eCommerce: Year in Review 2020 and what to expect from 2021
Many changes in behavior, product preferences and consumer habits accelerated in 2020 and provided an opportunity to experience new paradigms of work, amusement and shopping. Almost nothing went untouched or unchallenged in 2020: from home renovations, fashion, commercial real estate, housing, travel, moving and much more. On video calls with a number of eCommerce brands our smaller clients were empowered and saw incredible growth. These clients disclosed that there were majors cuts in their ad spend but with the decline of the cost per click (CPC), Now, as COVID starts to recede, we can see the new norm but not without some of the changes and new trends that emerged from 2020.
US consumers spent an average 23 more minutes on mobile devices in 2020 vs. 2019
The average US adult spent 23 additional minutes per day on mobile apps in 2020 than the year prior, according to eMarketer and it expects these gains, across most mobile activities, will become permanent this year. In fact, the market can expect these numbers to increase as mobile first becomes even more prominent and additional companies offer mobile options.
As data suggests, it is clear that marketers need to revisit their mobile technology strategy for the year ahead and acquire companies that help traditional groups to leverage this technology.
The Rise of Mobile eCommerce
39% of US consumers say they’ve used their smartphone more during lockdown (Twigby). Mobile e-commerce, or mobile commerce, refers to online purchasing transactions that utilize devices such as smartphones, tablets, or laptops.
Retail Mobile Commerce (mCommerce) reached $338 billion in the USA, up from 207.15 billion U.S. dollars in 2018 or 27.8% compounded growth per year. As expected, due to social distancing measures, time spent on smartphones and tablets worldwide, online retail has and will continue to focus on mobile first technology to take advantage of the growing mobile population. Expect the smartphone retail e-commerce sales to surpass $430 billion U.S. dollars in the USA by 2022, up from $148 billion U.S. dollars in 2018.
TikTok, the new medium for brand identity!
Seeing tremendous growth in 2020, TikTok is approaching Snapchat in terms of volume of social network users (eMarketer). It is not surprising that TikTok was the second most downloaded free applications from the App Store and Google Play (fourth when compared with paid), beaten only by WhatsApp. Being new and popular, 41% of these users are from the age of 16–24, it is critical for eCommerce brands to adopt this medium for branding and growth. And what content was driving the most engagement? The winner is entertainment content, such as lip-synching and dance videos. Most importantly for an eCommerce company is that TikTok has the highest follower engagement rates across 100,000 user profiles — 5x higher than Instagram & 17.7x higher than Twitter. So, get your dancing shoes on brands!
What to watch out for in 2021, and what will win?
- Multi-tasking apps — TikTok Audience is on Netflix, Q4–2020 49% of Netflix App users also used TikTok, which doubled from Q4–2019.
- Competition — Instagram, SnapChat, TikTok, etc. are not the real competitors, brands have to compete with Playstation, Xbox and other mediums distracting eyeballs away from their go too advertising platforms.
- Partnerships — Shopify + TikTok partnership will be a strong signal for smaller eCommerce brands. It allows merchants to create native, shareable content that turns their products into In-Feed video ads that resonates w/the TikTok community. After Facebook launched their shopping focused update in 2020.
- The Rise of Mobile Payments — The number of proximity mobile payment transaction users in the United States is projected to reach 80.1 million users by 2023. We should expect growth in adoption in 2021 to continue, despite 1/3 of Americans being skeptical about utilizing mobile payments as an option.
Consolidation — Expect further market consolidation to continue, bringing more M&A activity in the digital commerce space. Brands will continue their push to become more digital and stay relevant.
You can connect with Marcus Magarian via LinkedIn, Twitter, or by visiting the Chatsworth Group.
