Ecommerce 2021

2020 was the year in which ecommerce exploded. AO founder and chief executive John Roberts said in May that the coronavirus crisis had accelerated five years of online shopping behaviour changes “into only five weeks”.

Asda boss Roger Burnley, meanwhile, noted in August that the grocer expanded online capacity early in the pandemic “to meet levels we had anticipated reaching in eight years”.

John Lewis Partnership chair Dame Sharon White unveiled a new strategy in October for the John Lewis and Waitrose parent group, saying “five years of change in the past five months” was key to a more digital-led operational structure. 

Hobbycraft head of digital experience Jennifer North told attendees at trade association IMRG’s virtual Data Week event that the retailer’s “ecommerce operations aged three years in three weeks” in March 2020, adding the retailer's “feet haven’t touched the ground since”.

While in December Waitrose executive director James Bailey highlighted just how rapidly the grocer’s digital footprint had changed over a nine-month period. Sharing results from its Food and Drink Report 2021, Bailey revealed Waitrose’s online grocery business was on track to be worth 20% of total sales by December 31 – a dramatic uplift from the 5% of total sales it generated pre-Covid. 

The picture is clear and the trend looks set to continue into 2021.

So how can retailers make online their advantage this year?

It will require investment in new teams and technology, and a fresh set of tactics – all the while ensuring that the economics of a more digital proposition add up.

While traditional online marketing methods such as PPC and banner advertising will still play a crucial role in helping retailers maximise the consumer shift towards digital, there are plenty of new and emerging approaches to consider. These approaches, explored throughout this report, include everything from deep data-driven personalisation and discovery commerce to optimised website UX and mobilisation of new digital channels.

Retailers must stay one step ahead during this period of rapid change – this report will show you how.

Digital by numbers

• 46% - year-on-year uplift in ecommerce sales from December 2019 to December 2020, according to ONS data published in January
• 31% - online penetration totalled 31% in December, 5% down from the online peak  in November but up significantly on the pre-pandemic figure of 20%, according to the ONS

• 57% - online will provide 57% of global sales growth by 2025, with more brands going DTC through ecommerce and most retail categories becoming increasingly digital, Edge by Ascential predicts

• 100% - the year-on-year increase in organisations looking to fill roles in 2020, according to digital jobs agency Beringer Tame, which specialises in recruiting for roles such as digital trading manager, marketplace manager, and heads of digital marketing in retail and FMCG businesses

• 45% - of consumers are now making online purchases one to three times a week, while the average monthly spend is just under £150, RWRC research from November surveying 1,000 UK consumers found

Online shopping is on the rise, but how consumer behaviour will look year by year is less black and white. No longer linear, the online path to purchase is rapidly evolving, with consumers able to discover products via marketplaces, search engines and home assistants, as well as make purchases in just a few clicks from social media.

Transactions often only occur once consumers have visited multiple retail, review and lifestyle websites, as savvier shoppers conduct comprehensive research prior to purchase.

The coronavirus pandemic has resulted in demographics that previously only shopped in stores, generally older consumers, becoming digitally literate and enjoying the benefits ecommerce provides, thus expanding its reach.

RWRC's study reveals 51% of consumers are now spending on average more than £100 online every month, with 11% spending between £251 and £400, indicating it is now the primary shopping channel for many.

So, through what online channels are consumers shopping?

The role of marketplaces in the new ecommerce

Marketplaces matter, with 34% of consumers surveyed starting the majority of their online shopping journeys on the larger marketplaces, such as Amazon and eBay. 

Moreover, 40% of consumers are spending more than 40% of their online outlay via Amazon; another 24% spend between 21% and 40%. On average, 36% of people’s monthly ecommerce outgoings are spent via Amazon, highlighting the importance of having a presence on the platform. Only 3.6% say they don't shop on Amazon at all.

While marketplaces are no silver bullet, for retailers without the scope and budgets of retailers like Nike – which recently cut ties with Amazon to take more control of its sales and to drive its own DTC operation – there is greater reward versus risk.

Giving up margin to third parties is never a preferred option for retailers, but Amazon’s popularity might be used by retailers as one method of attracting consumers to their brands before they engage them with a wider collection via their own channels.

Including independent and smaller platforms, such as Notonthehighstreet.com, Trouva and Etsy, 73% of consumers shop via online marketplaces, and 46% of consumers say they are less likely to shop with a retailer if its products are not available to buy on these channels. This can’t be ignored and the right marketplace strategy seems vital to brand success.

Where social media fits in

Social media discovery is still in its infancy, but a channel for retailers to consider nonetheless, especially as sites such as YouTube, Snapchat, Instagram and TikTok have never been so popular.

Ofcom research from June shows nine in 10 online adults, and almost all older children aged eight to 15, used at least one of these websites and apps in the past year, with many watching videos from them several times a day. One-third of online adults now spend more time viewing video-sharing services than broadcast television, according to the study.

RWRC's survey found that just 1.5% of consumers start their online shopping journey on social media, however 35% say they have purchased an item after seeing it on social media. This chasm just goes to highlight how unpredictable today’s shopping journeys have become, and may even highlight that there is often a gap between what consumers say they do and how they actually act.

Founder and chief executive of social media engagement and insight tool Maybe* Polly Barnfield says that “the fact our own research shows consumers are now spending on average three hours a day on social media but don’t think they’re being influenced to buy is very interesting”.

She continues: “Consumers don’t think of themselves as starting their shopping journeys on social media, but it’s a signalling process and often they may purchase something not realising they’ve previously seen it on social media and that this had reinforced their spending intent.”

To harness the power of social media, Barnfield recommends retailers invest in retargeting ads, specifically across Facebook and Instagram. 

“A number of our retail clients are now doing retargeting campaigns where they hadn’t before – it just brings in cash like you wouldn’t believe. By retargeting existing people that have engaged with a post organically you can capture and convert them to spend,” she says.

“My advice: make sure that the organic engagement you drive through Facebook and Instagram is retargeted through ads.”

Outside of driving investment in social media, Barnfield says retailers can learn a thing or two from Primark’s social media strategy. 

“Primark is a retailer with no ecommerce, but they stack up next to Asos and Boohoo in terms of social media engagement. Looking at our data about Primark, customers were talking about them as much on social when they were shut during the UK lockdowns [in2020] as they were when stores were open," she says.

“How? Primark has used its social media channels to own the audience, they understand that social media is about good communication and not using it simply as a customer service tool.”

When asked about the importance of a retailer or brand having a presence on a social media channel such as Instagram or Facebook, a sizeable 29% said they would be less inclined to make a purchase if they didn't.

It might not yet be consumers’ go-to shopping channel, but it is an increasingly vital way to drive sales, meaning now is the time for retailers and brands to ensure their social media sites are not only positioned for commercial needs but act as a medium to communicate and build relationships with the target audience.

The pulling power behind your website

A retailer’s own website is still the most important channel for appealing to shoppers at the beginning of their purchase journeys.

More than a third of shoppers (39%) say they start their online shopping journeys via a retailer’s own website, compared with the next most popular, marketplaces at 34%, suggesting online consumers often have in mind a specific retailer they would prefer to purchase an item from when they begin their path to purchase.

With the ecommerce market becoming ever more crowded, retailers' websites must offer great user experience, product range and have conversion tactics in place to ensure shoppers don’t transact elsewhere. We’ll come to this in Step 2.

What’s motivating online shoppers?

We’ve uncovered top-level insights about consumer behaviour in the new digitised world, but what is driving these actions?

Gifting and treats

In 2020 gifting was a key trend for online shopping and retailers should plan for this in their ecommerce strategies this year. Some 41% of consumers revealed that the majority of their online purchases had been gifts for others or treats for themselves. Retailers could leverage this trend by adding ‘gift idea’ category descriptions to their websites, and prioritising placement of gift items in product searches and on social channels, for instance.

Grocery and home items in high demand

The acceleration of online has occurred as many non-essential shops shut their doors temporarily in 2020, or consumers deemed visiting shops unsafe at the height of the pandemic.

So it's no surprise that grocery and household essentials were high up the list of sought-after categories for shoppers, with 20% and 28% respectively citing these sectors as where they purchased the most items online in 2020 – setting a precedent for what will be important this year if Covid-19 disruption persists.

Out of fashion

Whereas grocery, gifts, homewares and furniture have effectively been gateway categories to the online world for many, and are likely to endure this year, the same cannot be said for fashion. Just 10% of respondents said that most of their online purchases were essential clothing or footwear.

IMRG statistics support this finding, showing in the first 10 months of 2020 online sales of products for the home were up by 70% year on year, while clothing including footwear and accessories was down by 1.2%. With people largely confined to their homes and events cancelled, clothing was the only category where online sales declined during 2020.

These figures will be expected to improve this year with the vaccine rollout helping the health crisis to subside. Equally, strong trading reported by Asos, Boohoo and Zalando throughout 2020 proves the market’s potential, but retailers in this space must work doubly hard to attract customers during such challenging times.

Discounts, delivery and word of mouth matter

Discounts and free delivery/returns are the best ways to capture new customers online that haven’t shopped with a retailer before, according to the research, with 38% and 30% respectively citing these as their top reason.

A recommendation from a friend or family member is the main purchase trigger for 14% of people, so the value of word-of-mouth marketing for ecommerce cannot be overlooked. Interestingly, the over-65s are most swayed to shop with a new retailer offering free delivery and returns, with 36% of those in this demographic choosing this option.

Demographic differences

What device?

At first look there seems to be little difference, in general, between which device a consumer prefers to use for an online transaction, with 46% preferring laptop or desktop and 42% choosing a mobile phone.

However, it becomes stark when assessing consumers’ ages. While 25% of 17- to 24-year-olds prefer using desktops and laptops, 67% of this age group prefer to use their phone. And for over-65s that is turned on its head, with 74% preferring to use desktops and laptops and just 7% choosing mobile.

Tablet devices appear to be the big loser, proving less popular across all age groups. However, the link between age and device type preference suggests retailers should be optimising size of font and text depending on the device to capture as large an audience as possible.

Which social media platform?

When it comes to social media, Facebook is the platform most likely to influence a purchasing decision for all age groups, apart from 17- to 24-year-olds who are more likely to be swayed by Instagram. 

TikTok and Pinterest had no key purchasing influence on anyone over the age of 55, but TikTok was the most influential platform for 8% of 17- to 24-year-olds.

Since retailers cannot target all consumers online, they must define, identify and understand their social media target audience to communicate with them effectively.

Understanding where target audiences are, and where they are most active, will help to prioritise which social media platforms to focus on and retailers should then adjust and adapt as they go. TikTok, for instance, has become an active marketing channel for Gymshark to reach the platform’s 16-24 demographic.

Online shopping may have rocketed in the last 12 months but so too has competition. In order to truly take advantage of the ecommerce opportunity retailers must, more than ever, offer consumers compelling reasons to shop with them, and central to this is web UX.

One retailer that already achieves highly in this regard is global ecommerce behemoth Amazon.

According to RWRC's research, the company dominates when it comes to the best online user experience (UX). When asked, with zero prompts, to name the retailer that currently delivers the best online shopping experience, almost 50% of consumers said Amazon. 

They cited reasons such as “it’s secure and I feel safe buying from them”, “the option to have Prime next-day delivery on some items”, “extensive customer reviews”, “great selection of products” and “a fast checkout process”.

In the words of retail analyst and NBK Retail founder Natalie Berg: ”Covid has cemented Amazon’s status as the indispensable route to market and will accelerate its transition to become the rails that the retail sector runs on.

”The company has spent the past decade embedding itself in our homes and the pandemic has offered a once-in-a-lifetime opportunity to deepen engagement with consumers beyond its core retail offering.”

So what can the wider retail sector do to keep up with Amazon? What else does our survey tell us about what retailers' ecommerce investment priorities should be? And what actions would improve their UX?

Measuring up to the UX of Amazon

Firstly, a strong online UX is non-negotiable, with the survey findings highlighting how the majority of shoppers (39%) still start their ecommerce journey on an individual retailer’s website as opposed to a marketplace (34% for the larger ones, 4% smaller independents), search engine (20%), or social media platform (1.5%).

The element of a retailer’s website that consumers believe is most important in providing the best experience is secure shopping and payment gateways, meaning it is crucial for retailers to offer familiarity and a choice of options at the point of purchase. Some 31% of survey respondents say it is the most important factor.

Not only does the point of sale online have to be highly secure, but it also has to provide an easy checkout process, according to consumers, who rate this, alongside high-quality product images and branding, as vital to creating a positive UX. Some 11% and 18% of respondents, respectively, choose these as the most crucial elements for good UX.

Fast loading speeds and mobile responsiveness are not as crucial in terms of providing the ultimate UX, but this differs markedly by age range – with 25- to 34-year-olds ranking both as much more important factors than older shoppers.

On the flip side, over-45s are far more likely to be highly concerned about online shopping security than millennials.

It goes to show retailers with a targeted demographic may not have to provide winning UX in every aspect to convert shoppers, but those trying to appeal to multiple generations – including department stores and general merchandise retailers – must be consistently good across the board to avoid disappointing their audience.

Successful retailers already monitor online shopping behaviour and use web analytics to improve CX, retain customers and increase customer lifetime value.

This data-driven strategy is one to pursue, says personalisation platform True Fit Corporation EMEA managing director Sarah Curran-Usher. True Fit uses data and machine learning to optimise shopping experiences. Curran-Usher says: “Brands and retailers have an opportunity to pause and listen to what their customers want before blindly marketing products at them.

“If your customers seem happy to fit into the box you designed for them, then you are making the false assumption that they will be happy next time.”

The cost of customer acquisition through marketing can add up quickly – Maybe*'s Barnfield says it’s the most expensive part of operating online and it’s not surprising that emerging brands such as Sosandar and Eve Sleep list customer retention as a key performance indicator in their trading updates.

Converting fickle shoppers into repeat customers

According to RWRC's survey, the best way to convert new customers into loyal shoppers is to offer them access to a rewards or membership scheme entitling them to discounts, freebies and exclusive offers. The highest proportion of consumers surveyed (39%) suggest this would be most effective in getting them to spend again.

This makes sense. If consumers provide consent for rewards and offers via such programmes, retailers will have a direct line to them, an opportunity to understand their shoppers’ individual conversion triggers and the option to act accordingly.

The study also indicates that half of consumers are happy for retailers to have access to their basic data – full name and email address – if it means they will get a better online shopping experience. Additionally, 29% say they would provide access to additional data, such as gender, location and age, to support receiving a better online UX.

A mutually beneficial data exchange between retailer and consumer can be extremely powerful – let’s look at some examples.