Digital commerce predictions for 2021

January 14, 2021 | Mike Monty, Head of Enterprise Sales

Prior to 2020, many Canadian businesses were lagging behind when it came to digital transformation. The global pandemic has permanently altered the way businesses operate. This year, nearly six in 10 organizations have accelerated their digital transformations to meet health and safety guidelines and to keep up with changing consumer shopping behaviours. While online shopping isn’t new, this year proved that it’s here to stay and there is no turning back.

What does the future of digital commerce look like following a year of accelerated transformation? These are some of my predictions on some of the top trends of 2021 as the pandemic and other factors continue to influence consumer buying behaviour.

Augmented reality redefines retail – Augmented Reality (AR) applications have been on the rise in recent years with virtual “try-before-you-buy” experiences. Due to pandemic related lockdowns, the trend is only increasing as retail brands no longer have the live interaction with their customers they previously depended on. AR helps bridge the gap between online and offline retail experiences with use cases ranging from previewing furniture and products in your home from everyday brands like IKEA and Home Depot, to virtually trying on a pair of glasses in Warby Parker’s mobile app without ever having to leave the couch. In terms of more recent innovation, just last week, Google announced its move into the AR space with the launch of an AR-powered cosmetics try-on experience on Google Search. Once a nice-to-have feature, AR is quickly becoming an essential technology for retailers.

AI takes customer service to new heights – While the past few years have allowed many companies to dip their toe into Artificial Intelligence (AI), 2020 proved to be the year to dive in headfirst. Newer developments have seen AI-driven technology moving from back-of-house to front-of-house, with customer-facing initiatives such as AI-powered chatbots that enable users to perform their everyday tasks more efficiently, automate customer conversations, predict customers behaviour and increase customer retention.

In 2021, AI will be leveraged to enhance the customer experience by delivering uber personalized guidance and recommendations. For businesses that leverage AI to collect data, the more data they continue to collect and optimize about a customer and predict products and services the more they can build a compelling shopping experience. Add more data, and AI can learn and infer user preference, delivering best-in-class personalization.

The online shopping experience gets personal – The pandemic is driving e-commerce competition to record heights as Canadian consumers spend $52 billion on retail e-commerce this year (eMarketer data), an increase of 20.7% compared to 2019. While sales are booming, it is increasingly challenging for retailers to cut through the noise. Consumers now seek richer experiences when they shop. With the absence of brick-and-mortar, the digital shopping experience requires tools that are immersive, informative but most importantly, personalized.

The future of personalized experiences will be one where retailers can leverage customer data to create one-to-one personalization. More and more, customers will start to receive offers that are highly targeted at them, as individuals, with products, offers, and communications that are uniquely relevant to them. International cosmetics retailer, Sephora, is a prime example of online personalization done right from its personalized emails, Beauty Insider loyalty program and in-store technology. Shoppers’ Beauty Insider profiles are unified across Sephora.com and its mobile app and can be accessed in store to personalize consumers’ shopping experiences, no matter their entry point.

We’re likely to see brands increase their investment in personalization tools to help them stand out in a crowd and prove they know their customers best.

The rise of voice commerce – Voice assistants are seeing their use cases expand beyond checking the weather, operating smart home devices, or searching fun facts on Google, they’ve also been quietly taking over the e-commerce industry. Given that we spent more time at home this year, we’ve seen an increase in interactions with voice assistants as families adopted new technologies and habits around their newly disrupted routines. The more opportunities consumers have to engage with a new technology, such as voice assistants, the more it allows long-lasting habits to set in. This is likely why this year saw significant growth of independent voice assistants. For example, Houndify is a voice AI platform that allows brands to add smart, conversational interfaces to anything with an Internet connection.

In terms of where voice can take retailers, it has the potential to help brands improve the way they interact with customers, providing more seamless, conversational customer journeys that shepherd them through purchase funnels, customer service encounters, and other types of payments and transactions.

Social commerce is trending – Social commerce made major strides this year as social platforms evolved to meet consumers where they spend most of their time and I anticipate this trend will only continue to accelerate in 2021. In May, Facebook launched Facebook Shops, enabling businesses to set up a single online store for customers to access on both Facebook and Instagram. Businesses small and large now have a simplified way to build an e-commerce outlet on the world's leading social network, and consumers are presented with a frictionless shopping experience without ever leaving the social app. More recently, Instagram has been testing its Shop tab as an evolving e-commerce tool which will also provide businesses with new revenue opportunities.

While social commerce enables brands to focus on direct selling as the key priority, it also presents an opportunity to increase audience engagement and create awareness as over half (60%) of Instagram’s users are learning about new products on the app. Given three in four Canadians (77%) use Facebook on a daily basis, and Instagram coming in a close second with 69% daily users, 2021 will be the year to capitalize on this market and increase conversions via social commerce. These are just two examples of social platforms that have built in checkout functionalities designed to streamline the online shopping experience and facilitate more immediate purchase behavior in response to user actions. With the increased usage of TikTok and YouTube, the possibilities of social commerce are endless.

Optimize the shopping experience for mobile – As lockdown rules change on a week-by-week basis, many consumers are left with lingering fears over renewed outbreaks, making them wary of returning to stores. Discomfort with physical shopping forced consumers to try digital and mobile commerce in new areas. Grocery shopping is a prime example. Research from earlier this year found that nearly half of Canadians surveyed said they have bought groceries online in the past six months and among those who ordered groceries online, 53% said this would be something they would continue to do so long after the pandemic is over. To reach the rising number of mobile customers, Walmart Canada rolled out mobile check-in across the country this fall, so customers can check-in for their grocery orders while on route, making the pickup speed quicker.

As customers continue to make more purchases using mobile devices, brands will need to provide consistent experiences across all devices, from desktop to tablet to mobile for their online store or risk shopping cart abandonment and above average bounce rates. The mobile shopping gains we’ve seen this year will likely stick post-pandemic and I expect the effects of the pandemic will only accelerate long-term trends in mobile usage.

With roughly half (48%) of Canadians using e-commerce platforms more often now than pre-pandemic, technology needs to be part of your go-to-market and business strategy. Consider if your brand is leveraging any of the above-mentioned trends and if not, how could adoption help your company keep pace with changing consumer habits?

If 2020 has taught us anything, it is that digital transformation not a concept, it’s a reality.

 

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