Future of Commerce 2021

Omnichannel features and experiences that retailers adopted in 2020 will give new life to physical stores and allow businesses to take advantage of proximity to local consumers.
Future of Commerce 2021

It’s no secret that 2020 has pulled commerce forward by 10 years. Regardless of what 2021 brings, the result is a new normal—especially when it comes to the way we shop.
 
Young consumers will change the business landscape as e-commerce charges ahead. While the pandemic kick-started a behavioral shift to e-commerce, the highest shift was seen in young and middle aged consumers. Brands will need to adjust the way they do business to meet new consumer expectations and have staying power.

Consumers are hesitant to return to in-store shopping.
 -  84 percent have shopped online since the pandemic; 38 percent have shopped in-store.
 -  85 percent of consumers said they will shop online regularly in the next 6 months.; significantly fewer (31 percent) say they’ll shop in-store regularly in the next 6 months.
 -  85 percent of younger consumers (18-34) and 90 percent middle-aged consumers (35-54) years shifted more of their spending to online shopping since the pandemic was declared, compared to the 86 percent average.

Brands should pay attention to the habits of younger consumers as they lead the shift to e-commerce, especially because they are more likely to:

Discover and shop via social media
- 55 percent of younger consumers who purchase from independent retailers discover brands via social media compared to 45 percent of middle aged consumers 35-54 .and 33 percent of older consumers 55+
- 41 percent of younger online shoppers said they purchased via social media, compared to 44 percent of middle aged online shoppers and 22 percent of older online shoppers.

Prefer to shop for sustainable and green products
-  83 percent of young consumers (18-34) prefer to shop for sustainable and green products compared; 93 percent in the middle aged bracket also prefer to shop for sustainable and green products

Shop to have an impact
- 42 percent of younger consumers who shopped from independent retailers since the pandemic was declared did so to have a positive impact on society, compared to 26 percent of middle aged consumers
 
Physical retail will transform as we know it, giving local businesses new advantages. Omnichannel features and experiences that retailers adopted in 2020 will give new life to physical stores and allow businesses to take advantage of proximity to local consumers.

Some of these new strategies and technologies resilient retailers adopted and will continue to offer include:
- Contactless payments: 82 percent consumers are more comfortable making in-store purchases with digital/ contactless payments (81 perecent - younger consumers, 86 percent - middle aged consumers, 76 percent - older consumers)
- Alternative pickup and delivery options: Among those who used alternative fulfillment methods, over half did so more often in the past six months than before the pandemic was declared. These include:
- Local delivery: 71 percent of consumers are receiving items through local delivery more often than before the pandemic was declared.
- Buy online, pick up in store (BOPIS) or curbside: 69 percent of consumers are using BOPIS or curbside pick-up options more often than before the pandemic was declared.
- Pick up point: 69 percent of consumers are using a pick up point option more often since the pandemic was declared.

Consumer pain points: Merchants will need to improve the following aspects of consumer touch points for better online experience. Top factors that made shopping online frustrating for consumers include:
- 42 percent say limited stock is a concern
- 36 percent feel shipping took longer
 
Consumers want to shop independent. Businesses will adapt to make that easier. Consumers expressed the desire to shop with independent businesses but still purchase from marketplaces for convenience. Independent brands will continue to close the gap.  

Consumer intentions lean toward supporting independent & locally owned businesses.
- More than half of consumers (81 percent) look for independently owned businesses to support for reasons including: supporting entrepreneurship, buying unique products, and experiencing good customer service.
- 86 percent of consumers say they support small businesses, while 83 percent say they look for locally owned businesses to support

Consumers’ intentions to support independent businesses are not yet reflected in their purchasing habits. However, this may change: 
- 44 percent purchased from marketplaces since the pandemic was declared, while 52 percent say they’ll continue to shop from Local/ Independent businesses regularly in six months’ time.
- 76 percent of consumers are willing to shop at new brands or stores for the first time. 

Independent & Locally-owned retailers should highlight the benefits of their business models and adopt features offered by large retailers to meet consumer needs.

Fast and free shipping
- 42 percent of online shoppers say free delivery would improve their online shopping experience while 28 percent say free returns and 42 percent say faster delivery would make online shopping better.
- 75 percent of Shopify merchants who generated sales between March through September have free shipping enabled on their stores. (Shopify merchant data)
- In Q2 2020, Shopify enrolled more merchants and increased fulfillment volumes for Shopify Fulfillment Network by 2.5 times over Q1. (Shopify merchant data)

Conversational commerce
- As e-commerce continues to grow and retailers navigate challenges presented by COVID-19, fostering an online dialogue between merchants and customers is becoming increasingly important.
- Merchant sales attributed to chat on Shopify Ping increased by 185 percent from March 16 to July 1, 2020. (Shopify merchant data)

Shoppable social media
- Independent retailers are increasingly adopting ways to meet customers where they spend their time online.
- At the start of the pandemic from March through April, marketing on Facebook and Instagram via Shopify’s channel integration saw 36 percent growth in monthly active users—a trend that continues to rise. (Shopify merchant data)
 
More consumers will vote with their wallets. Consumers will make an informed decision while choosing  brands. Brands must demonstrate authenticity, transparency, and accountability as consumers increasingly support local businesses and sustainable products.
- 87 percent of consumers prefer green or sustainable products.
- 80 percent of consumers respond positively to retailers making a donation to a cause with each purchase.
- 27 percent of consumers shop at local or independent retailers to reduce their environmental impact.

Consumers’ main reasons for shopping at a locally owned business (online or in-store) include:
- Strengthening the local economy (37 percent)
- Helping support local job creation (41 percent)
- Investing in their community (22 percent)

35 percent of Indian shoppers purchased something from an independently-owned retailer in the six months since Covid-19 was declared a pandemic

Top reasons for shopping independently include: having a personalized shopping experience (43 percent), having a positive impact on society (36 percent), and to reduce their environmental impact (33 percent)

More than (58 percent) of consumers who shopped at independently-owned businesses found them through recommendations, followed by through social media (48 percent)

Modern financial solutions will disrupt business and consumer banking, finance, and lending. Providing options that traditional banks don't offer, financial solutions that prioritize speed and access to capital, faster ways to pay, and more flexible payments like installments are growing in popularity among businesses and consumers.

- The quality of the digital user experience is a key factor for merchants: 48 percent global consumers say a “good online banking or mobile app experience” is one of their top three most important features when considering a bank for their business.
-  More businesses are accessing capital outside of traditional banks: Across the US, Canada and UK, cumulative funding from Shopify Capital reached approximately $1.4 billion at the end of September.
- Buy now, pay later has grown in popularity: The number of Shopify merchants globally who offer buy now, pay later has increased by 60 percent since the start of the pandemic.

These trends were revealed in Shopify’s first annual report, ‘Future of Commerce 2021’.
 

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