The Reality Of The New Econsumer: Are Brands Ready?

The Reality Of The New Econsumer: Are Brands Ready?
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In the beginning of 2020, all sorts of ‘predictions’ around consumer confidence and ecommerce were made – predictions which are now utterly irrelevant. In the space of a few months, life irrevocably changed and predictable consumer behaviour was thrown out the window, along with a lot of ‘normality.’

So where will the consumer be left at the end of all this disruption? And where does this leave an already vulnerable retail sector?

In 2019, worldwide ecommerce sales topped USD$3.5 trillion, an increase of 18 per cent from the year before, and was expected to nearly double by 2023 to more than $6.5 billion. In 2019, ecommerce share of total global retail sales was 14.1 per cent and is expected to increase two per cent a year to 2023.

However, consumer confidence since then has understandably taken a nose-dive, as millions around the world are now unemployed, and survival becomes everyone’s first concern.

The initial spike in ecommerce, caused by people shopping in isolation, has flattened as a global recession looms. All the growth predicted for 2020 is now looking highly unlikely. In fact, a recent McKinsey survey found around a third of Australians are intending to cut back their spending from May. These cuts are expected to impact everything except groceries and at-home entertainment.

The necessary reduction in both frequency and duration of visits to physical stores, has also forced consumers to adapt to the digital world. Those initially reticent to explore ecommerce options now use them as second nature, and this has propelled consumer behaviour and expectations. Now, ecommerce trends such as virtual reality, 3D imagery and value-add have arguably accelerated, with years of anticipated evolution occurring in only a few months.

The rise of the new econsumer

Eighty-three per cent of US shoppers say their in-store shopping behaviour has changed since the coronavirus hit, and pure ecommerce platforms have seen an 80 per cent increase in demand since January, according to emarsysCovid-19 Commercial Insight study. In Australia, a recent KPMG study also found that even prior to the current environment, Australia’s retailers were primed for ecommerce to grow rapidly in 2020, with the sector forecast now to see two sequential waves of accelerated ecommerce growth as a result of the coronavirus (COVID-19).

Consumers have been forced online, so retailers have had to quickly pivot. Those already with a strong online presence were well prepared, whereas those who weren’t had to quickly adapt to meet demand, or risk failure. The lockdown has also resulted in consumers expecting their every need to be met online, and great digital innovators have thrived in this climate.

Key to all this has been mobile optimisation of the consumer experience. It was estimated by 2021, 53.9 per cent of all ecommerce sales will happen on mobile devices. It could be argued this has been reached already, given the rapid evolution of online shopping this year. However, mobile conversion rates are less than half those of desktop, as research indicates 53 per cent of consumers will abandon a site that takes longer than three seconds to load. Research also suggests mobile bounce rates are 10–20 per cent higher than desktop.

The econsumer now expects their needs to be met wherever they are, on any device, with zero pain points or lag. Once again, it is the innovators who are attuned to these shifts in customer expectations and behaviours who will thrive, while merchants who are slow to evolve from legacy models get left behind. When the dust settles, retail will never be the same again – but in a good way.

Direct to consumer is the new norm

While many experts were predicting a bricks and mortar renaissance moving forward, powered by experiential destination shopping, the pandemic has flipped this prediction. Many traditional retailers have been left struggling when the ‘middle men’, such as malls and outlets, were closed, some permanently. They had to quickly open up direct lines of distribution and communications with consumers. For instance, brands like Heinz in the UK and Lindt in Canada had no online shopping offering and had to quickly establish a presence.

Not only did many brands thrive in this new DTC model, they also discovered clear advantages, such as the ability to communicate directly with consumers, which has enhanced customer loyalty.

DTC is, by its very nature, a no brainer for many brands wanting to empower and future-proof their business offering to customers. A study by Direct Brands 2020 for IAB Australia, even prior to COVID-19, found direct brands are doing more than just selling online directly to consumers, they are using new channels to reach customers, develop new delivery methods, and communicating strong brand purpose messaging via their own channels.

Direct control over pricing, promotion, product and distribution are all appealing to brands who were previously at the mercy of distributors and sellers. The opportunity of DTC communication and sales via new channels and routes to market also offers access to first-party data, allowing more insights and a test-and-learn approach to marketing and innovation.

This will mean for many brands, DTC will be the ‘new normal’ moving forward.

Shipping, like convenience, isn’t an added extra

Good luck to those retailers who plan on going back to charging for shipping or click and collect in the coming months. Consumers have quickly adapted, and are appreciating value-add of bonuses such as free shipping or free additions to carts, such as samples. While these might have been implemented to motivate online shopping, consumers swiftly adjusted and won’t appreciate losing those benefits moving forward.

Brand loyalty has also been eroded, and around 40 per cent of respondents to a Yotpo’s recent survey said they’d be glad to turn to less familiar brands for similar items. Brands looking to thrive moving forward should see these kinds of offering as table stakes to keep their customers loyal and happy.

Technology is the new economic advantage

Even before all the disruption, consumers were setting the bar, based on their last best online experience. Arguably, these expectations have now increased.

Many brands reliant on physical presence in stores had to adjust, and implemented virtual reality, augmented reality and 3D imagery onto their sites so clothing or beauty products could be ‘tried on’ prior to purchase.

Cutting edge digitally native brands are also experimenting with voice commerce, and testing augmented reality-enabled online-to-offline (O2O) experiences. With headless commerce and progressive web applications (PWA), the world is becoming a storefront as brands enable commerce via smart mirrors, video games, and live streams.

Zoom and other online meeting equivalents have become the norm, and retailers can expect this to promote their offers as well. Retailers should be prepared to hop on some version of a video chat with customers the way they might have interacted with them in person previously. This will extend to chatbot and virtual customer service and stylist offerings.

Evolution from the throes of enforced isolation

Enforced isolation has seen consumer expectations evolve quickly. Smart brands have adjusted, turning to technology to facilitate consumer interaction and retain revenue, and many brands who have traditionally communicated with customers through resellers and distributors are now becoming direct to consumers. This has come with boons, including a closer relationship with customers for improved loyalty.

The way forward is clear: online is the new ‘store frontier’ and this trend will continue. Those retailers who invest in digital channels and ensure exceptional digital customer experience is at the heart of everything they do, will ultimately thrive in the years ahead.

About the Author: Shaun Broughton, Director of Shopify Plus APAC

Shaun Broughton joined Shopify Plus in July 2018 to lead the business in APAC.  Prior to joining Shopify Plus, he spent 8 years at Microsoft where he held various roles working on their Xbox and retail business allowing him to build a deep understanding of retail and the consumer market. He then joined the leadership team that launched LinkedIn into the Asia Pacific market and most recently held the position of Senior Director at Lego Australia.

 

 

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