Accelerated Digital Adoption
Indeed these are not normal times, not only have we potentially come to the end of a macro economic cycle, but also potentially to the end of an entire era. Whilst that may sound dramatic, the whipsaw events of the COVID-19 Pandemic have not only been severe, but have arrived at a crucial inflection point for modern society and its consequences have massively accelerated the digitisation of how we interact, consume, vote and even think about the nature of money.
The unique way the Pandemic unfolded and the government's response to it, not only created an immediate systemic response, placing entire economies on something akin to a war footing but also compounded these changes into long term, mainstream habits with lockdowns lasting months at a time.
As a result the COVID-19 crisis has accelerated the advance of digital and put it squarely at the centre of almost everything we do.
Recent surveys have suggested that overall we have advanced with digital adoption by as much as 5 years and it’s been calculated that at the height of the COVID-19 pandemic, 10 years of online commerce growth happened in just 90 days. Shopify was no exception seeing double digit growth throughout 2020 as a result.
10 years of online commerce growth happened in just 90 days.
It has meant that existing vendors have had to expand rapidly to meet increasing shifts to online demand. Not only has it spawned new and innovative supply chain, it has created many new entrants to the online space. Some, who simply moved online out of necessity or spotted a niche have gone on to become amazing success stories, turning over 6 figures in their first year on the back of the surge to online services.
So there is no doubt that over the last 18 months there has been a tectonic shift, but how can Shopify Store owners turn this wave of digital adoption into sustainable business models moving forward.
While the future is very hard to predict, let's dive into some of the key areas it would be sensible to focus on.
Attention is the currency of the future.
If you‘ve ever felt a little overwhelmed by information you're not alone. As humans we have a limited ability to process and handle large information sets. Combine this with the exponentially growing amounts of content and delivery platforms it’s no wonder we are becoming more sophisticated at filtering out what isn’t important.
Not only that, but we are becoming less tolerant of interruptions that don’t have any context or relevance to us in any given moment.
For vendors thinking forward this means you need to get personal. With your audience becoming more discerning of where they focus their attention, it’s vitally important to not only understand your customer, but have the ability to engage with them across multiple touch points in the relevant context. It now means that being an omnichannel operation is no longer optional but a necessity.
Platforms like rokt, yotpo and airship can be crucial to helping you keep the customer experience relevant and “joined up”, allowing you to aggregate customer insight and use it effectively when and importantly where it matters.
With AI increasingly helping us make sense of the data it won’t just be the big platforms that are doing this. Individuals will do so as well, so expect a new generation of services and platforms powered by AI agents that will do the “hard work” of finding products at the right price and suit your preferences.
The ecommerce boom will lead to increased competition.
In very simple terms, everything just got a lot more competitive. Whilst, accelerated digital adoption has brought more entrants into the online space increasing the addressable market, it has also provided consumers more choice and ways to exercise that choice.
Combine this with rapidly growing advertising models that put privacy at the forefront of their ad models (see Brave Browser and iOS14) it’s clear that the cost of acquisition is going to rise.
For store owners that want to thrive and retain the business uplift from 2020 it means that creating long term customer loyalty needs to be at the very centre of your operation. Customers will be increasingly hard won and also increasingly more demanding to keep engaged, unless you both understand them and respect their privacy.
For some important clues on this, Shopify's recent study into the Future of Commerce 2021 offers some great insight, here are some of the key headlines from that article.
Young consumers will change the business
landscape as ecommerce charges ahead.
What does this mean for me?
The pandemic kick-started a behavioural shift to ecommerce that young consumers will continue to drive forward. Brands need to strengthen their omnichannel strategies, invest in their social media presence, and demonstrate authenticity to have staying power.
Physical retail as we know it will transform,
giving local businesses new advantages.
What does this mean for me?
Omnichannel features and experiences will give new life to physical stores and allow businesses to take advantage of proximity to local consumers.
Consumers want to shop independent.
Businesses will adapt to make that easier.
What does this mean for me?
Consumers expressed the desire to shop with independent businesses but still purchase from marketplaces for convenience. Independent brands that improve their discoverability and fulfilment capabilities are poised to succeed.
More consumers will vote with their wallets.
What does this mean for me?
Brands must demonstrate authenticity, transparency, and accountability as consumers increasingly support local businesses and sustainable products.
Modern financial solutions will disrupt business
and consumer banking, finance, and lending
What does this mean for me?
Speed and access to capital, faster ways to pay with digital wallets, and more flexible payments like instalments will grow in popularity.
Digital partnerships will be increasingly vital to online operations
Not so long ago starting a sophisticated online operation required huge amounts of infrastructure and investment to get off the ground. However as the ecommerce space has matured, innovative services have, and continue to solve almost every challenge a modern store owner might face.
Shopify is uniquely placed to capitalise on this trend. With its focus on providing not just an online store but an ecommerce platform, Shopify is fostering agile innovation that should see it remain a growing ubiquitous part of online commerce for years to come.
For store owners in simple terms this means they can use Shopify and its app platform to build value into innovative online businesses rather than simply accessing a high volume sale channel like Amazon that can encourage a race to the bottom.
Through the comprehensive API, integrations and the app store, vendors are already creating digital relationships with suppliers, brands and producers that allow them to compete with the customers demand for speed and convenience.
With the drive from consumers for more socially responsible and local services, this innovation and specialisation will continue to remove friction from traditional business networks and drive us towards more resilient, sustainable decentralised business models that puts digital partnerships at the forefront of any online commerce business.
The Rise of the Metaverse
A business that is created, marketed and provides services entirely within the context of the digital platform it’s built on, can be described as being part of the metaverse. A good example would be a clothing brand that only exists within a popular online game that designs and sells digital collectables for players' avatars.
When you combine this with Cryptocurrencies like Bitcoin, Ethereum, NFTs and Digital Wallets all converging to reduce the friction around the future of payments and value transfer. It’s clear there is a whole new world of growth out there that’s effectively happening exclusively inside the digital realm.
While the future can be hard to pin down, it's certain that the next 10 years are going to be a fascinating ride indeed.
The Key Takeaways
- Customer attention is a scarce asset you will need to work hard to get and maintain it
- Increased competition means higher acquisition costs, so long term customer value is vitally important, think subscription, loyalty and great highly engaging content.
- Omnichannel ecommerce is getting sophisticated, create digital partnerships that help you stay ahead of the game
- How and where customers transact is rapidly changing so seek out new and exciting markets in the metaverse
