E-commerce trends that will change retail

Retailers ramped up their e-commerce strategies to serve consumers that were shopping from home. Either due to mandated lockdowns or their own safety concerns. Retailers and consumer brands should keep five e-commerce trends top of mind in 2021, according to Forbes.

A permanent shift to e-commerce

One of the most profound changes unfolding in commerce is the shift to online retail. Euromonitor estimates that 17% of goods will be bought online in 2021, nearly doubling from 2016. COVID-19 accelerated this shift toward e-commerce, as many consumers experimented and became reliant on the digital channel while in isolation. In 2020, goods bought online globally grew by 24% while stored-based sales declined by 7%.

Three-quarters of global retail professionals expect the crisis-inspired e-commerce boom to lead to a permanent channel shift. The key debate is what percentage of this overnight e-commerce growth is sustainable in the coming years. Euromonitor forecasts that e-commerce sales of goods purchased globally will post a 9.5% compound annual growth rate from 2020-2025. This is more moderate than the 24% crisis-driven spike in 2020. By 2025, Euromonitor forecasts that online sales will account for 21% of total retail spend.

There is always room to grow

Even without expanding supply chains or logistics networks, growth is possible merely through optimization. Several markets are positioned to handle more e-commerce purchases than they saw coming into the pandemic. This means they are positioned to sustain the COVID-19 surge in 2021 and beyond.

Categories with relatively low e-commerce sales like fresh and packaged food as well as alcoholic drinks have potential for significant movement toward online sales. Meanwhile more developed e-commerce categories such as apparel still show prospects for growth. In a similar capacity, countries at varying stages of e-commerce maturity point to continued prospects for online shifts. From developed online markets such as China and the US to emerging markets such as India and Brazil. There is room to grow in nearly all geographies.

Online grocery sales

The penetration of e-commerce into the grocery space lagged other retail sectors before COVID-19. Globally, online grocery saw a significant boost in 2020 as consumers sought to comply with lockdown restrictions and turned to websites in search of hard-to-find products. Thus, retailers ramped up digital investments and consumer brands launched D2C operations. In 2020, food and drink e-commerce, in particular, posted 53% growth. This is the highest of any product category.

E-commerce growth in Latin America

The COVID-19 pandemic led companies in Latin America to make bigger investments in digital platforms. This included developing a smoother website experience, adding D2C operations and partnering with last-mile delivery services. Many turned to social media platforms such Instagram, Facebook and WhatsApp. There they facilitated interactions across the shopping journey.

These efforts helped Latin America post the strongest growth of any region with a 60% jump in goods sold online in 2020. Euromonitor expects Latin America to be the regional growth story this year. Mexico is expected to lead that expansion. Thus, narrowing the gap between itself and the region’s largest e-commerce market, Brazil. Traditionally, spend in the travel sector drove e-commerce in Mexico. However, the desire to shop online to ensure safety during COVID-19 caused consumers to overlook some of the hurdles like fraud and logistics that previously hurt online sales.

Going the last-mile

In 2020, 40% of global retail professionals viewed enhancing product delivery as an important delivery initiative. These players will struggle to meet consumer expectations of yesteryear in the post-pandemic, digital-first era. Unless they reimagine their physical assets and make significant upgrades to logistics networks.  

As such, last-mile strategies, including both home delivery and consumer collection options, have been in the spotlight during COVID-19. Last-mile options receiving attention range from low-tech, click-and-collect services that require consumers to retrieve items from specific locations to high-tech robotics that deliver products or meals to the consumer’s home.

A digital presence is an important component of a company’s value proposition. However, only 15% see their company as setting the pace for a digital transformation against industry peers. Retailers and consumer brands are continuing to navigate the digital terrain. Understanding these tech-driven trends is necessary in order to better compete this year and beyond.