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2021 eCommerce Holiday Recap

the numbers "2021" surrounded by a wreath

For many eCommerce professionals, the early days of January bring a welcome break from the hustle and bustle of the holiday season. For weeks, if not months, you and your team have fulfilled orders, managed customer inquiries, and navigated the rocky supply chain of our Covid-19 reality. It probably feels like as good a time as any to put up your feet and revel in some well-earned quiet time — and after this year, it’s no wonder you might be feeling a little more tired than usual!

Since the onset of the COVID-19 pandemic in early 2020, eCommerce has exploded. With stores closed and travel restrictions impacting consumers’ ability to get out and shop worldwide, eCommerce businesses saw a massive boost to the tune of 77% year over year (YoY) growth by May 2020 alone.

And it shows no signs of stopping. Forecasts estimated that U.S.-based eCommerce sales would surpass $1 trillion for the first time ever in 2021 as a result of lasting impacts of the Covid-19 pandemic. But, as vaccine rollouts took place over the course of the year and regions moved towards living with Covid-19, consumers began to venture out again, marking a return to in-store shopping in numbers not seen in over a year.

So, did 2021 turn out to be the biggest holiday eCommerce spike as forecasted or not? Yes and no. Here’s how eCommerce in 2021 and the recent holidays shaped up.

2021 end of year

If you look at eCommerce trends over the past decade, there’s a clear line that delineates the times before and after COVID-19. The data for this phenomenon is appropriately stark: In 2019, only 13.6% of sales were made from online purchases while early 2021 projections expected to see that number rise to 19.5% by year’s end.

The year kicked off with huge YoY growth following a big Q4 2020, but the growth did slow over the remainder of the year, with 2021 Q3 ending at a modest 6.8% growth, down from 36.3% during the same period in 2020.

B2B trends, numbers, and audiences shifted

It wasn’t only consumers who went to their search bar instead of the storefront over the past 24 months; many firms shopped online for goods and services necessary for their own businesses to overcome pandemic-imposed constraints and challenges. The pandemic saw the majority of business-to-business (B2B) sellers realizing 25% sales growth or greater.

At the onset of 2021, about half of B2B buyers were millennials, forcing the B2B sector to evolve to meet its largest growth market: younger buyers. Prior to 2020, the B2B audience predominantly comprised baby boomers and Generation X — audiences who sought spreadsheets, sales literature, and product trials or trade shows, conferences, and print ads. Millennial buyers, on the other hand, are heavily digitized in their behaviors, meaning more B2B sales are taking place online than ever before.

New types of commerce emerged

While 2020 was all about survival for many eCommerce brands, 2021 opened up an opportunity to expand and take advantage of increasing appetites for new commerce varieties.

A growing trend in commerce, Live commerce, is similar to the Home Shopping Network of the 80s and 90s and provides customers with an engaging experience. Shoppers can tune in to livestreams on Amazon, Facebook, Twitter, Instagram, TikTok, and YouTube to learn about products and connect with influencers and brands while shopping in real time.

Social commerce allows customers to shop directly on their favorite social media platforms while simultaneously bringing your brand into their lives through engagement activities.

Finally, quick commerce has made it possible for shoppers to buy online, pick up in store (BOPIS), or use services like DoorDash to receive their purchases within hours (or less), building on the two-day shipping or next-day delivery that previously shook up the eCommerce world.

Consumer behaviors changed

As quick commerce rose in popularity in 2021, consumer behaviors shifted to match. Even as storefronts reopened and the world resumed a sense of normalcy, 60% of shoppers said they prefer online grocery shopping, compared to only 45% in 2020.  The convenience of click-and-collect purchasing via BOPIS also encouraged more consumers to shop online and then retrieve their goodies from stores, avoiding lines and saving time.

Additionally, three out of four consumers said they made purchases directly from their mobile devices because it saved them time. In short, the overall landscape of eCommerce and consumer purchasing has continued its trend towards digitization — and then the holidays hit.

The 2021 holiday sales season

Sales seasonality made no exceptions in 2021. Retailers saw the usual peaks and valleys in sales volume around annual events, but the year also delivered some unique surprises. In early Q4, Deloitte forecasted that Canadians would spend more this holiday season than in 2020 — a return to pre-pandemic spending — while Americans were predicted to spend the most they have in 20 years with an average of $886 per person.

For the first time, Black Friday sales took a nosedive in spite of record levels of early holiday shopping. The reason? Perhaps the shift from single behemoth sales days like Black Friday and Cyber Monday to full-fledged weeks (or is it the whole month now?) of deals via “Cyber Week.”

According to Adobe, 2021 Black Friday sales narrowly missed the 2020 $9 billion record, coming in at a still impressive $8.9 billion. Cyber Monday outshone its weekend counterpart with an incredible one in three U.S. residents making a purchase on Cyber Monday, resulting in an additional $1.8 billion in sales. By the end of November, U.S. holiday spending reached $109 billion — up from $90 billion in 2020, but still shy of Adobe’s forecasted $111 billion in spend. In total, Cyber Week performed more poorly in 2021 than 2020.

What about shopping beginning sooner in the long lead-up to the holidays?

Supply chain bottlenecks and media reports of shortages and long shipping times created the perfect storm of early shopping behavior among consumers, leaving many retailers scrambling to find creative solutions to meet customer needs. But, Thanksgiving sales still fell flat, with no significant increase in the U.S. from 2020 to 2021.

For the first time in two years, consumers were back to in-person shopping on a larger scale as the anxiety about leaving their homes eased by mid-Q4 with 64% of consumers planning to head to stores to shop in 2021, up from 51% in 2020.

Another big trend during the 2021 holiday shopping sprees was buy now, pay later plans, paying homage to the old days of layaway, but now in an easy, consumer-led digital world. These payment plans require an early start to shopping and allow consumers to pay for their goods over a predetermined time frame, with lower impacts on credit ratings than traditional loans, which require more significant credit checks.

Keep the momentum going

Although the temptation to get some quality R&R during the quiet days of January is strong, the adage “strike while the iron is hot” is especially true now. Statistica forecasted eCommerce sales would grow about 14.4% in 2021 and, if this is true for your business, it’s likely at least some of that growth came from new customers.

If so, it begs the question: How can you continue to see regular growth in the weeks, months, and quarters ahead? The following tactics can help.

Maximize momentum through targeted advertising

One of the most effective ways to remain top of mind and capture additional revenue opportunities is to target your past customers with products commonly purchased by that demographic or that complement their most recent purchases . Retargeting existing customers also costs less generally than attracting new ones, meaning your customer lifetime value (CLV) will increase faster than your customer acquisition cost (CAC).

Your CAC calculation is a simple matter of division. To understand your business’ CAC, take your total promotional costs for a given period of time and divide those costs by the number of new customers. Then, compare that number to your average CLV or your average order value. If you can increase your CLV or average order value with existing customers, your CAC-to-value ratio will be far stronger and your business, as a result, will grow faster.

Encourage social promotion + UGC

User Generated Content (UGC) is content your customers or users of your products create. Implementing a UGC strategy can help you avoid a sudden drop in sales following busy periods like the holidays, and gives you a great excuse to reach out to those customers again. Here are some easy ways to use UGC to continue propelling your business forward.

Plus, UGC and social promotion act as free advertising for you and produce strong marketing messaging and collateral you can use in your own efforts — like that targeted advertising above.

Build relationships with customers new and old

We buy from brands and people we feel connected to, so it’s especially important to focus on relationship-building activities. Thank-you emails, holiday wishes, or Happy New Year notes are easy to send to establish quick touchpoints. Inviting your customers to share their feedback or experience, offering them great deals, or simply introducing them to your newest products makes them feel valued and further builds loyalty.

Meet customers where they are (in particular, mobile)

Is your eCommerce site and/or your product listing optimized for mobile? If not, you’re missing out. A whopping 79% of consumers used a mobile device to make a purchase in the last six months, and more than half of all internet traffic is shopping from a mobile device.

Streamline the customer experience

No one likes a complex shopping experience, which is why streamlining it is an absolute must for any eCommerce business. From optimized product listings and websites to well-written descriptions and transparency in policies and beyond, creating a customer experience that’s smooth and easy to navigate ensures your customers will come back again and again.

Create appealing deals and bundles

Take stock of more than what’s in your warehouses now that the holidays have passed and analyze your sales data in depth. Were any individual products commonly purchased together? If so, you can craft appealing deals for your customers to take advantage of throughout the year, making it both easier for them to shop and more profitable for you.

Looking ahead

Nobody can predict the future, especially in these unprecedented times, but it’s safe to say certain trends will continue into 2022 (and beyond). As you plan for your upcoming year and — dare we say it? — the next holiday season, you must keep leading trends in mind to stay on top of them.

Omnichannel operations will continue to expand for eCommerce stores worldwide. The multiple contact points businesses now have with their customers is here to stay, connecting on their eCommerce platform, social platforms, email, and more. During the course of the pandemic, Square and Atlantic Brand Partners found 45% of survey respondents added new channels to their businesses.

As Artificial Intelligence becomes more commonplace, so, too, will the prevalence of voice shopping through tools like Amazon Alexa, Google Assistant, and more continue to shape the future of eCommerce. Wondering what voice shopping is? It’s the use of your virtual assistant like Amazon Alexa or Apple Homepod to order products (“Hey Alexa, order XYZ”).

Subscription models like Amazon’s Subscribe and Save will continue to grow in popularity, thanks in part to the world’s shift to other subscription services like Netflix. Subscription models ensure repeat business while delivering added value to your customer when you provide cost savings for subscriptions.

Read: Start a subscription box business: 15 Subscription boxes to create today

Expect to see increased demand for buy now, pay later options like Affirm, Afterpay, and Zip. These payment options accounted for 2.1% of all global eCommerce transactions in 2020.

Finally, be ready for even more mobile customers navigating to your product listings. The rise in demand for mobile-optimized eCommerce sites is anticipated to continue into 2022 and beyond, especially as consumer appetites increase and people become more comfortable leaving their homes.

Wrapping up – Be prepared for an amazing 2022

As we all head into 2022 with high expectations for eCommerce, ensure you are primed to meet customers wherever and however they want to shop.

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