Five Commerce Thoughts for 2021

Certainly 2020 has been full of challenges for everyone, and I am no exception, but excitement is in the air as the new year approaches. Not everything was bad this year, in fact there were a lot positive and exciting things which happened in retail as a result of the COVID pandemic. All of those things will add up to a big step-change as we go into 2021 where, I predict, we will continue to see massive disruption along with consumer adoption of new services, store types and ways of shopping.

Two great stories for me coming out of 2020 were the renewed push toward buying local and how shoppers exhibited tremendous patience for stores of all sizes as they tried to roll out new services. Hopefully we see local retailers continue their momentum while we can expect shoppers to lose some of their grace as expectations rise throughout the year.

So, without pause, here are five things driving change in commerce for 2021. A few may be too early or a bit ambitious, but these perspectives will shape the types of human experiences we at WONGDOODY want to build moving forward. Understanding the forces pushing the market will better help us address, and solve, human problems with interfaces, technologies and strategies to help retailers of all types.

#1 – #Shipageddon Reactions

As I sit here before Christmas some estimates say that more than 20 million packages are in danger of missing their shipping expectations. The hashtag #Shipageddon and headlines like USPS Gridlocked fill my feeds. What is more is that eCommerce generally has a higher return rate and Bloomberg predicts a ‘tidal wave’ of returns which will keep the shippers busy well into January. The reality is pretty simple, capacity usually expands by about 8% each year while this year eCommerce grew by more than 30%. So, it makes sense to start with how the fallout from this imbalance will shape decisions in 2021.

  • Focus on the last mile – Let’s expect retailers to do a lot to get shoppers to pick up their eCommerce orders in 2021. It will be interesting to see how far they will go and there are a lot of options; adjusted pricing for non-delivery items, exclusive product access, adjusting pickup hours, locations and availability. We may also see a boon for 3rd-party last-mile services partnering with retailers. Dropoff, one such service, says that 47% of consumers paid extra for same-day delivery over the past year which bodes well for this option.
  • ‘Ship from Store’ will be reflected in eCommerce carts – As we saw with Apple this year when they offered guaranteed delivery to your home for items which were listed as ‘in stock,’ retailers will know where you are and offer you stuff that is in your closest store with incentives. If shoppers want items that come from another store or a local distribution-center they can expect to see extended shipping windows as the norm.
  • We will see the end of ‘one-size-fits-all’ shipping – This is something I have been talking about for a few years, but the era of one-size-fits-all pricing for shipping has to go away. Retailers, especially with the new volumes of eCommerce, can’t afford to subsidize more expensive shipping. However, it will be hard to bring in shipping surcharges for non-urban areas because these costs are still responsible for the most cart-abandonment. This will force retailers to get clever either with product pricing based on zip-code or things like minimum thresholds. What remains to be seen is if it will extend to programs like AmazonPrime and Walmart+ where I believe we may see pricing ‘tiers’ based on consumer location.
  • Lockers and Vending will explode – As retailers get people to pick up more of their purchases, self-service opinions are in a position to grow exponentially. We will see vending machines and lockers at most retailer locations but also at third-party retailers (think Amazon lockers at 7-11) and more common areas including strip-malls, parking areas and supermarkets.

#2 – Touch-less Payments Help Re-shape Stores

During the pandemic, the use of cash has been way down. A lot of this is driven by increased online purchases but there is also a reluctance around cash where one study found that as many as 55% of consumers were afraid to use it. Enter more touch-less options which certainly include chip-based credit cards but also mobile wallets, including WalmartPay with an impressive 24% participation rate according to PYMNTS. This makes it the most used, by percentage, among the big players which include ApplePay, Samsung and AndroidPay.

This increased adoption along with a need to re-configure stores will present a great opportunity in 2021. As retailers start to re-design their stores for a post-COVID world we can expect a combination of traditional shopping environments, shipping hubs and pick-up stations. Much like many of the the new Nike stores, many retailers will now be able to free up space from the traditional check-out lines and, instead, spread this capability throughout the store and to every associate. One downside may be that while cash might not be going away, it also may not be as convenient in the newly arranged store.

#3 – The End of the Traditional Department Store

The reality is that every ‘department’ in the traditional department store has been disrupted by DTC, Amazon and a variety of other marketplaces. 2021 will give us a glimpse on what the new ‘department’ store may become as major changes are necessary for them to survive. A few models that are already showing promise are Nordstrom and showrooms like Showfields and Naked Retail.

To be fair, Erik Nordstrom has always said that they are a fashion retailer and not a department store, but it is worth looking at their NYC flagship as a pathway to the future. When it first opened, I was very impressed in the store’s attention to detail and forward-thinking concepts but now, after 2020 and the pandemic, I am even more convinced it is going to shape the future. Some of the innovative features are rotating store-in-store experiences, Trunk Club service, high-quality food and, most of all, discovery areas for new brands, products and seasonal highlights. Add their ‘local’ stores to the mix, and Nordstrom can be a roadmap for other retailer’s success.

2019 was also poised to see a huge growth in DTC stores across the country, however the pandemic put a pause on many of those plans. Now stores like Showfields, Naked Retail and B8ta are starting to look more attractive. Rather than being a ‘department’ store, they are a store of brands and products, each with a unique take on their specific category. Another disruption which will drive DTC brands toward this type of exposure is the rising cost of online customer acquisition which is making growth in that channel more difficult.

#4 – Social Shopping Finds its Groove

More eCommerce and other types of digital adoption are rising so it makes sense social shopping will rise as well. This item has been on many lists (including mine) in the past but some important progressions in 2020 have laid the foundation for some step-change in 2021. Alternative social channels like TikTok and Snap have had great success with shopping capabilities while Instagram and Facebook’s commitment continues to evolve with platform integrations.

The diversity of what is social shopping is also making it easier to adopt. Services, like Salesfloor, now let shoppers on eCommerce platforms text with local store associates. Emerging trends like Verishop’s addition of group shopping starts to bring the social element back into eCommerce. There is also the huge impact of livestream shopping, documented by Inc. Magazine as being one of the biggest trends for 2021.

#5 – Local Businesses Crack eCommerce

They say that necessity is the mother of invention and 2020 has certainly brought that attitude to local businesses with eCommerce. Those who didn’t have it scrambled (and are still scrambling) to get it and those who had it struggled to make it work better. My local bookstore quickly added a ‘buy’ button to their search feature and the local burger joint got so good with their online ordering they deployed two iPads out in front of the store. These are one-location, mom and pop stores but they figured it out quickly, certainly a good sign for everyone.

Another exciting development is how big eCommerce platforms are starting to really help local businesses compete. Shopify’s marketplace app launched in 2020 and allows shoppers to browse all stores (who opt in) on their platform in a single app and search index, creating a virtual Main Street. I expect more of these types of services in 2021 and many will be driven by the huge strides in local search and indexing by sites like Google who have quietly been helping local businesses for years.

2021 Should be Better…But There is a lot of Work to Do

As usual, after writing this I am very excited for the year ahead and do believe the stresses and changes in 2020 are going to pave the way for a very bright 2021.

However, it is not going to be easy as we see through these trends in shipping, store configuration, department stores, social and local. We didn’t even touch on associates, who have been on the front lines of this change and will adopt a host of new jobs and responsibilities moving forward. In other words, all aspects of commerce will be changing, and it suffices to say that a comprehensive approach will be required as retailers re-think what it means to be in business in 2021. It can and will be a bit overwhelming for many on where to start and what to do.

What we have found at WONGDOODY however, is that taking a customer-first, human approach to retail evolution creates a clearer path toward what needs to be done…and when. Understanding the Human Experience at each touch point and solving real problems for shoppers along the way can help clarify a roadmap for success. With this approach I really look forward to working with all of our customers in the coming year.

I will leave you with one, early, trend for 2022 which is 3D/AR incorporated into real-world shopping. Some great work is being done on this front by brands like Adidas who already have the largest library of virtual shoe try-on incorporated into the latest version of their app. Very exciting and it will be fun to track these cool experiences through the year!