December 3, 2020

Five Marketing and Ecommerce Trends That Will Shape 2021

By Mike Austin, CEO & Co-founder, at Fresh Relevance

This year is one we’re unlikely to ever forget. It has been a huge episode of disruption and change, and for the eCommerce industry in particular, has moved us forward about five years within a period of less than 12 months.

Online retail has had to quickly adapt and scale to cope with unprecedented levels of demand when non-essential retailers had to shut the doors on their physical stores twice this year. With eMarketer forecasting a 35 per cent YOY growth in online revenue for 2020, and the pandemic still ongoing, 2021 promises to be another both challenging and exciting year for eCommerce.

Many organisations recognise its potential and are shifting their 2021 plans and budgets towards digital in order to acquire new online customers and better serve the existing customer base. To help you navigate strategies, tactics, and technologies as you finalise your plans, Fresh Relevance have pulled together five key eCommerce and marketing trends that will shape the new year.

1. The year of D2C

With more and more consumers discovering the benefits of online shopping, the enormous increase in market share for eCommerce is likely to continue, at the expense of physical stores. As a response, more retailers than ever are now engaged in a well-known battle for online market share against giants like Amazon and eBay.

That will continue and become even more competitive with the rise of brands executing Direct-to-Consumer (D2C) strategies. For brands, cutting out the retailer gives them increased margin and a better understanding of their consumers as they market and sell to them directly. For organisations with the ability to execute efficiently, going D2C opens up multiple new possibilities, including the introduction of subscription models, access to a wealth of customer data, and the ability to engage shoppers using owned channels, such as email, mobile app, and other targeted, low-cost channels, by-passing the stranglehold of paid channels.

2. Increased focus on customer experience drives AI adoption

Artificial intelligence is already commonly used in eCommerce to increase revenue with product recommendations based on the shopper’s unique interests. As retailers explore new avenues to optimise the customer experience and conversions, the use of AI is only going to extend. In fact, research predicts that retailers will spend $7.3 billion globally on AI by 2022.

Retailers will heavily invest in AI tools that allow them to differentiate and improve how they engage with customers. Key AI use cases range from CDPs to help understand constantly changing customer behaviour, personalisation engines that respond based on this by generating tailored, timely offers for each customer, to chatbots that provide instant customer service.

3. A shift towards customer retention

Despite the imminent roll-out of the vaccine, for a good part of 2021 COVID-19 is likely to continue to define how we behave, consume, and engage. With the global economy in a recession, many consumers will have to prioritise price and do more bargain hunting, which can have a damaging effect on brand loyalty.

Revenue growth will come from encouraging customers to make repeat purchases. Already, marketers are shifting their budgets away from costly acquisition marketing and into channels that allow them to engage more with their existing customer base, such as email, website, direct mail, and loyalty programmes. This trend is expected to even accelerate next year, with Forrester predicting that spend on loyalty and retention marketing will increase by 30 per cent in 2021.

4. Pre-defined experiences help pivot tactics quickly

Given that customers have changed so exponentially in such a short period of time, companies have had to adapt extremely quickly to new situations – throwing out old plans and starting again from scratch within a completely new context. And even in 2021, marketing plans are constantly in danger of being blown off course by ongoing, rapid changes, such as travel bans and local lockdowns – all of which affect demand and hence require a marketing response.

Additionally, there are local legal changes such as privacy laws to take into consideration, which could require a switch from 1-1 personalisation to personification. This means digital experiences are delivered based on a shopper’s membership in a defined customer segment, rather than based on personally identifiable information, such as their name or email address.

To quickly adapt your messaging to changing circumstances, eCommerce and marketing teams need to set up defined customer experiences for key event and customer segments. For example, if a region’s lockdown level changes, organisations should be able to quickly adapt the experience for that region so affected customers will see appropriate content no matter which channel they engage with.

5. Moving beyond traditional A/B testing

Testing and optimisation of marketing and eCommerce tactics will be crucial next year as budgets are more harshly scrutinised for return on investment. Being able to identify and deploy the best-performing tactics quickly will become more important than ever. At the same time, marketers need to preserve their time for creative work, not repeatedly setting up manual A/B tests and then having to wait for the winning variation for each component of a comprehensive cross-channel experience.

Multi-armed bandit algorithms are a smarter version of A/B testing that use machine learning to dynamically allocate traffic to variations that are performing well, while allocating less traffic to variations that are underperforming. This makes it easy to build, test, and launch campaigns that provide the optimal customer experience to each shopper and drive maximum results based on business needs.

2020 has in many ways forced eCommerce and marketing professionals to be as agile as never before. Teams have had to upgrade tech, challenge their ways of thinking, and adapt to new ways of engaging with shoppers. And the need to be agile will likely be the biggest trend continuing into 2021 as we enter year two of living with COVID-19. Yet, with flexible, customer-centric tech and tactics up their sleeves, online retailers are in a strong position to survive and thrive in these interesting times.

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By Mike Austin, CEO & Co-founder, at Fresh Relevance