E-commerce innovation in 2021 will look like what was projected for 2025
In 2020, adoption of digital commerce has accelerated by multiple years in only a few months. Social commerce, evolution of omni-channel commerce, instore transformation, and headless services are e-commerce trends that will shape the 2021 innovation roadmap.
To say this year has been different would be a huge understatement. Storefronts went digital, kitchen tables turned into conference rooms, and how we live, work, and shop have been generally turned upside down. What hasn't changed for businesses, however, is the importance of providing an outstanding customer experience. 2020 ripped a hole in the fabric of time, and the commerce roadmap fell through it.
There's never been a more critical moment for companies to know their audience and relate to what they're experiencing. Brands that get this -- and actually invest in appreciating their customers' varied perspectives -- can gain a competitive advantage by delivering connected and contextualized engagement. While 66% of customers expect companies to understand their personal needs and expectations, only 34% say they usually do so. Moreover, more than half (52%) of customers expect offers to always be personalized.
So, how can companies get it right? One important way is for brands to ensure everyone under their roof has real-time information. When customers engage with a company, they shouldn't have to worry about reaching the right person. Salesforce research shows 76% of customers expect consistent interactions across departments. However, 54% say it generally feels like sales, service, and marketing don't share information.
Prior to 2020, customers were well on their way to becoming more digitally dependent in their interactions with brands. From Amazon to Hulu, more and more customers grew accustomed to having their wishes granted at the push of a button. In a socially distanced environment, those same customers -- and many new converts -- have come to view digital engagement as not only a convenience, but a necessity. Brands, in turn, have had to accelerate their digital transformations. "Online interactions grew from 42% of customer engagements in 2019 to 60% in 2020."
Explosive growth of digital commerce in 2020
2020 Salesforceresearch shows that 80% of customers say that the experience a company provides is as important as its product or service. In 2020 the experience that mattered most to customers was a decentralized and mostly digital only experience powered by e-commerce capabilities. Global digital sales grew 36% year-over-year on Cyber Week alone. Digital sales surged an unprecedented 71% in Q2 globally and significantly grew 55% in Q3 globally. Shoppers across the globe spent a record $270 billion online this Cyber Week, growing an astonishing 36% YoY -- outpacing even our most bullish projection. Mobile comprised 71% of traffic and 55% of orders, while desktop saw 26% of traffic and 41% of orders YoY globally during Cyber Week. We have witnessed 10 years of accelerated e-commerce adoption in the past few months of 2020.
A digital first mindset is now mandatory in the next normal
According to McKinsey, over 75% of U.S. consumers have changed shopping behavior and changed to new brands during the COVID-19 pandemic. The top three reasons for shopping for a new brand were value, availability and convenience. The most important filter for discretionary spend is safety. The ability to offer e-commerce, contact-less payments, order online curbside pickup, and home delivery are all requirements in order to compete in the next normal. Salesforce research shows that U.S. retailers offering creative pickup options experienced 29% growth in sales compared to 22% in retailers who had a simple fulfillment option.
An important 2020 lesson: Every business must be a digital business
Salesforce analyzed over 1 billion digital commerce data points during the 2020 holiday season with incredibly accurate prediction. To learn more about what we can expect in 2021 and beyond, I connected with Tony Pizza, senior director of Product Management at Salesforce. Throughout the year, Pizza and his team have engaged customers that are adopting new technologies at lighting speed.
"The business challenges that we needed to address for our clients included: 1. direct access to end customers, 2. accelerated adoption of digital commerce, 3. modernization of legacy platforms, 4. enable curbside delivery, 5. reduction of return rates, 6. adoption of omni-channel orchestration, and 7. adoption of social network engagement platforms. So much of what our existing and new customers had the highest level of urgency and familiarity. Most of these customers had these requirements on the 2019 roadmap, with implementation targets that extended to 2025," said Pizza.
An important business lesson for 2020 is that all companies must be digital. This starts by adopting a digital first mindset. Another lesson after talking to Pizza is how business leaders much identify core digital capabilities with implementation time lines that are measured in months, not years. Roadmaps have been pulled through a time portal, landing 3-5 years ahead of where they expected to be. So as we look to predictions for 2021, we can use to the 5 year plan as a guide.
8 digital transformation trends for 2021
Research from MuleSoft and third-party findings highlight some of the top 2021 trends facing CIOs, IT leaders, and organizations in their digital transformation journey. The 8 digital transformation trends are:
The digital-ready culture. Organizations are under greater pressure to digitize services quickly at scale to meet rising customer demands and create new revenue channels.
Democratization of innovation. Line of business users is trying to develop digital customer experiences faster. IT needs to drive cultural change by empowering the business to self-serve and deliver solutions quicker.
Composable enterprise. Hyper-specialization has created a groundswell of applications, leading organizations to shift to a composable enterprise to become more agile -- where digital capabilities can be composed of existing applications using APIs, rather than being built from scratch every time.
Automation. Organizations are using automation to drive operational efficiency and improve business processes. APIs are key to driving automation and scaling productivity.
API security. The average enterprise has 900 applications. The proliferation of new endpoints creates new avenues for intrusion, requiring robust API security.
Microservices. Organizations are turning to microservices to rapidly build new customer experiences. Companies deploying microservices to production will require some form of service mesh capabilities to scale.
Current state of Business and IT Innovation
In the State of Business and IT Innovation report, consisting of a global survey of 1,739 line of business (LoB) employees in organizations with at least 250 employees, only 37% of organizations definitely have the skills and technology to keep pace with digital projects during the COVID-19 pandemic. The key to adoption of new emerging technologies is for companies to invest in reskilling and upskilling their existing employees. In addition, choosing the right technology strategic partner will accelerate adoption of key technologies and capabilities needed to compete in the next normal.
Pizza shared his point of view on e-commerce trends for 2021.
Social Commerce and the Evolution of Omni-channel
Brands will leverage their investment in social platforms by pushing the checkout closer to the edges of social media experiences. Over the past 5 years we have seen growing investment in social channels as advertising vehicles. In 2021, we will see brands take a step further, adopting commerce capabilities provided by these social platforms. We also anticipate expanding relationships with brands and social influencers as a accelerant to grow sales. This shift will also challenge brands to re-think the traditional definitions of "omni-channel", expanding the definition to include the ability to identify customers, at any location, and the ability to deliver and service their need, independent of time or location, based on the customer's method of delivery. The evolution of omni-channel orchestration will be a frictionless framework, where companies can deliver value at the speed of need. The evolution of social commerce will include the merger of entertainment with education. Video live-stream shopping will facilitate interaction between the brand and shoppers, serving as an e-commerce growth driver.
Digital channels of customer engagements have grown during the crisis. Customers turn to an average of nine channels to browse inventory, seek advice, and make purchases. Millennials claim to use more channels than other generations, even Gen Z. Seventy-six percent of customers prefer different channels depending on the context. In 2020, messenger apps like WhatsApp and social media edged up in popularity. Text/SMS and video chat made their debut on the list of customers' 10 most preferred channels this year. Digital engagement has hit a tipping point this year, with an estimated 60% of interactions taking place online, compared to 42% last year. Sixty-eight percent of customers say they're online more often than not. This trend is expected to persist beyond the pandemic. Fifty-eight percent of consumers expect to do more online shopping after the pandemic than before, and 80% of business buyers expect to conduct more business online.
In-store Experience Transformed
Demand for flexibility in fulfillment options will continue to trend as methods such of Buy-Online, Pickup In Store become familiar components of shopping culture. Expect technologies which extend and support this type of experience to see accelerated adoption as well, such as contactless checkout options and queue management. To make these experiences work, brands will also need to rethink the capabilities of core systems like inventory management. Expect to see adoption of innovative technologies which manage inventory across multiple locations in real-time.
According to Salesforce research, strong customers service delivery capabilities, for both online and offline are more important than ever. Great customer service doesn't just benefit trust and engagement -- it benefits the bottom line and can even restore lost trust. Ninety-one percent of customers say they're more likely to make another purchase after a great service experience.
52% of customers describe most service interactions as fragmented.
52% of customers expect offers to always be personalized -- up from 49% in 2019.
83% of customers expect flexible shipping and fulfillment options such as buy-online-pick-up-in-store.
76% of customers expect consistent interactions across departments. Commerce and customer service lines-of-business must be completely aligned.
Commerce Services and Headless
The growing demand for new experiences will require brands to also accelerate their plans for future proofing commerce systems. Top priorities should be flexible front end and application creation, ability to embed checkout everywhere, and scale. Commerce services and headless architectures provides the flexibility and scalability brands will need in order to deliver a diverse array of connected experiences that their customers need.
According to Pizza, brands will need to think about full stack, complete suites, and accelerated investments in what was likely labeled "future proofing needs" to what should considered as "now delivering" set of capabilities. A brand's ability to deliver against these new critical set of capabilities starts with an appreciation and adoption of developing connected journeys, visibility and access to a single source truth of customer data, and a platform that can provide a 360-degree view of customers to all lines-of--business, including commerce, sales, services and marketing.
This article was co-authored by Tony Pizza, senior director of Product Management at Salesforce.