Leveraging buyer information and AI to drive ecommerce progress in 2021
- Despite the challenges of 2020, vacation e-commerce sales in 2020 increased 49 percent from 2019, indicating a dramatic shift in 2021.
- Brands are employing new strategies, such as roadside collection, to increase shopper convenience amid a pandemic.
- To leverage large amounts of customer data from multiple sources, brands will be looking for solutions that allow them to extract value from the data in order to make smart decisions about delivering the right products at the right time on scale.
- Despite the explosive growth of e-commerce brands, there is still a need to invest in multichannel business models to optimize the customer experience both in-store and online.
- Retailers can increase ecommerce growth even further in 2021 by using AI to deliver highly relevant customer experiences.
It is impossible to sum up 2020 in one word, but “unpredictable” is a good place to start. Looking back on last January, very few of us could foresee a pandemic that would spread across the globe. At the start of a new year, we all look ahead with the hope of a return to normal. Travel, hospitality and retail were some of the hardest hit businesses in 2020, but even before the pandemic, retail was experiencing a “reset” or “transformation” that some have called the retail apocalypse. The pandemic accelerated e-commerce growth and transition as consumers turned to online shopping. Her favorite stores were temporarily closed and then for her health and safety when they reopened.
As the 2020 holidays approached, no one could predict how it would turn out. Given the economic downturn due to store closures, unemployment and the ensuing decline in consumer confidence, would the holidays, usually the peak of the year, be a bust? We now have some answers thanks to a new Mastercard SpendingPulse report that offers a glimpse of 2020 retail sales. According to the report, retail sales increased 3 percent compared to the 2020 holiday season, which increased due to early sales and specials (October 11 through December 24). Even more impressive is the growth in online sales, which is up 49 percent compared to 2019. This very rapid growth in ecommerce has brought with it a number of problems, including a stifling number of packages causing delays in shipping for public and private carriers, including the USPS and UPS. However, this does not detract from the promising and continued growth of online shopping for digital-first and multichannel brands in the future.
Retailers proactively worked to make shopping safer and more convenient for customers, relying heavily on strategies such as online in-store pickup (BOPIS) and the use of technology that enabled contactless pickup. One of the most surprising results in Mastercard's report was how well the home furniture / home furnishings and home improvement sectors performed during the holidays. Online sales of home furniture rose 31 percent and e-commerce sales of home improvement items rose by almost 80 percent. This growth can be attributed to generous sales and offers, or to consumers having been “window shopping” for some time and using the Christmas sales to click “buy”.
Regardless of the factors that have contributed to the huge growth of e-commerce, it is imperative that brands continue to invest in their multichannel business models by optimizing the shopping experience both in-store and online, and by nurturing and deepening relationships with customers who are new to online shopping and who have also been VIP customers for many years.
Looking ahead, brands will leverage what they learned from a year of ups and downs and apply those lessons to the new year. Given that continued business growth requires a lot more than sales, coupons, and deals, brands should seriously consider four key trends when setting business strategy and roadmap for 2021:
1. Consumers expect instant satisfaction when they share their data
Consumers will continue to find it more convenient to share preference data with brands as long as they get value from the exchange. They will also increasingly expect relevant experiences to be modulated in real time, with consumers being satisfied with their data sharing almost immediately. Consumers will become less loyal to the brands they deal with, but relevance will be a key differentiator and source of business value.
2. Brands will use multiple sources of data to create value for customers on the fly
Brands have more data than ever before – about their customers, products, sales and purchases, and through a variety of channels including online, in-store, in-app, email, third-party, etc. We know the data isn't there This is tantamount to deriving value from the data, as it is often present in silos, in different structures or schemas and is accessible to different teams within an organization. Brands need to look for solutions that unlock large amounts of data from multiple sources to enable decisions about what and when to display to a customer. and then run that decision on the web scale. In other words, brands will be using just the right data at just the right time to grow and expand their capabilities and create instant value for their customers
3. Retailers will focus more on data protection compliance as this issue continues to grow
As brands collect more customer data and look for ways to best unleash their power relevance value, compliance with various laws and regulations becomes more complex / difficult, especially when they operate in different regions. Brands will continue to focus on properly and regularly assessing their company's compliance with GDPR, CCPA, and various other evolving regulations. This includes vendors and third-party applications that companies work with.
4. Brands will rely more on AI-powered product recommendation solutions to generate revenue and online sales
One way brands can create relevance in real time is to better enable product discovery with product recommendations. With so many channels and information being shared with consumers, the ability to help them find and discover the items that are most interesting to them has become of paramount importance. Product recommendations are ubiquitous in all of e-commerce and usually make up two to three percent of e-commerce sales. However, traditional recommendations based on collaborative filtering do not offer the customer the most relevant product choices because they are anchored in a product-to-product relationship. Solutions such as deep learning supported by Google Product Recs adapt to the customer's session behavior in real time, are anchored on the individual's shopping journey and use the key context (e.g. the time spent on a product and the order in which products are searched and more) to adapt to changes in buying intent signals.
We assume that companies will examine personalized product recommendations more closely in order to offer customers added value and generate significantly more sales for the company compared to conventional recommendations.
As a new year begins and we regain some of the normalcy we lost in 2020, brands cannot miss the opportunity to build even deeper relationships with new and existing customers. Retailers provided customers with the products they needed during a pandemic, affirmed their commitment to their customers and built a relationship of trust that will last long after the story of COVID-19.
Tracey Ryan O’Connor is Qubit's Chief Revenue Officer.