There is no doubt that the growth seen in e-commerce in 2020 has been incredible. And WOW has it been a year! We all knew walking into 2020 that e-commerce would grow, most notably Amazon and other marketplace growth. DTC (direct-to-consumer) brands would continue to be on the rise. We would have all walked into a casino in Vegas and made that bet in full confidence. But no one could accurately predict what e-commerce would actually look like this year. Unimaginable growth in e-commerce adoption rates (and not because of an amazing product, marketing, or pricing). But because people wouldn’t feel comfortable actually leaving their homes for fear of an invisible and unknown deadly virus, COVID-19.
E-commerce Adoption Rates
E-commerce adoption rates have skyrocketed between 4 and 6 years into the future in 2020. Essentially, the expected revenue of 2024-2026 has accelerated and come to full fruition in 2020. This is not only unexpected but also creates compounded problems for those already behind the curve. If your business was already slow to adapt to the move to e-commerce you, unfortunately, are in even a worse position now. On the other side, it has given a significant advantage to those business models already heavily invested in e-commerce – Amazon for example. Amazon has been a clear winner in the battle for revenue in 2020. But with success comes pain as well. Significant shipping challenges, persistent stock-outs on products, allegations of price gouging, and issues with COVID-19 outbreaks at distribution centers have definitely been pain points for Amazon in 2020.
This chart by Statista shows you the dramatic growth of e-commerce sales as a % of overall retail sales:
Experts predict that retail e-commerce sales will be $4.13 trillion in 2020. That is a huge chunk of change and something all businesses should be paying attention to. This can either be directly (like a DTC brand) or indirectly (like a service company). The ease of interacting with your brand and purchasing online does influence decision-making on all aspects of purchasing, not just products. Consumers now demand more from websites and offerings of service companies, as well. Where previously it would be expected to have an in-person meeting or phone call to finalize pricing quotes many are looking for more online-only ways of closing the purchasing cycle. Not only because most have experienced this to be easier, but also in these times it is a safer and cheaper alternative. You need to re-look at every aspect of your business value prop to be sure you are not falling behind in a rapidly changing ecosystem.
Supply Chain and Shipping
Supply chain and shipping pipelines have been tested continuously over the past several months. There have been notable failures that are only expected to compound with peak shipping right around the corner. Because of social distancing, COVID-19 sickness, and overwhelming package volume, shipping carriers like you are getting hit on all aspects of the supply chain. Products are in demand, however, manufacturing is not able to keep up. Then, when you do finally catch up there are the issues with the shipping, whether that be inbound imports or outbound domestic shipping.
Open communication on all sides is key to your future success moving forward. Also, ensure if you are working with a 3PL (3rd party logistics company) that also has strong communication skills. A 3PL is an extension of your brand to a consumer and issues they are facing will also have a negative on your brand. If you are looking for a trusted 3PL with excellent communication skills and a passion for efficiency reach out to Lessgistics at firstname.lastname@example.org. Lessgistics specializes in e-commerce fulfillment for direct-to-consumer brands. They understand the pain points that exist and have experience solving them every day.
Future Growth of E-Commerce
While 2020 was certainly a year of incredible record-breaking growth, the acceleration is not over. E-commerce will continue to expand– at a minimum- 23% each future year. It is worth noting the continued COVID-19 impacts could push this number even further in 2021 than currently predicted which accelerates future years, as well. Purchasing dog food, for instance, month after month, at a brick-and-mortar store becomes routine for a customer. Due to COVID-19, many brick and mortar stores were closed. Customers were forced to purchase items like dog food online. Moving forward these customers will most likely continue to purchase these items online as they have deemed this an easier and safer choice. Also, the pricing differential between online and in-store has never been closer, with a lot of brands having unilateral pricing regardless of the sales channel.
If your brand or products are not easy to purchase online you are not only missing out on current revenue but future revenue as well. Shopify or Woo-Commerce are popular choices for direct-to-consumer brands based on their ease of set-up, security features, and also customizable choices for your brand. There are also several plug-ins available to help convert browsers to customers which are key when building a successful website.
This is an exciting but also nerve-wracking time. We are in the midst of the largest e-commerce boom ever and it is only expected to continue to increase over the next several years. It is imperative that you are continuously looking at your direct-to-consumer and marketplace strategies. Your business’ future depends on your agility to adapt and consistently please your customer base. All arrows point towards e-commerce being the largest part of that strategy going forward.