The 2021 holiday shopping season is expected to be a record breaker. Retail ecommerce sales are projected to increase nearly 17% this year and reach roughly $4.9 trillion. But capturing that market share will require brands to overcome a number of persistent challenges. Ongoing supply chain issues, continued disruption from the pandemic, worker shortages and consumer habits that have changed forever have forced ecommerce brands to operate in new ways in 2021. And these nuances aren’t going away anytime soon.
Brands that have planned well and strategically stocked inventory, tested technology systems and worked closely with their partners will be positioned to succeed this holiday season. Here’s what you need to prepare your ecommerce brand for the 2021 season and beyond.
For more expert insights on how you can make your D2C channel stand out in the crowd this holiday season and into next year, download our Holiday Ecommerce Readiness Guide.
Plan for new consumer behaviors
The events of 2020 changed the world forever, but by some measures, that may actually be a good thing for ecommerce brands. Not only did online shopping get a boost when physical stores were closed, but consumer behaviors appear to have changed for the foreseeable future. For example, 75% of consumers have tried a new shopping behavior since the pandemic began, according to McKinsey.
Social buying in particular is gaining significant ground. Social buyer penetration in the U.S. is expected to hit 36% in 2021, which would rank second only to China, where rates are around 46%. Ecommerce brands should consider how social buying fits into your overall marketing strategy and how you can more authentically engage with consumers on their preferred platforms.
Baby boomers are also more active online in 2021 after contributing significantly to higher ecommerce holiday spending last year. Overall, studies show 47% of boomers have increased their digital spending since the beginning of the pandemic.
Across all demographics, holiday sales in the U.S. are expected to increase 11.3% in 2021. Understanding who your customers are and how they behave in 2021 will be critical for achieving holiday season success.
Manage expectations for fulfillment
Supply chains continue to be in turmoil around the world, with many brands fearing they might not be able to get physical goods to market in time for the holidays. Walmart and Home Depot have reportedly chartered their own ships to try to cut shipping times for goods coming from Asia. As prices rise, U.S. retailers are expected to spend $223 billion more this holiday season than last year on freight, manufacturing, and labor.
It’s more important than ever for brands to proactively engage with fulfillment partners and build out a cross border fulfillment infrastructure that is as reliable as possible. With supply chain issues expected to extend well beyond this holiday season, here are some other things brands can do to position themselves to ride out future volatility:
- Use data to intelligently predict consumer behavior and prepare for surges in demand for different products and locations
- Minimize returns by giving shoppers an overload of information such as product images, comparison charts and reviews
- Brands that don’t have physical stores can simplify reverse logistics and improve the customer experience by partnering with third-party drop-off sites for returns
For the 2021 holiday season, the most important thing brands can do is communicate clearly, effectively, and transparently with customers. It may be too late to establish all new shipping partners. But you can help customers manage expectations and work diligently to foster a positive experience and build relationships despite any challenges that may arise.
Looking ahead, consider building out a deep network of carrier partners to create strategic redundancies, increase efficiencies and reduce delays.
Localize marketing to make real connections
To capture holiday sales, marketing materials and consumer-facing communications need to be truly localized for every new market you enter. Simply translating old assets into the local language won’t be enough. You need to capture the nuance of the local culture as much as possible to foster genuine connections with new customers. You will also need to localize your promotions calendar to reflect the preferred holiday shopping seasons in that market as different important dates and cultural traditions can impact sales.
Another thing to keep in mind is that different regions of the world and within the U.S. continue to offer varying responses to the ongoing pandemic. This means customers in one part of the country may be experiencing a very different situation than others. As much as possible, take this variation into account when devising your marketing strategy. Make sure communications are appropriate for the current situation in the target market.
Build strategy into payment processing
Payments are central to ecommerce success. Brands should strive to optimize not only the payment method options they offer during checkout, but also the back-end systems used to process payments and their overall payments strategies. In planning for the holiday season and beyond, consider which payment methods resonate with your core audience and whether investing in some of the following concepts could boost sales:
Digital Wallets – Digital wallets accounted for 44.5% of ecommerce transactions globally in 2020 and are expected to continue increasing in popularity in many markets.
Buy Now, Pay Later – 10.4 million people in the U.K. used a buy now, pay later option while shopping online in 2020.
Direct Debit – Most popular in Europe, where this payment method accounted for 4% of ecommerce sales, direct debit is expected to grow in popularity around the world.
Shopping from Smartphones – Customers in developed and emerging markets now expect optimized mobile shopping experiences that allow them to use their preferred payment method via smartphone.
Take time for taxes
Many brands are looking to expand their operations into new geographies and take advantage of the increase in online shopping to reach new customers in new markets. But this also brings a host of tax questions as each new jurisdiction you sell into has its own set of tax laws and requirements.
For example, tax remittance processes vary by country in the E.U. because each member state sets up its own systems based on the bloc’s wider tax directives. In the U.S., more than 43 states have enacted economic nexus laws that say ecommerce vendors need to charge sales tax once they reach certain sales volumes or revenues.
All of this variability, and the inherent complexity of tax laws in general, means brands need to have a robust strategy in place for managing tax obligations. Consider how partners and external vendors can help simplify processes around tax calculation and remittance.
Finding a partner who act as your merchant of record allows your brand to launch into new markets faster and easier because you won’t have to spend time investigating local tax laws and building out internal systems to manage taxes and other legal responsibilities. These partners can take on all of the tax burdens for you so you can focus on delivering a seamless shopping experience for your customers this holiday season and beyond.
The spirit of the season
Many retail brands depend on the holiday season for a significant portion – or even a majority – of their annual sales. In 2021, that may line up with consumer buying behavior because experts say many people are ready to “revenge spend” due to pent-up demand and excess savings. Brands that are ready to capture that spend with thoughtful planning and robust strategies that simplify ecommerce will likely do well this holiday season.
Want to learn more about how you can optimize your D2C channel for success this holiday season and beyond? Check out our 2021 Holiday Ecommerce Readiness Guide for additional insights on crafting and implementing a winning ecommerce strategy that moves the needle for your company.