5 Trends Impacting E-commerce Websites in 2021

The Covid-19 pandemic was a bonanza for e-commerce websites. Entrenched habits changed overnight as older people and other populations that were traditionally hesitant about shopping online were left with no alternative — e-commerce was the only way to get the things they needed while sheltering in place.

The results were stunning. In the second quarter of 2020, e-commerce sales rose by 31.8% in the US as compared to the previous quarter, according to figures released by the Census Bureau of the Department of Commerce. In fact, e-commerce accounted for 16.1% of total retail sales in the US in the second quarter of 2020, up from 11.8% in Q1 of 2020 and 11.3% in Q4 2019.

In parallel, traditional retail crashed, and even big retailers were forced to close many of their brick-and-mortar stores.

Almost halfway through 2021, the top e-commerce websites are still going strong. But what can we expect from e-commerce in the second half of 2021, as vaccines are rolled out and the infection rate drops in many countries? Below are some of the key e-commerce trends and opportunities to expect in the coming months.

1. A Digital Advertising Arms Race

As consumers were forced online, so were businesses. This has made the advertising arena more crowded and competitive than ever before, as companies of all types increase their digital investments.

From the platforms’ side, shakeups are afoot, with Apple cracking down on cross-app user tracking in iOS 14.5, Amazon reporting 77% year-over-year ad revenue growth, and Google moving away from cookie-based user identification in favor of a new system called Federated Learning of Cohorts (FLoC).

Dentsu predicts that digital advertising will make up half of the total advertising expenditure in 2021 for the first time ever, with a total expected expenditure of $284 billion. The leading sources of digital growth are expected to be social media advertising, search engine advertising, and video.

The crowded field makes it more challenging than ever before for e-commerce websites to stand out. Just doing more of the same won’t be enough, as online retailers will need to create new channels, content, population segments, and most likely invest additional financial resources in order to stay in the race.

2. Personalizing the Relationship with Customers

Data is key to effective digital advertising, especially to understanding consumer behavior and targeted messaging to align with customer values and priorities.

Therefore, wide-net digital advertising is becoming less and less effective, and the e-commerce websites that thrive will be those that are able to collect first-party data, accurately segmentize their spending, and customize content to their consumers’ interests and needs.

Collecting data, however, is not enough, as e-commerce websites also need smart analytics to better understand their customers. In 2021, the focus on having a closer relationship with consumers, and understanding what triggers purchase behavior from which cohorts, is expected to grow in importance. Personalized chatbots and AI-enhanced product recommendations are starting to emerge as must-haves.

Likewise, educational content can help empower shoppers throughout their journeys, providing guidance on buying the best products for their needs, whether they’re choosing eyeglass frames, auto parts or the latest gadgetry.

3. Leveraging Strengths Through Consolidation

With so many players in the e-commerce space, it can be difficult for smaller websites to stay afloat, especially when they’re using high-cash-burn business models. Consolidation can offer a way to accelerate growth, improve operating margins, and shorten the road to profitability.

Acquisitions and mergers, especially between companies with complementary strengths, allow e-commerce websites to shore up capabilities and market share, and leverage infrastructure, resources, and human capital.

The pull toward consolidation isn’t only apparent in smaller companies either. The big players want one-stop-shops, and the most efficient way to achieve that goal is through acquisition.

We may also see greater reliance on marketplace platforms for product discovery, although at the same time, the sector’s growth has meant that there’s never been a better time to experiment with direct-to-consumer distribution models.

4. Continued Focus on Home Improvement

The pandemic kept everyone at home, and people who were lucky enough to maintain jobs and financial stability turned their resources towards making their homes more pleasant places to shelter in.

Financial resources that would otherwise have been used for travel or recreation, were instead invested in home improvement, creating an unexpected boon for e-commerce websites in the home improvement arena.

This trend should continue, opening enormous opportunities for e-commerce upstarts in this niche. Although travel and recreation venues are slowly reopening, many consumers are still hesitant about returning to their pre-pandemic habits.

Likewise, the pandemic has created a new awareness and many people are continuing to invest in their homes to make sure that they’re ready for the next one, if and when it hits.

5. The Omnichannel Customer Journey

As Covid-19 infection rates drop, in-person venues, including brick-and-mortar stores, are gradually reopening. However, consumer habits have changed and it’s unlikely that they’ll return to being solely brick-and-mortar consumers, even when stores fully reopen and the pandemic becomes a distant memory.

Yet that doesn’t mean that consumers won’t also return to physical stores. In fact, the customer journey, like so many other aspects of life in the third decade of the 21st century, will increasingly be a combination of the physical and the digital.

For example, a customer may first see a product on Amazon, then learn more about the said product through retargeting sequences or paid distribution content, and finally decide to buy it after looking it over in a physical store.

The key is to make the transition between channels as frictionless as possible for the consumer.

Evolving Beyond the Pandemic

2020 transformed the world of e-commerce, opening up opportunities to access new populations and industries. As the impact of the pandemic lessens, e-commerce websites can capitalize on the changes in consumer behavior to continue to thrive and grow.