Remember when the ecommerce industry shifted significantly upward in 2020? In fact, trends showed in the U.S. consumers spent $861.12 billion online in 2020, which was a 44% increase year over year.
Moving into 2021, it’s difficult to determine how much more the industry will grow, but what we do know is customers spent 2020 experiencing the convenience of online shopping and were introduced to new brands they’re likely to continue supporting.
Following these ecommerce trends, many businesses opened an online store in 2020 or optimized their current stores in order to continue reaching their customers.
Competition in the DTC space is now more fierce than ever.
Source: Grand View Research
So what can you do to ensure you’re still seeing an increase in sales? How can you engage with your customers in a way that drives a long-term relationship? How can you do better than your competitors this year? Don’t worry—we brought together DTC experts from several companies with data-driven insights on what the fastest-growing brands are doing in 2021 to stay ahead of their competition.
I’m going to share some of these findings with you right now. These ecommerce industry growth trends will help you boost conversions, increase retention and level-up your customer’s experiences. Ready? Let’s go!
What we're covering:
- Free shipping and acquisition
- Creative-first advertising
- Personalization and growth
- Automated emails, SMS and push notifications
- Mobile apps versus web
- Consumer-friendly payments
- Order tracking and retention
- Subscriptions programs
P.S., We have these insights in a full report that dives even further into these trends and shares more data from every expert. Get access to the free report here:
1. Free shipping shows a trend of higher customer acquisition
Logistics and shipping may not always be on the front of your customers’ minds, but logistics definitely matter to DTC marketers. In fact, shipping can have a major impact on the entire customer journey. From offering free and fast shipping and losing sales due to out-of-stock items, to slow deliveries impacting customer satisfaction and providing the right unboxing experience—these all have an impact on how your customers view your store and how likely they are to purchase from you.
Our friends at Shipbob discovered several data points that are essential for ecommerce brands to consider this year. Check out these findings:
- Distributing your inventory can reduce shipping costs by 25%.
- Distributing your inventory can bring 13% cost savings to your bottom line.
- Offering free shipping on orders can increase conversion rates by 3X.
- Free 2-day shipping can increase AOV by 97%.
- Free 2-day shipping can reduce cart abandonment by 18%.
To ensure the shipping experience is positive for your customers, don’t forget to track carrier performance and communicate all updates with your buyers. When they know where their packages are and when they can expect them, they’ll feel much happier compared to getting no communication from your brand—this can make them fear that they were just scammed.
2. Market trends say take a creative-first approach to paid ads
While interest and lookalike audiences will still be an important part of your paid social media advertising strategy, Shoelace spent a lot of time during 2020 testing the performance of user-generated content across three industries to see how each prospecting targeting type (Broad, Interest and Lookalike) stacked up against one other.
They found that Interest and Lookalike audiences are still an important method to tap into new markets, but an increasingly important source of differentiation comes from making apt creative decisions that algorithms are not capable of.
So what should brands focus on? Developing creatives that resonate uniquely with audiences. One example of this type of creative-first approach is brands that leverage their user-generated content for their paid ad campaigns.
There are many reasons why UGC is beneficial for your ads. Kaleigh Moore, a freelance writer for ecommerce and SaaS companies believes it’s mostly tied to the fact that UGC offers a more authentic user experience.
“It's far more authentic to hear from a customer than from a brand. As a customer, I value UGC far more than any marketing message.”
- Kaleigh Moore, Freelance Writer
However, keep in mind that UGC doesn’t work for every brand, and Shoelace even found that this style of ad performs better with a few optimizations, including the following:
- Ad creatives with people in them tend to perform better than just an image of the product, especially for apparel.
- Instant experience ads perform best
- Punctuation and stand-out emojis are ideal
- Models with neutral outfits resonate more
“UGC shows products in a natural consumer ecosystem. It adds a layer of approachability and social proof that helps consumers take the risk of buying new products and experiences. Ultimately, it instills confidence in the purchase process and product—especially key for internet native brands.”
- Rachel Vandernick, The Vander Group
3. Personalization is essential for ecommerce growth in 2021
One of the biggest ecommerce trends of 2020 was personalization. Advanced personalization is when brands use data to share relevant, actionable and interesting content and products that enhance their customer’s online shopping experience. When done well, personalization drives more conversions, builds loyalty, creates community and increases retention. Two methods to approach this strategy include creating an ecommerce quiz and engaging with customers with conversational commerce.
Leverage an ecommerce quiz
In order to meet the level of personalization your brand needs to succeed, you’ll need to collect buyer profile data. One of the best ways to collect buyer profile data is with an ecommerce quiz. When built with data collection in mind, a quiz will capture a customer's likes, dislikes, preferences, demographics and contact information.
With the style of quiz and the questions you ask, you can collect a wide range of data about your customers, including:
- Demographic data includes age, gender, location or the source from which a user discovered your brand.
- Engagement data tells you how a customer is interacting with your business and the touchpoints they take. For example, you can segment customers by their quiz drop-off rate or the products they click on.
- Attitudinal data is what customers think about your business. Are they satisfied? This information can be collected in a post-purchase survey.
- Qualitative data is what tells you about a customer’s preferences, pain points and motivations.
- Descriptive data includes customer lifestyle habits and behaviors, family details, career details or any other information that helps you understand their habits and intents.
At Octane AI, we discovered brands using personalized interactive content, like our ecommerce quiz, drive 12-30% more revenue and see an average increase of 10% to their AOV.
This increase is due to how personalization brings important human elements from brick-and-mortar shopping to a brand’s online space. Simon Cooper, founder of Grin Toothbrush, says as more consumers shop online there’s a gap existing in the customer experience—the experience of talking to a salesperson with an expectation of a positive service.
“Ecommerce brands need to provide a personalized service so their customers don't just get a package in the mail and feel like their purchase was purely transactional. Every brand is not only selling a product, but service in terms of support and education.”
- Simon Cooper, Founder, Grin Toothbrush
Engage with customers using conversational Facebook campaigns and flows
Here’s a fun fact: Brands using Facebook Messenger AI for individualized, one-on-one conversations with customers reach 80%+ open rates, 48% average click-through rates and a 7-20% increase in revenue.
What is a conversational Facebook ad? It's an ad that you interact with via an automated chat conversation, typically through a Sponsored Message or click-to-Messenger ad. The automated conversations can range anywhere from collecting an email address in exchange for an offer, to asking a series of questions and recommending a product.
Conversational Facebook ads are different than any other type of ad on Facebook. Instead of driving someone to a landing page or a form, you are starting an automated and interactive conversation with everyone who clicks on your ad. This is great for driving interest at the top of the funnel; however, conversational flows on Facebook Messenger are also impactful for bringing customers back for repeat purchases as well.
“Personalization has always been important, but consumers want to know that you care, that you understand and that you are actually trying to help them. Personalization isn't using their name in the body of the email; it's knowing what they shop for, what they like and what they may like in the future.”
- Richard Dedor, Bruck and Co.
According to a survey conducted by The Manifest, roughly 96% of people choose to interact with brands they follow on social media, and Messenger marketing is an important channel not just for engagement, but also for post-purchase marketing. A few types of personalized messages you can send customers on this channel include purchase confirmations and thank you’s, feedback requests, product recommendations and upsells, early sales access and a reminder to restock items.
4. Automation isn’t dead—it’s a DTC strategy just getting started
As consumers shifted further online, the battle for consumer attention and digital noise increased. Unlike channels such as social media and search, consumers sought out opt-in channels for product discovery and brand communications. If you want to focus on growth in 2021, three areas to focus on are email marketing automation, SMS and web push notifications.
Automated emails are naturally relevant
Through the first three quarters of 2020, automated emails were responsible for 29% of all email orders, despite accounting for less than 2% of all email sends.
Before you go and decide that email has become too saturated of a channel, keep in mind how natural it is for your customers to receive emails from their favorite brands—it’s not a nuisance when it’s expected.
Email isn’t just for promoting new products or sales either, which is where a lot of brands can get their email strategy wrong. According to Omnisend, the four essential automated workflows to focus on are welcome, cart abandonment, browse abandonment and product abandonment messages. These automations have the highest conversion rate, and they’re much more valuable to the end-user than a generic product announcement that you send to everyone.
When you personalize these workflows to every user based on first-party data (that maybe you collected from a quiz—wink, wink), you’ll see an even higher conversion rate because the content and offerings will be extremely tailored to what each individual customer is interested in.
Data trends show SMS is a gamechanger
Did you know most SMS flows are read within the first several minutes? For a long time, this channel was used by DTC brands to experiment with something different from email, but over the years we’ve seen the impacts of reaching customers in a less competitive space.
Omnisend discovered in 2020 online stores sent nearly 400% more SMS messages than in 2019, and while more people were sending text messages to their customers, the conversion rate for SMS still grew by greater than 100% YoY. Jumping on this trend now will be essential for your brand to get noticed by customers and drive them down the funnel.
Simon Cooper at Grin Toothbrush says SMS is a more personal channel, giving your customers an opportunity to engage with them in a way that could be more meaningful and impactful: “The closer you get to your customers, the better. SMS is a more personal channel than email and gives them the opportunity to engage the customer in a different way than email. Younger consumers are also less likely to engage with/subscribe to emails, so SMS is a good way to communicate with them.”
Web push notifications are your secret weapon
There tends to be a negative connotation with the idea of web push notifications, but in 2020 Omnisend saw a greater than 1200% lift in sends and 428% lift in conversion rate YoY. When done well, these automated reminders can bring a 117% higher conversion rate than email-only promotions.
While you never want to be a nuisance to your customers, keep in mind that those that choose to opt-in to your automations—whether it be email, SMS or push notifications—are doing it for a reason: they want to engage with your brand off the website to get reminded about products, deals and other valuable information.
Omnisend can give you more data-driven insights on the impact automated campaigns can have on your business in 2021. If you want to learn more, download our full 2021 trends guide here.
5. Mobile apps are outperforming web
It's no surprise that consumers are shopping more from their mobile phones — and this trend shouldn't be ignored.
A well-designed mobile app gives your customers an entirely new channel to engage with your brand. With the option for customers to have profiles, track their orders and get recommended products based on previous purchases, a mobile app is an excellent option to give consumers an engaging and personalized experience.
At Plobal Apps, they discovered 15-20% of a brand’s monthly web visitors end up downloading their app, and mobile apps show a 3X-5X higher conversion rate compared to mobile web, which is the least converting channel at 0.5%-1.5%.
According to Plobal, “A well-crafted mobile commerce strategy includes setting up recurring organic install campaigns and personalized engagement campaigns. Merchants can reach millions of customers with targeted campaigns through push notifications. Analytics-driven segmented campaigns can turn new customers into repeat buyers, elevating the channel performance for your app while reaching out to a high-quality customer base.”
6. Set up consumer-friendly payment options
In the past few years, a popular trend for online shopping is the idea of payment installments—where customers can be on a payment plan for a number of weeks, owing a percentage of the total cost of their purchase each week.
While more consumers are purchasing items online than before, offering payment installments is helpful for those that are on a budget to still be able to purchase bigger-ticket items with less financial stress. According to Sezzle, “81% of consumers claim that they would use installment payments if available at checkout, and 53% of consumers claim they would spend more if installments were available at their favorite store.”
Not only does payment installments provide shoppers with a choice, but it’s a proven method of increasing conversions and average order value since customers can choose to purchase your products in a way that’s most comfortable and convenient for them. And we all know how important it is to offer a comfortable checkout experience for your retention rate.
7. Don’t overlook order tracking as a retention channel
One of the most exciting parts about purchasing online is checking your order tracking constantly to see how far away your order is from being delivered—and on the day you get that notification telling you it’s going to arrive, you’re constantly looking out the window to see if that delivery truck has showed up yet.
For your customers, order tracking is an essential part of the online buying experience.
“Brands should have email & SMS flows that go out to customers when packages ship out, if/when packages are expecting delays, and lastly when tracking shows as delivered. This stat also highlights a key emphasis of mine among all ecommerce brands that I advise: Customize your order tracking page with call to actions. Call to action examples on these custom tracking pages that have proven to be super effective include: upsells/cross-sells, SMS and email opt-in forms, clickable banner image to join a private Facebook group or to follow the brand's Instagram page and many others! Brands must focus on optimizing every layer of the funnel and tracking pages rarely have been leveraged by brands as they should be!”
At Malomo, they found customers are checking their tracking up to 3 times more than pre-COVID times, making order tracking one of the most viewed touchpoints of the entire customer experience.
However, the issue is this channel is that it’s mostly overlooked by brands, so after customers make their purchase they don’t get a follow up with information about when they can expect their package, which is usually what they care about the most. For brands to ensure they’re offering a good post-purchase experience, Kaleigh Moore says you should “deliver proactive updates that keep customers in the loop on progress (text is great for this).”
Duane Brown from Take Some Risk Inc. says brands can turn these post-purchase order tracking automations into another selling opportunity. “Post-purchase emails are great to do an upsell or to educate customers more on the brand and what they should expect,” he says. “Those emails are the best place to either sell more and let your brand voice shine.”
8. Subscription programs are a must
For customers that are loyal to your brand, subscriptions are a great way to reduce their effort of restocking certain items or offering a personalized experience for those that tend to purchase a lot from you. In 2020, Ordergroove saw a significant shift in consumer buying behavior where shoppers flocked to subscriptions and then stuck with them; they believe this trend will continue in 2021.
Simple: Research from Harvard is showing that the current COVID-19 pandemic will likely continue throughout 2021, and while consumer demand for subscriptions increased because of the pandemic in 2020, it will only continue to increase well into this year as well.
As one example, Yankee Candle worked with Ordergroove to expand their subscription offering
to include curation. The company’s curation product prompts shoppers to participate in a guided quiz that helps them select a fragrance box based on their preferences. Since launching, Yankee Candle has reported 343% growth in recurring revenue.
“Looking to increase CLTV and have a consumable product? Then you need a subscription program. As consumers became more adept at ordering everything from "chicken nuggets” to toothpaste online in 2020, the DTC brands that seized the opportunity to turn those new customers into recurring revenue will continue to see the high growth trajectory in 2021. The highest margin sale is to a repeat customer, so put earning that revenue on autopilot with a high-converting subscription program.”
Don’t wait to start acting on these 2021 ecommerce trends
So you’ve read the data and got the tips for success this year; what are you most excited about? If it’s collecting buyer profile data to personalize all of your marketing channels, we will gladly help with that!
Not only do we have a team of experts that can help you set up your ecommerce quiz for success, but our platform includes conversational Facebook Messenger and SMS campaigns and flows and opt-in tools to help you connect with customers and engage with them on the most impactful channels.
Want to get started with advanced personalization? Chat with us today!