Warren Buffet once said that only when the tide goes out do you see who is swimming naked. With restrictions easing across some of the states, I believe the tide may be going out rather soon.
It feels like the pandemic has been a ’golden age’ for e-commerce. Last year, consumers spent $861.12 billion online with U.S. retailers. That’s up 44.0% from $598.02 billion in 2019, and growth is expected to continue in 2021.
In the last week of October, shopper footfall in the United States was down by 36.7% when compared to the same period in 2019, as consumers changed the way they shop, owing to statewide lockdowns, store closures and the fear of contracting coronavirus. As a result, many retailers launched curbside pickup as a way to get products to consumers safely.
So, what will the ’new normal’ look like for e-commerce? At Croud, we believe that there are four key trends that have the potential to disrupt and reshape the landscape in 2021. So how can you maintain momentum in these shifting sands?
The Pandemic Upstarts
According to the U.S. Census Bureau, in 2020 applications for the employer identification numbers, which are required in order to start a business, passed 3.2 million, compared to 2.7 million the previous year. One of these could be the next Dollar Shave Club or the next Clubhouse.
Competition is always round the corner and an unassailable position in-market can be upset with a new entrant. In times of plenty, it’s easy to over-invest in marketing, not scrutinize performance well enough, while not investing in the future, because of the success of now. Last year VW spent around $20bn on innovation; when Tesla launched, it was one-third of that. Don’t find yourself having to play catch-up. Take this opportunity to get a clear view, not just of your customers, but your long-term marketing strategy.
The Roaring Twenties Revisited
With all this talk of all shopping moving online, in 2020 Best Buy saw profits increase by $88m, allowing it to offer wage increases to all employees. When the world opens up, your brand’s product suddenly competes not simply with the category, but with the act of living itself. Yale professor and social epidemiologist Dr. Nicholas Christakis believes we will see a return to the Roaring Twenties.
Whether you are an online-only business or a brick-and-mortar retailer, there is significant opportunity and threat. As a matter of hygiene make sure you invest in the capabilities to connect your on- and offline data; as a matter of differentiation, find the way to connect the experiences.
Regulation, Red Tape and Restrictions
Earlier this month Google announced that it would be removing all third-party tracking across its properties, and Apple has just rolled out its latest iOS with significantly enhanced consent mechanisms. Both these changes will have a large impact on the way that we buy and measure media. More broadly we are seeing significant stand-offs between Facebook and Apple, between Google and Australia, and between the CMA and the whole industry.
Personally, I look forward to a world where hundreds of unspecified, non-transparent data-points are no longer arbitraged to inform targeting. This will make our jobs harder, but I believe we will be better for it. Invest in people, not just data-sets – great planning and great thinking is what will drive effective media. The added benefit will be that more money will likely go directly to the makers of trustworthy content, which will not only be good for society but will help placate the regulators.
Dotcom Bubble 2.0
According to Goldman Sachs, in the US we could see a hiring boom over the next year, resulting in unemployment falling to pre-pandemic levels. Joseph Briggs, Goldman economist, cites that the reopening of stores, fiscal stimulus, and pent-up savings switch will fuel very strong demand growth. This sounds very optimistic, especially given neighbors across the pond in the UK are set to lose 200,000 jobs on the UK high street this year. We haven’t even touched upon political uncertainty that follows elections. It does make you wonder if the optimistic forecasts from Goldman Sachs are indeed responsible.
Many businesses will be over-indexed for performance marketing as demand for their products has surged online. Yet, if this rollercoaster ends, people will have to make tough choices about what to buy and how to spend. And people are far more likely to pay for brands that they actually care about. To make them care, you need more than hyper-efficient PPC, but also great creative and experiences. Make sure you do not under-invest in the media or the capability.
Of course, these are generalizations, each category is different and each solution unique. However, if you want to maintain momentum and not be caught swimming naked, one principle holds true: plan for the future, not for today.