7 Trends in Online Retail for 2021

Online retail has seen some huge numbers over the last year.

The global COVID-19 pandemic has left an enduring mark. More and more businesses had to turn to online sales to keep their doors open at a time when they had to be physically shut. Consumer spending shifted to online channels, even for items that typically weren’t big ecommerce sellers.

And through all of this, retailers learned. They learned more about consumer preferences and more about what it takes to operate successfully in an online retail environment. The big question is, how will all of this impact ecommerce this year?

What trends can we expect from online retail in 2021?

#1. Record online competition in retail

While not all businesses were well-prepared to make a shift into the digital world, most have learned some good lessons by now. Research from McKinsey found that ecommerce jumped forward 10 years in just 90 days. Growth was phenomenal out of necessity, so how much of that will stick?

One thing they found was that it wasn’t just the younger generations of shoppers heading online. Older shoppers also made the move to online shopping with some surveys finding 80% to 90% of all consumers shopped online during the pandemic. In all, there is data to suggest that more than 150 million people globally shopped online for the very first time during the pandemic.

With such a massive shift happening, most retailers don’t want to be in the “just waiting this out” sort of position. Timelines are uncertain everywhere and as more time ticks by, that’s more opportunities to optimize for online sales.

A recent Forbes article states: “Three-quarters of global retail professionals surveyed by Euromonitor 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.”

So at least for now, record levels of online competition are here to stay as retailers and consumers figure out what’s next.

#2. Consumer preferences drive optimization

One thing that has been highlighted by the pandemic (although almost always true of consumers), is that those who optimize for speed and efficiency win. Arguably, this is happening offline too, or in situations where the modality of the consumer is mixed (such as order online, pick up at the curbside).

Several industry experts in the online retail space have stated that consumer demand for speed and efficiency is at an all-time high. If you can ship faster or set up a better curbside service than the competition, you’re onto a winning strategy.

One thing that retailers need to be aware of is that it’s not just competition in their own country they need to watch – it’s cross-border commerce too. This is another area that has grown during the pandemic.

Online retailers should consider the overall customer experience in detail. It’s fair to say that many digital-first brands are still outdoing those that moved from a more traditional format to online retail during the pandemic. Some of the larger companies (who you might think would have the best resources), actually have among the worst customer experiences of their websites. There’s still room for the small online retailer to compete!

Optimization has always been important for ecommerce, but you could argue that increased competition makes it more critical this year. (See some of our tips for CRO – Conversion Rate Optimization – here).

#3. New product categories are doing well online

How many of us brought home essentials such as groceries or health and hygiene products online for the first time during the pandemic? According to Statista data, health, hygiene, home essentials and food and beverage moved to become the new top online product categories.

A Statista survey showed that drivers of consumer behavior included: direct delivery to their home, cheaper prices, more convenient shopping and the fact that online shopping is available 24/7.

Many CEOs globally expect to see this as a shift that will stick, as long as it goes hand in hand with good customer experience, speed and convenience. A Global Web Index survey found that almost 49% of consumers said they would shop online more often even after the pandemic is over.

If you’re a retailer hoping to continue reaping the benefits of increased online shopping, ensuring your checkout experience is optimized is one of the top things you can do to stay competitive.

New product categories in household and consumer goods are dominating online this year

#4. AI to help with learning

AI (Artificial Intelligence) is not new, but has grown over the last few years in terms of application in an ecommerce environment. AI capabilities can learn from shopper behavior and help to personalize their experience.

Another area in which AI is set to make a bigger impact is within analytics. Google recently introduced its new GA4 (Google Analytics 4) platform, with AI features for helping businesses and website owners fill in any gaps in their data.

In a world where the acceptance of cookies and forms of tracking is expected to rapidly deteriorate, GA4 is Google’s answer to help marketers access data from which they can reasonably learn about their users.

#5. Sales by live streaming

The live stream sale is nothing new. The Shopping Channel and QVC have been doing this for years. Over the last year, ecommerce sales via online streaming have been taking off, especially in China. The US is also expected to see growth in this area.

Amazon and Facebook are moving in on the live shopping trend, testing out new platforms to facilitate it. The live stream gives customers the chance to see products in action and chat with the hosts, creating a more interactive shopping experience. Via social platforms like Facebook, it’s easy for viewers to click on the products and purchase as they see them.

#6. Shipping matters more than ever

We all know that consumers have developed high expectations when it comes to ecommerce shipping. Over the course of the pandemic, those expectations have been heightened. Somewhat unsurprisingly, consumers want fast and free shipping. In the US, almost 40% expect that two-day shipping should be free.

This has come with a number of challenges, especially as shipping infrastructure has been strained over the pandemic. A combination of high demand and staff out with COVID were reasons reported by USPS for slow delivery times.

To add an extra level to consumer expectation, many now have the expectation that sustainability will factor into shipping and packaging choices. Consumers are also showing a willingness globally to pay a premium for sustainable packaging. People are looking for companies that are active in reducing, reusing, recycling and avoiding sending plastics to landfills.

It’s worth noting that your shipping and packaging options may be a way to stay out competitively. Consumer preference has been leaning toward more sustainable practices for a few years now and is unlikely to look back.

#7. Independent businesses popular with consumers

The great news for all you smaller, independently owned businesses out there is that consumers are expressing a preference to shop independently. A Shopify survey found that half of all consumers deliberately seek out independently owned businesses, with their reasons for doing so listed as supporting entrepreneurship, buying unique products, and experiencing good customer service.

The only hitch is that those same consumers still like to shop from marketplaces (like Amazon) for convenience. Still, 57% stated they were willing to shop at new stores for the first time.

One way independent businesses can compete is to highlight their own unique benefits. For example, are you more sustainable? Do you make contributions to a charitable organization? Is shopping with you contributing to some sort of social goal or initiative?

Final thoughts

These were just seven trends out of many in online retail this year. As expected, the biggest impact has come from the ongoing effects of the pandemic and the associated needs and expectations of consumers.

Online retailers can harness a piece of the large digital pie by staying ahead of the trends and optimizing for the best possible user experience. Aim to iron out any sources of friction and this will help your sales.

CheckoutWC provides an optimized checkout experience for WooCommerce. Check it out here today.