Following the surge of 2020, 2021 was a year of growth and enormous challenges for eCommerce businesses. While traditional retail sales saw some recovery compared to 2020, brick-and-mortar stores still struggled to grow due to pandemic concerns and global supply chain issues.
Meanwhile, online retail continued to thrive –– albeit at a slower growth rate than the previous two years. Despite economic instability and consumer price sensitivity, overall spending increased throughout 2021. In particular, online businesses with business-to-consumer (B2C) business models saw tremendous growth. Online shopping become an integral part of the “new normal” for the average consumer.
2021 eCommerce Results
2021 was another great year for eCommerce, even though eCommerce growth slowed significantly after impressive 32% eCommerce growth in 2020. While the pandemic was a major, early shakeup that changed the world in 2020, global events had leveled out somewhat into a “new normal” by the start of 2021.
Consumers have adjusted to a “new normal”
After two years of an ongoing pandemic, consumers have adjusted to a new normal. Vaccine status and masks impact many consumers’ daily lives, from work to entertainment. Consumers spend more time at home –– and more time connecting with the world through mobile apps. Homeschooling, eCommerce, and telework are on the rise, and ongoing economic uncertainty has led to increased price sensitivity among consumers as prices continue to rise.
Throughout the pandemic, consumers started basing their spending decisions less on brand and more on algorithmic search and online research. They’re more willing to experiment with competitor products. This is thanks to AR experiences, engaging photo and video marketing, and community feedback that documents real customer experiences like reviews and social media communities.
Consumers felt more financially secure in 2021
Federal aid in the form of stimulus funds and enhanced unemployment benefits helped consumers feel more financially secure than in 2020. After early pandemic furloughs, some consumers went back to work, and others changed jobs to take on higher-paying opportunities. A greater sense of financial security (along with a year of pent-up demand) pushed consumers to spend more both in retail and eCommerce stores.
Millennials have become the largest group of consumers
However, consumer preferences changed between the end of 2019 and the end of 2021. Millennials finally replaced Baby Boomers as the largest consumer group during that time, just as the Millenials are reaching their prime spending years. The preferences of the younger generations are impacting businesses all over the world.
Millennials expect more from brands –– and they’re willing to pay for it
Business ethics is a significant area of interest for modern consumers. Young people expect brands to take social responsibility –– not just chase profits –– by responding to feedback, getting involved with the community, supporting charities, investing in sustainability, and supporting diversity.
As digital natives, younger generations prioritize efficiency and affordability through omnichannel integrations. They expect brands to have a robust digital presence and reliable customer service thanks to tech solutions that make customer service more efficient than ever before.
Movements are arising across the globe in response to unethical labor practices and environmental negligence. The next generation of consumers is seeking brands who’ve committed to low-waste and low-emissions methods of production and distribution. They’re also willing to pay a premium to help support the environment.
The pandemic and climate crisis have wreaked havoc on the supply chain
Public health concerns, an ongoing labor shortage, and freak climate disasters slowed the global supply chain to a crawl. Price increases and shortages in fuel and raw materials have rippled across every industry. In some cases, they’ve even forced businesses to shut down for good.
The holiday shopping experience has lengthened and gone digital
In the culmination of a trend that began in 2020, Black Friday has become Black November. In fact, in 2021, consumers started their holiday shopping as early as June. For the first time, Black Friday and Cyber Monday sales posted a year-over-year decline –– despite an increase in overall holiday spending.
Consumers seek variety in payment gateways
Throughout 2021 (especially during the holidays) consumers increasingly turned to “buy now, pay later” apps. These methods allowed them to pay for their purchases in monthly installments over half a year or more.
Subscription pricing continues to grow in popularity and enter new sectors. Additionally, after two years of record adoption rates for Bitcoin and Ethereum, consumers are expressing a desire to make purchases with cryptocurrency. This trend will continue to unfold in 2022 and beyond.
eCommerce platforms now dominate the online shopping experience
Online sales through eCommerce marketplaces make up a growing percentage of online retail –– Amazon alone accounts for over 40% of eCommerce sales. eCommerce marketplaces provide wide product variety, robust community features, and an immersive customer experience that smaller eCommerce operations struggle to compete with.
Perhaps most importantly, eCommerce marketplaces provide the consistency, security, and customer service necessary to build consumer trust and convert even the most hesitant online shoppers into eCommerce regulars.
The traditional eCommerce site still has a role for online retailers, especially for maximizing SEO. Still, it’s also becoming just a single spoke in the larger flywheel of sales and marketing.
Even now, the pandemic is driving eCommerce growth
2021 introduced several new variants of COVID-19, each one catching the public off guard as they prepared for “the end of the pandemic.” As a result, eCommerce penetrated retail sales in more sectors than ever –– especially in grocery sales.
Curbside pickup is here to stay. As consumers adjust to the convenience of shopping from home, large retailers are converting more of their locations into “dark stores” to reduce redundancy and maximize their eCommerce growth.
eCommerce has a discoverability problem
The shift to eCommerce has significantly impacted how consumers discover products –– and the impact isn’t always good. Consumers often feel frustrated by online search experiences, and discoverability growth has so far been hard-won.
In traditional retail experiences, shoppers browse products in person. Physical shopping provides a visual, tactile, and olfactory experience that eCommerce simply can’t offer. While reviews and virtual experiences on product pages help offset the downsides of disconnected digital browsing, traditional retail still maintains an edge in impulse buying whenever consumers seek instant gratification.
Did 2021 eCommerce live up to expectations?
2021 saw more consumers and businesses buying and selling goods and services on both independent sites and major eCommerce platforms. While eCommerce growth slowed compared to 2020, eCommerce still shattered records and set new trends in 2021.
Prepare for 2022 eCommerce Growth
For the first time, eCommerce will reach over $1 trillion in 2022. While the best time to start planning for 2022 eCommerce growth was during Q4 2021, the second-best time is right now. Don’t let slow money hold back your 2022 eCommerce plans.
Payability offers funding solutions for eCommerce sellers who are ready to scale. Put your 2022 eCommerce strategy into action with up to $250k in immediate growth funding through Instant Advance by Payability. Then, accelerate your 2022 eCommerce growth with daily payouts through Instant Access by Payability. Don’t let your cash flow slow you down.
Payability’s services feature quick approval and no credit checks. Access your money on-demand with Same Day ACH, Instant Transfer, or wire. Lastly, Payability puts money back in your pocket with up to 2% cash back on purchases with the Payability Seller Card.Apply now to make 2022 your best year yet with eCommerce funding solutions from Payability.
