Changing consumer behavior in the new age of ecommerce

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Commerce has changed. And as we move into 2022, retailers need to be able to adapt.

What does this ecommerce transformation journey look like? 

Our goal was to take a closer look at the new era of ecommerce. In our new whitepaper, “The Great Ecommerce Acceleration,” Linnworks surveyed over one thousand retailers in the US and UK.

In this article, we’ll take a look at the results and how retailers need to adapt to the new age of commerce.  

Are you ready for the new age of commerce?

From shifting consumer behaviors to strained supply chains, and store closures, the last few years have thrown many challenges in the face of retail businesses. While online sales have slowed slightly, they still remain above pre-pandemic levels in both the US and the UK. So while there might be challenges, there’s also plenty of opportunities.

Consumer behavior has not only shifted towards more of an online pattern, but consumers are also moving their shopping habits away from traditional websites and instead towards marketplaces and social platforms.

Now, retailers need to adapt fast to scale and automate their back-end processes to stay in control of their cross-channel merchandising. At the same time, they also need to prioritize strategies to make sure that their inventory, stock management, and order fulfillment processes can keep up with demand.     

Adapting to consumer demand is key. 

The general public is more motivated to shop online than ever before—but they also have high expectations when it comes to convenience. Linnworks “Effortless Economy” research found that 76% of consumers prioritize convenience, and nine out of ten shoppers will prioritize retailers who can offer a seamless experience.  

Many consumers now shop across multiple channels. Your presence on marketplaces, social media, and your website is now considered part of your overall brand. Integrating your shopping experience seamlessly into social platforms helps remove another friction point by bringing your brand to where your consumers spend a lot of time. 82% of consumers enjoy the convenience of social shopping, with 71% preferring to complete their check-out process on their social channel rather than be directed to your website. 

Consumers don’t just expect a seamless purchasing journey—they demand it.

We found that 74% of consumers will abandon their online shopping carts if check-out is too complicated. 58% of consumers will stop using sites that prove inconvenient. And almost every consumer—95%—expects to select convenient delivery options to suit their personal preferences. 

Now we know what consumer demand looks like—how can you adapt your business to meet your consumers where they want to shop? 

Two challenges.

If you haven’t yet heard of Total Commerce, you have now.

This concept means conducting commerce wherever your customers are, on their terms. It means being where your customers are creates an effortless, seamless shopping experience across any online environment. This requires a two-pronged attack—staying connected to your customers across multiple environments while also continuously adapting and controlling your commerce across all of these.  

Linnworks CEO Callum Campbell says that to succeed in a Total Commerce environment, “Retailers broadly need to focus on two things moving into 2022. Retailers need to thoroughly map their customer journey, from discovery to purchase, through to delivery and returns, to understand where any friction might be. It’s how you understand your customers and how you set up in the back end. At the back end, it’s about setting up the organization with the technology that allows retailers to scale effectively and quickly.”

So, how prepared are most retailers for this acceleration towards great commerce?

Many are meeting this new challenge head-on. 

One of the key findings from our research was that 96% of the retailers we surveyed said the pandemic accelerated their adoption of new sales channels.

This often required significant investment, with 46% of respondents increasing their IT spending and 71% of businesses planning to invest in additional IT over 2022. This is the highest level of investment in retail IT for five years, and it’s expected that these budgets will continue to grow. This investment shows that most retailers already understand that technology will be critical for ongoing growth.

As retailers have to run channels across different systems, the omnichannel experience becomes more critical than ever before. 77% of respondents would prefer to have a centralized platform to manage all sales channels, according to Linnworks research. Omnichannel capabilities like this are becoming a solid priority, with 92% of respondents planning on investing in this area over 2022. 

Control the fulfillment journey.

If your priority is to create a seamless customer journey, a huge part of achieving this success lies with the journey of your products themselves—your supply chain. While no retailer can solve the current supply chain issues, it is possible to mitigate their impacts as much as possible. 

Over the pandemic lockdowns, many retailers pivoted towards using their storefronts as storage space. What’s more from Linnworks survey, only 32% have converted these spaces back into storefronts. One challenge that still remains is effective warehouse management, which is particularly challenging as a business grows.

The two main strategic approaches when it comes to managing fulfillment are keeping everything in-house, chosen by 48% of respondents, and outsourcing to a third-party logistics provider (3PL), selected by 41%, according to Linnworks survey.

Expanding to cross-border commerce is the main driver for retailers who use a 3PL. This makes distribution, warehousing, and fulfillment much easier across multiple international locations. Of those respondents who do use a 3PL, Fulfilled by Amazon (FBA) is the most popular, with a 46% share. 

Supply chain issues have been a significant pain point for many retailers, with 88% of respondents to Linnworks recent survey saying this has negatively affected their customer service. These disruptions show no real signs of being resolved, with 71% of respondents still battling with issues including labor shortages, reliance on international suppliers, and problems balancing supply and demand.

95% of respondents to the Linnworks survey said that improving the resilience of their supply chain is their number one operational objective for 2022. As retailers have no control over the supply chain, the only solution, for the time being, is to implement strategies to mitigate these effects.

The most popular strategies are diversifying supplier locations and establishing an inventory buffer. It’s also important to be transparent with customers and communicate any stock shortages or delays as swiftly as possible.     

Adapt and respond to new consumer values.

To succeed in ecommerce through 2022 and beyond, retailers need to control their inventory management and shipping. Again the key goal here is to improve the customer experience. A significant consumer value that is becoming more and more important is sustainability. 

PwC found that 50% of consumers now consider the environment when purchasing. If you don’t yet have a robust sustainability strategy—you’re going to need one going into 2022. A fundamental problem in this area is “greenwashing,” which must be avoided.

Greenwashing involves making statements around sustainability that, on the surface, seem meaningful, but in reality, deliver very little. With consumers and employees now holding brands to account, you’ve got to walk the walk and not just talk the talk.

The demand for sustainable products continues to grow, and intelligent retailers can tap into this fast-growing market if they take the right approach.

For those brands already implementing sustainable operations, 46% have achieved this by working with vendors, supplies, or partners who also focus on sustainability, according to Linnworks research. 45% prioritize sourcing ethical products or ingredients alongside reducing their use of packaging materials. 

How close are you to achieving Total Commerce? 

The past few years have resulted in a dramatic shift in consumer habits. They now expect almost instant access to products, combined with minimal effort. To remain competitive in this consumer-driven market, retailers need to rethink their selling and logistics strategies completely. 

While retailers need to expand, they also need to maintain their service levels and keep supply chain disruptions to a minimum. Omnichannel retail is becoming more critical, as is ensuring convenience. At the same time, it’s vital to consider and then communicate your environmental credentials. 

Our latest research aims to provide a benchmark for where retailers are right now and how they can continue driving efficiency and growth in a swiftly changing market. One of the most efficient strategies is to move towards a centralized platform that provides a birds-eye view of the entire business. Alongside this, automating specific processes at an early stage is essential, so you can maintain a positive customer experience as your business grows. 

The good news is that many retailers demonstrate a deep understanding of what they need to do to adapt. And if you can adjust—you can also grow your business as ecommerce accelerates towards a new era.