Last updated: Retail e-commerce growth: Predictions and trends to watch

Retail e-commerce growth: Predictions and trends to watch

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After such tremendous e-commerce growth last year, what can we expect this year? Will e-commerce continue to surge even as brick-and-mortar stores reopen?

Here are three predictions for retail brands to watch:

  1. Increased online privacy requirements will impact e-commerce strategies
  2. Direct-to-consumer connections will be a priority
  3. The return of in-store traffic will factor heavily into growth trends

E-commerce growth fueled amazing holiday stats

The statistics from the 2020 holiday shopping season were eye-popping:

  • A 162% increase in year-over-year order volume during the holiday season
  • 55% to 60% of November’s orders came during the first two weeks of the month
  • The average order value tripled between Black Friday and Cyber Monday

These stats reflect e-commerce growth that ended 2020 high above 2019 levels (see chart below) in terms of order volume. Clearly, the global pandemic caused online holiday shopping to skyrocket in ways no one predicted before the lockdowns started.

e-commerce growth in 2020

Can brands keep the e-commerce growth going? Let’s take a closer look at our three predictions.

Privacy improvements will make user tracking harder

This past holiday season represented the last hurrah for the third-party cookie. Now, enterprises must address the oncoming “Cookiepocalypse.”

Following the lead of Mozilla Firefox, Apple Safari, and other browsers that have already prohibited third-party cookies, Google has targeted the start of 2022 as the deadline to phase out these cookies from its Chrome browser. In addition, new updates to Apple’s mobile operating system are putting consumers in control of data tracking across apps and web sites.

These changes will cause a major shift as many retailer leaders adjust their e-commerce growth strategy. Their ad retargeting and behavioral advertising will take a hit due to limited tracking.

So, brands will instead need to prioritize customer retention initiatives.

They’ll focus on ways to understand their existing customers better with the aim of extending the relationship and optimizing their lifetime value.

Digital direct-to-consumer connections will become even more critical

After movie theaters, the global pandemic hit out-of-home (OOH) advertising the hardest. Since they rely on one-to-many impressions in high-density areas, their once-lucrative sites failed to meet forecasts and revenues dropped precipitously as a result.

Where did the ad spend go? The answer is clear: into digital. Mobile ad spend soared more than 70% year-on year.

Social media ad spend rose 50% year-on-year at the height of the holiday season. The big tech players like Facebook, Twitter, Snapchat, TikTok, and Tencent all saw sharp rises in ad revenue as a result.

With pandemic lockdowns lasting well into 2021, paid digital media spend won’t slow down any time soon. Retailers will continue to prioritize paid search advertising, paid social media promotions, and SEO initiatives because they reach customers where they are – at home.

A return to in-store dominance? Be ready for the next holiday hullabaloo

The surge of online shopping has made a lasting impact on brick-and-mortar stores. Once thriving empires have been carved up by younger online retail businesses, and no one is certain when in-store foot traffic will return.

Yet if the current vaccination programs continue on their current trajectory, pandemic lockdowns could ease amid upcoming holiday seasons. And if they do, the enthusiasm to return to the stores could swing the pendulum the other way. There may even be a contraction in online sales value as physical retail rebounds.

The key for retail e-commerce growth: Know who your customers are and how they want to engage

As we look forward, how can retail brands best reach the right consumers, at the right time, with the right message in the right channel?

Given the acceleration of the online shopping trend since 2020, the key to success will be a robust engagement strategy built on a foundation of first-party, permission-based customer data.

This foundation consists of information and consent collected directly from the customers themselves. Through customer identity and consent data management solutions, this accurate, high-quality data can form the core of each profile or account.

Other types of data – behavioral, offline, in-store, and more – can be associated with a real person who has explicitly consented to those communications or marketing activities.

By knowing who their customers are and how they want to engage, retailers will be better equipped to segment and optimize increased spend in digital channel look-a-like campaigns.

They’ll also be better able to enhance and personalize customer experiences while respecting their preferences and privacy.

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