Ecommerce Predictions for 2021
2020 was a year without precedent in modern history, and one most people are more than happy to put behind them. While 2021 represents renewed hope for the end of the COVID-19 pandemic and the resumption of something more closely resembling normal, many of the changes to daily life – and to commerce – ushered in by 2020 will be driving forces behind 2021 as well. Ecommerce merchants looking to make 2021 a year of growth and abundance need to understand those forces and use the lessons of the past year to get out in front of them. With that in mind, the following predictions represent four likely ways that the back end of the coronavirus pandemic will drive opportunities (and challenges) in ecommerce into 2021 and beyond, and how merchants can proactively plan for those emerging trends to make the most of the year ahead.
Prediction: Ecommerce Shopping Habits of 2020 Are Here to Stay
COVID-19 changed life for people all around the world, forcing them into their homes and onto their computers. Unsurprisingly, ecommerce exploded during the pandemic. Online merchants enjoyed 45% growth in year-over-year sales, despite the fact that individual consumers are actually spending less. With the world well over a year into COVID-influenced life, the shopping and payment habits that consumers have developed are now ingrained and won’t revert to the “old normal” as vaccine programs roll out.
Online shopping will continue to dominate throughout 2021 and beyond as people both consciously and subconsciously maintain their new routines. People will have plenty of reasons to get out of the house and enjoy the activities and experiences they were denied during lockdowns and stay-at-home orders – experiences like dining, entertainment, and travel. Day-to-day shopping will not be on that list, as consumers will continue to forgo overly-crowded indoor spaces and instead opt for a one or two-day wait on delivery instead.
Merchants will need to be ready for the trend towards ecommerce to continue. While few business owners made it through 2020 without realizing the enormous importance of the web as a sales channel, there are still some that have been slow to move. The time to make that transition is now, as stores failing to offer a smooth online and omnichannel experience will quickly find themselves left behind.
Prediction: New Opportunities Will Arise in D2C Ecommerce
From Warby Parker’s glasses to Casper’s mattresses to Dollar Shave Club’s razors and blades, direct-to-consumer brands have been redefining how people shop online for years. D2C brands have long been masters of lowering costs by cutting out the middleman, but the ubiquitous nature of ecommerce today has provided them with a platform and reach Michael Dell could never have dreamed of in the late 90s and early 2000s.
With almost one in ten U.S. consumers reporting they made an online purchase for the first time during the pandemic, and another 25% having yet to move online at all, the continued growth in the ecommerce space is going to create even more opportunities for D2C brands in 2021. D2C opportunities will be especially ripe in the sectors most “positively” impacted by the pandemic, including personal care, health, and home products – three areas in which the direct sales model has already been proven to work.
Forward-thinking merchants with the right sales volume and resources will have a major opportunity to go around their wholesalers directly to manufacturers in order to create their own private-labeled brands – an evolution with the potential to turn a merchant’s business from one of pure utility to the consumer to one of major brand awareness and loyalty.
Prediction: Cyber Threats Will Continue to Explode in Volume and Scope
Every mass migration draws predators, and the migration online during the COVID-19 pandemic was no different. More people online provides more potential targets for cybercriminals, and technologies like Zoom and ecommerce software being used by novices without proper security protocols represent new opportunities for novel attacks. During even the earliest stages of the pandemic, data breaches skyrocketed by 273%. Phishing scams have been booming as well, and ransomware attacks are occurring more than twice as often in the United States as they did in 2019 – a trend that is, unfortunately, likely here to stay.
The proliferation of cyber threats creates a more dangerous environment for all ecommerce merchants, and makes it more important than ever to take cybersecurity and the safety of customer data seriously. Cybersecurity begins with PCI compliance. While failing to meet PCI security standards is a problem at the best of times, it’s more important now than ever with cybercrime on the rise. Merchants should also evaluate how and why they store sensitive customer data. Merchants storing customer data themselves are open to breaches that could potentially have enormous financial consequences. If possible, shifting that responsibility to a partner within the tech stack – like a gateway provider – could be a game-saving move.
Prediction: Merchants Will Need to Streamline Their Operations
As more businesses chase consumers online, the competition for time and space on their screens ramped up significantly through 2020. By Q4, spending on search advertising was up 32% YoY, spending on social was up 39% YoY, and spending on ecommerce advertising was up a whopping 78% YoY. At the same time ecommerce is becoming an absolute necessity for merchants, it is also becoming more expensive. Merchants need to be ready to absorb those elevated acquisition costs to be able to compete. In 2021, that fierce advertising competition is going to continue to accelerate, making retention more important than ever and also forcing merchants to rethink their spending.
Rising costs in one area need to be offset in other areas in order to maintain profitability, and merchants will need to look for ways to lean their businesses to stay both competitive and afloat. Arguably one of the most direct ways to reduce ecommerce costs is to reduce the processing fees paid on each transaction. This will likely make 2021 a year in which many merchants hit the market for a new, lower-cost payment processor.
Interchange-plus pricing represents the lowest, most transparent pricing model available in the payments industry, and business owners looking to shave their fees would be well served by moving to an interchange-plus merchant account. BAMS merchant accounts combine guaranteed-low interchange-plus pricing with a complete suite of value-added services, including fraud defense, assistance with PCI compliance, integration with Apple Pay and other digital wallets, next-day funding, and more.
To find out more about how a BAMS merchant account can reduce your monthly merchant statement while providing you with the tools you need to thrive in 2021 and beyond, click here to get started with your custom five-point price comparison today.
