Hello folks, welcome back to the Marketing Mindset Club. It’s good to be back. What did you think of the last episode? It was the first guest interview I’ve done on the show. If you haven’t listened to it and you’re interested in how to pull off awesome events in 2021, then I’d really recommend checking it out. I really enjoyed the conversation and I’m thinking of doing more of that style of episode, so if you’ve got any preferences for guests or topics you’d like me to cover, pop over to Instagram @MarketingMindsetClub and let me know.
So, I mentioned a few episodes ago that I’ve moved roles in my full-time job and I’m now working for an agency specialising in e-commerce. I’ve worked with clients before who are in e-commerce, but at my previous role, I had a real mix of B2B and B2C clients. So now I’m able to focus on e-commerce, I’m going to dedicate this episode to all the things the trends and game changes you need to know for 2021.
First things first - customers
Customers should always come first, but I can’t stress this enough in 2021. And not just if you’re in e-commerce - understanding the situation your customers are in is crucial to designing an effective value proposition.
We’ve been living in a state of upheaval for almost a year now thanks to COVID, and previously known behaviours that you thought you could predict and plan for are now pretty much out the window. In the US, McKinsey estimates that they saw 10 years worth of growth in e-commerce penetration in 3 months in 2020 - this is opposed to retail through physical channels. That’s huge. At the beginning of lockdown - business supplies, toys and games and food & drink were the top three categories purchased online (ref). Looking back on that crazy time, it totally makes sense - as a global community were setting up work at home, finding ways of occupying children at home and trying to get groceries - whether from supermarkets or food box suppliers.
The growth in e-commerce isn’t just limited to millennials - consumers of all ages are shopping online, mostly because the behaviour has been driven by lockdowns across the world, but this includes every age group including baby boomers and seniors. And when you combine that with the data that said 75% of customers tried buying a new brand this year and that 60% of those consumers would consider incorporating these new brands into their lives after the pandemic, you’ve got a world of change but also opportunity.
Some markets show buyers switching to purchasing online more frequently even after the pandemic - according to Statista the top 5 localisations are Vietnam, China, India, Italy and Russia where around 30% or more of consumers surveyed will buy things online more frequently even when physical stores re-open.
Some categories have also seen big changes - homewares and consumer electricals were up 75% and 65% respectively (ref) but as you might expect, party wear and wedding dresses were way down!
But if we take our thinking away from the things consumers are doing online and consider the wider world situation for a minute. It’s likely that a good chunk of this year will be spent in some level of lockdown for most people around the world. That means staying local - so travel and hospitality industries are still looking at a year of uncertain prospects. It also means families at home with their children, no social gatherings like birthdays and anniversaries and so I think the need to create a better home environment will continue - I think we’ll see purchases for homewares, games and toys continue to stay high. For those people who can work at home, I think we’ll see the growth in categories that help alleviate the cabin fever.
Which brings me onto...
Treats and luxuries vs necessities
No one can argue this hasn’t been a tough 12 months and offsetting some of that struggle with treats and luxuries is how many people are coping. One in 10 Britons signed up for a subscription box service during lockdown - so companies like Craft Gin Club and Cricklewood Coffee all saw new customer growth in the hundreds of per cent.
On a global luxury brand scale, the FT recently reported that so-called ‘revenge buying’ - after being stuck in lockdown had boosted the sector. Consumers in China and Japan are largely driving this return to some sort of positivity. But it got me thinking - I wonder how many of us have made purchases based on ‘I deserve it’. I think I prefer calling it Reward buying rather than revenge buying, let’s take the anger out of it!
I read in one article that UK residents spent an estimated £40million in the first lockdown alone on ‘I deserve it’ purchases. Which also, as a side note - it was recently announced that buy-now-pay-later firms like Klarna are about to be regulated in the UK by the FCA.
But it’s not just the luxuries consumers are seeking out online, purchasing necessities has transitioned online for many too. The nature of lockdown combined with the big retailers finding staffing and fulfilment challenges as a result of COVID disrupting supply chains - necessities like groceries, health, hygiene and home essentials are all part of the online shopping list. The share of online grocery shopping in the UK more than doubled from 7% to 15%.
Customer experience will determine retention
Now as competition in the e-commerce arena has taken a giant leap forwards thanks to the pandemic, there’s even more choice for the consumer than ever before. E-commerce reached a record high of 16.4% of total global retail sales last year, which also means increasing competition to attract shoppers. Acquisition costs are shooting up, so the focus is back on the old adage that it’s easier and cheaper to retain an existing customer than it is to gain a new one.
You’d expect to see a significant chunk of shoppers leave a brand if they had several bad experiences, and that figure is an unsurprising 59%. But it’s not enough to give a good experience most of the time, 17% of shoppers would leave a brand after just one bad experience (ref). So just think - you’ve spent all that time, effort and money to get new customers through the door for your customer experience to drive them away after just one purchase. I covered a lot more about customer experience in the 2021 Marketing Strategy episode, so head back and check that one out.
But thinking about customer experience from a retention perspective, you as a marketer can only do so much to make the digital experience as seamless and beautiful as possible, fulfilment, customer service and every other department that a customer comes into contact with has to give a good experience too. So, as I said in the strategy trends episode - you’ll need C-suite buy-in to make meaningful impacts.
But let’s think about the digital customer experience that you can influence as a marketer - what’s one of the most powerful things you can do to enhance that experience? Personalise it. And there are a bunch of ways you can do that.
Email marketing - feature products that you know a customer is interested in or compliments their buying habits
Tailor your visual on-site content to a customer’s geographic location, language selection or previous buying habits if they’re logged in.
Go seasonal - tailor your content to the season that your customer is experiencing. This could be any area of your communications or website. The weather has such an important role to play in buying behaviours, so if you can show that you understand the local conditions your customers are experiencing, it’ll grow their affinity with your brand.
If you’re going to retarget a previous customer to try and re-engage them, it absolutely should be personalised. Whether that’s with a product recommendation, content that’s relevant to their history with your brand or sharing a relevant offer - if you can personalise it, you’ll have improved success rates and it’ll positively impact the lifetime value of the customer.
Chatbots. In the recent 2021 tactics episode, we talked a bit about chatbots. Customers are increasingly expecting 24hr service, so chatbots for customer service are becoming increasingly common. But this is also a chance to personalise the experience. Your chatbot should have access to customer details in order to provide tailored product recommendations or customer service signposts.
Brand-building makes a return to the strategy
According to Shopify, over half of all global e-commerce sales happen on marketplaces like Amazon and eBay, so building a brand has got to be part of the strategy again in order to stand out. The good thing going for you if you’re a brand who is focused on this area is that customers are willing to change their purchase behaviours to align with brands who are interested in sustainability and reducing their impact on the environment. Everything from recycled packaging to being a carbon-neutral or negative organisation, it’s something that can lure customers - not to mention being absolutely the right thing to do for our natural world.
Marketplace selling isn’t without its challenges though, even though the opportunity is huge. Platform fees and being one step removed from the customer are two of the top concerns that retailers have. As a brand in a marketplace, there’s little you can do to control the digital experience of your customers, so your end to end experience throughout the rest of the process has got to work extra hard to delight but also to bring that consumer direct to you next time (assuming that’s part of your strategy).
When I was researching this piece, I came across a stat that surprised me - 70% of Amazon searches do not include a brand name. So that means consumers are searching for a solution in the absence of a brand name. I was surprised, I didn’t think it would be that high but I guess that’s indicative of the Amazon marketplace - it doesn’t seem to do much to highlight the brands who sell through the platform. If anyone has a different experience of selling through Amazon, I’d love to hear about it. But that does mean that you have a chance to get your brand in front of new customers and potentially bring them into your world and keep them as repeat customers. So you could think of that first purchase as an acquisition cost if your eventual strategy is to get them to buy direct and you’re selling the kind of product that is of a consumable nature.
Personally, I’ve not had much luck with brand discovery on Amazon marketplace in terms of brands, I couldn’t tell you a single brand that I’ve purchased from. The products have all been fine, but there’s nothing remarkable about any of the experiences I’ve had in terms of packaging or product.
Augmented reality to become a mainstay of fashion e-commerce
Augmented reality, or AR, started off as a bit of a novelty and the preserve of the global brand but it’s likely to become more of a mainstay of the digital retail experience this year. As a result of lockdown and much reduced footfall in stores, many more customers are shopping online and want to know what a product will be like in their real life contexts before they purchase.
But before we get into its applications, let’s talk a bit more about what augmented reality is. Augmented reality (AR) is an interactive experience of a real-world environment where the objects that reside in the real world are enhanced by computer-generated perceptual information, sometimes across multiple sensory modalities, including visual, auditory, haptic, somatosensory and olfactory. AR can be defined as a system that fulfills three basic features: a combination of real and virtual worlds, real-time interaction, and accurate 3D registration of virtual and real objects. The overlaid sensory information can be constructive (i.e. additive to the natural environment), or destructive (i.e. masking of the natural environment).
So, what this means is that a visual representation of a product can be experienced in person. The clothing retailer, ASOS, has been one of the brands getting into the AR from the beginning. In 2019, ASOS started on their AR journey with an experimental feature called virtual catwalk. The idea is that you point your smartphone at any flat surface and see a model as though they are walking on the surface in front of you. It’s also continued to develop its AR offering as buyer behaviours have changed thanks to COVID among other things. You can now get a simulated realistic view of up to 500 clothing items per week on six real-life models. The initiative is called ‘See my fit’ and allows customers to see clothes on ‘real-life’ (in inverted commas) people. This will not only be helping with the customer experience, it’ll be reducing cost to the business in terms of handling returns.
IKEA is another brand that’s been making strides into the AR world. They incorporated AR into their app so that users could see furniture pieces in their real homes. They started with 2,000 pieces in the library and it means you can see how a new piece of furniture would sit next to your existing items. It was developed to help move IKEA forwards in the ecommerce space, because they hadn’t really taken steps forward into online retailing until this point. It’s obviously working out well for them because the library is now up to 3,200 pieces and the app has been downloaded over 2 million times. Incidentally, Dulux have also come up with a similar AR experience where you can try out different paint colours in your actual room, digitally of course.
Sustainability is high on the list
Which brings me onto something else consumers are looking for - brands that are interested in being more mindful of their impact on the environment. Sustainable or recycled packaging, carbon reduction or reduced energy consumption are all things consumers are looking for. Top of the list is reduced reliance on single use plastic.
From businessinsider - Value and ease of purchase are still the main drivers of purchase decisions, but sustainability is becoming a bigger factor. A 2019 survey led by Hotwire found that 47% of internet users worldwide had ditched products and services from a brand that violated their personal values. Protecting the environment topped that list.
In a research report from IBM Nearly six in 10 consumers surveyed are willing to change their shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible.
Don’t expect an easy ride in 2021
Even with everything you do have in your control in 2021 as a marketer, and while this year is expected to show a bit of a slower pace of growth than last year, it’s still going to be unpredictable and a bit of a roller coaster in terms of results. Shopify is predicting that bricks and mortar stores will begin to rebound as lockdowns (hopefully) ease this year, Forrester found in their research that only 13% of consumers now trust retailers. Click and collect or curbside pickups will have to remain in place to tempt customers back, so if you are in bricks and mortar retail as well as e-commerce, don’t abandon those things you did you help customers feel more comfortable about shopping with you.
And that’s all I have for you this time. Thank you so much for coming back to the Marketing Mindset Club. I’m so glad you’re still here and that you tuned in. Let me know what you thought - did you find them helpful? I’d love to know - pop me a DM on Instagram @MarketingMindsetClub. If you haven’t yet subscribed or left a review, please consider doing so if you’re getting value from the show - it really helps me out in my goal to grow this club. See you next time.