will not be impressed or pleased when the item they receive does not meet their expectations. In 2015, IHL research found that retailers lose $6.1 billion annually on returns made because the product didn’t match the description.
Those expectations have only increased over the years, along with the associated costs. Accurately representing products often requires more than high quality photography, which limits the consumer’s view of the product and offers visibility to only the images a retailer chooses. This often excludes colors, options, or customizations that are available, meaning the buyer lacks a clear image of what they can expect to receive.
As stated by one ecommerce expert, “today’s best practices are becoming table stakes...and the cycle is just getting faster and faster…”
That cycle could be a challenge for many firms; Adobe estimates only 38% of the largest companies have the structure and strategies in place to deliver on a valuable and contextualized customer experience, and according to a recent study from Salesforce, 67% of consumer and business buyers say that their standards for a good customer experience have increased.
Ready for a little more evidence? That same Salesforce study showed:
The numbers don’t lie; consumers are ready to spend online, but only with companies who deliver exceptional experiences in tandem with products that meet their expectations. Even category leading brands are not immune to these shifts, as consumer’s options increase and the convenience of seeing, experiencing, and purchasing their desired goods is elevated through immersive online experiences. Creating those experiences and optimizing product portrayal within those experiences should be top of mind for brands heading into 2021, and we expect to see more shifts and new leaders these tactics are implemented.