The future of commerce in 2021

The future of commerce in 2021

As some of you may know, I’ve worked for decades in the shopping mall and department stores industry, leading physical and digital relevant operations. I’ve always been known as an innovator and legacy challenger and, not often, people believed I was pushing too hard towards reinvention. I was preparing for the future of commerce, because it’s here.

2020: the digital transformation for the future of commerce

2020 has shown that mostly nobody was digitally ready and most retailer brands struggled to improve as fast as they needed on the e-commerce platforms, in many cases losing opportunities to pure players and marketplaces.

Everybody was able to grow fast and furious on the digital channel, but most of them had a very difficult omnichannel turnover, because their online channel was clearly underdeveloped and had most of their clients not used to that particular channel with them.

It’s important to consider that most of those clients were buying online already somewhere else – Amazon, Booking, Uber, Airbnb and Ryanair, just to name a few. For a long time brands discussed options in digital transformation but failed to understand the underlying reality of change: people and processes, not only technology switches. And, in addition, the technological developments were poor and not a main priority for the next few years as they should have been.

2020 was about forced digital transformation, but brands that do not understand it was just a launching and the most part of the job is ahead will be back in problems soon.

2021: what to expect from the future of commerce?

The beginning of this 2021 is around the vaccination process and when the markets get back to normal. The truth is that old normal will never be back, and the normal is probably heating up as spring will come.

January and February will continue to boost much more online, as brands have more inventory and touchpoints and users get used to that reality. Reverse logistics investments will be a priority for all those wanting to acquire new B2C clients, specifically in fashion. 

March is probably the first month when offline retail is getting some of its normality back. The same for travel, some people will probably start booking for the summer again, believing the statistic probability of getting the worse p-KPI down. The cases themselves may even grow, but as deaths and internships drop, confidence raises and some kind of normality will be back.

Travel industry

The travel industry will probably get up to 30-35% worse than 2019 in the European countries over the summer and after summer, or 40% or all year figures, but way better than 2020. It will take another three years to get back to 2019 numbers, and in B2B nobody really knows.

Personally I believe that the online video meeting is now a new standard that will reduce the B2B travel needs forever, even if it has some problems in efficiency, too. If so, travel will depend first on personal holidays, as events will probably get back with strength only by September. Travel is a pure online industry for quite some time, but databases, own channels, LTV logic, retention programs and user-centric journey building is now more important than ever.

Technology

Tech will continue to grow much more online, but physical stores will regain some traffic from the end of March on. On the go technology will possibly be hot again, but home offices are here to stay, even if not HO-only management. Overall, technology will continue growing, especially in the mobile ecosystem – it’s a commerce trend. And that is something we must keep in mind when preparing for the future of commerce.

Fashion industry

Fashion will begin the year with a period of sales that is going to be more online than ever. Many brands have much more inventory than ever, because some were not able to reduce the autumn/winter purchases as they pretended. Revenue will depend a lot on the lockdown measures, specially in the southern European countries that are used to open malls on weekends.

Fashion sales will be down around 25% in the first quarter, far away from the decreases of more than 50% in some quarters figures. As people imagine themselves in their (sometimes small) social events, sales will go up again. Most consumers have better savings than ever, but what we can’t expect is them putting that money all of a sudden on retail. The purchase project is mostly emotional, even if we search for objective reasons to defend them in our heads and families – and getting back to some kind of normality is more than sufficient for everybody. 

At the same time, online shopping will continue growing, even if conversion rates drop in April for a short period. Second quarter (Q2) 2020 will be, if all goes as planned, the first normal quarter for some time in this industry, but it’s not clear how Eastern Shopping will be affected. Q2 should be far better than the one in 2020, but way behind 2019 (around 20% down from 2019 in most countries).

But, as brands purchased less inventory, it may happen that many end up having a similar bottom line than the one of 2019, since the relative sellout curve over spring may be even better than the one in the best years.

Most other industries will follow these, being April the best month against 2020 and May the first one to have less gap versus 2019. Confidence and freedom to move are crucial here, since savings are high and unemployment still not as critical as in many other crises.

For all of this to happen, we must believe there is not a strong crisis coming due to unemployment, short cash flows in SMB or the end of moratorium. I tend to believe governments will have the power to do so, giving the vaccination pace and the money the UE made available, but many financial specialists disagree. To make it clear, I am not one of them, which makes me obviously listen carefully to that theory.

The future of commerce is obviously pretty much connected to digital and to e-commerce, which by the way are not the same thing. Using digital to influence all the omnichannel customer journey is the new reality for those who understand that digital investments should not only be compared to e-commerce sales as main KPI. On the other hand, using digital data to optimize offline CRO is the new now.

This is a opinion from Pedro Barbosa @ Digital Affair 

 

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