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For digital brands and e-commerce retailers, changes in the market this year have been swift and momentous. Shifting consumer habits, new demographics, wild fluctuations in demand, and a constant need to adjust messaging to suit the circumstances on the ground — just keeping up is the biggest challenge of all. As the world edges toward a new milestone — there will be over 2 billion online shoppers worldwide this year — there are several e-commerce marketing trends that are starting to sharpen into focus.
Here are the top predictions to watch as the industry rides out the rest of 2020.
Thanks to the coronavirus pandemic, the e-commerce industry has seen a massive spike. But there was nothing really surprising in this. After all, people were already shopping online; now they’re doing it more. Just how quick the shift occurred, however, is made clear in research published by eMarketer. In the first week of March 2020, 11% of U.S. shoppers were going digital for their grocery purchases. By March 22, that figure jumped to 37%. This is emblematic of a trend that has touched almost all verticals.
Due to the Great Lockdown, consumers who weren’t previously shopping online, or doing so only minimally, had to give the e-commerce experience a serious shot. This added many newcomers to the customer pool, and now that they’ve tried it, there’s no turning back. In a survey by Pymnts.com, only one-third of people who shifted to online shopping say they will return to physical stores after the recovery.
For e-commerce brands, this means tailoring the customer journey to two different segments: the newbie online shoppers who are less familiar with the concept, as well as existing customers who already know the ropes but have ramped up their digital purchasing in recent months.
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In 2019, the U.S. e-commerce retail market was valued at $365 billion. Although the direct-to-consumer (D2C) segment is still relatively small, with sales of just over $14 billion in 2019, it’s increasing fast. Between 2016 and 2019, D2C sales grew three to six times faster than overall e-commerce sales. The circumstances that defined 2020 have only accelerated the trend, and the D2C market is expected to reach $18 billion by year’s end.
On the one hand, this is great news for D2C companies. On the other, it brings a huge increase in competition, especially as traditional retailers join the fray. While D2C brands are digital natives, there is a trend among regular brands — those who do not have the built-in D2C infrastructure — to offer competing services, such as BOPIS (buy online, pick up in-store) and curbside pickup. In an ever-more competitive market, D2C brands will need to double down on what makes them different and attractive: brand values, customer relationships, and community building.
For more on how challenger brands are performing against big-box retailers:
The shifts in 2020 are not just affecting e-commerce companies and D2C brands — even the biggest platforms and marketplaces got a huge wakeup call.
For example, during the COVID-induced surge in consumer demand, Amazon was forced to take drastic measures to slow down sales and keep up the supply and distribution chain. The “world’s biggest marketplace” delayed its annual Prime Day, with a forecast loss of $100 million of stock that will remain unsold as a result. It also reportedly removed its “Recommended products” from the site, to prevent customers from adding more items to their cart.
The supply challenges also carried over to the platform’s third-party sellers, who rely on Amazon for their sales and distribution services and who represent a 52% share of items sold on Amazon in 2020 so far. In March, at the height of the crisis, Amazon had to resort to permitting the sale of essential items only, leaving many third-party sellers scrambling to find ways to maintain operations and get their products to customers.
Even before the crisis, many retailers were abandoning the large marketplaces and turning to first-party e-commerce platforms. With advanced and user-friendly options such as Shopify, Magento, WooCommerce, and more, online retailers can consider a move towards operational independence in a more even playing field.
A worldwide pandemic, unrest on the streets — 2020 is turning into a watershed year for local and global communities, and that’s evident in the ways that brands are communicating with customers, too.
During COVID-19, brands turned to their customers with honest, open communication, and that’s exactly what consumers wanted. It’s not just about communication either — 43% of millennials say that brands should step up and help, and one in four believes that brands should be as impactful as governments.
Maintaining a safe, corporate-style distance is no longer the way to go, even for large, global brands. In the recent protests in the U.S., several prominent companies took to changing their logos in solidarity with their customers.
This new trend towards openness and communal advocacy won’t go away. Customers have come to expect that brands be honest and transparent about their ethics and values. Many D2Cs operate that way already, and it’s what sets them apart from others. Gender-neutral underwear brand TomboyX, for example, is built on the promise of diversity and inclusion. As the year progresses, e-commerce brands will step up their messaging to reflect their values and authenticity, more than ever before.
For more on how to connect with customers via e-commerce marketing:
As the e-commerce industry expands and competition for market share increases, measuring page views and clicks is not enough to maintain a steady revenue stream.
That’s why brands are shifting their focus from simply growing their customer numbers to increasing the “value” of each individual customer. Once the customers’ attention is captured, the challenge now is keeping them engaged and satisfied in the long term, building a sense of loyalty that will encourage them to spend again and again. Customer journey optimization is the best way to boost Lifetime Value (LTV), which is fast becoming the key metric for e-commerce marketing ROI.
There are many ways brands can optimize the digital experience. One example is streamlining the checkout process. The number one reason for cart abandonment is adding extra costs during checkout, and number two is forcing customers to open an account. Making the checkout experience easy and comfortable is a powerful way to encourage repeat purchases. Personalization and retargeting are also critical components of an LTV optimization strategy.
Moving forward, e-commerce brands will focus more on LTV, looking way beyond clicks and conversions to every touchpoint with customers, especially existing customers.
For more on building customer loyalty via e-commerce marketing:
In a year that seems to bring new challenges at every turn, remember that many recent developments in the e-commerce industry aren't altogether unexpected, nor unpredictable. Rather, the pressures of the pandemic and other current events are speeding up the shifts that were already underway. There’s no need to be blindsided by trends after they emerge. Keeping a sharp focus on e-commerce marketing predictions as the rest of the year unfolds will help brands and retailers stay alert and prepared — no matter what lies ahead.
Originally published on June 11th, 2020, last updated on August 16th, 2022.