How Online Retailers Can Keep Customers Post-Pandemic
Online commerce experienced massive growth during the COVID pandemic. Consumers turned to online channels for just about every kind of purchase — from groceries to cars. From 2020 to 2022, consumers spent a total of $1.7 trillion online, an increase of $609 billion (61 percent) compared to the two prior years.
U.S. ecommerce sales jumped 47 percent in the 2020 holiday shopping season compared to the same period in 2019, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment. This underscores the pandemic's role in transforming shopping habits. And even with many restrictions lifted a year later, online shopping increased 11 percent year-over-year during the 2021 holiday season. But will this trend continue?
For retailers that worked hard for new customers over the past few years, this isn’t just an academic question — keeping an existing customer is much cheaper than acquiring a new one. And today, online-only retailers face a different competitive landscape, as many traditional brick-and-mortar retailers upped their online game during the pandemic, offering new services such as buy online, pick up in-store (BOPIS), buy now, pay later (BNPL), curbside pickup, and at-home delivery options to make up for lost in-store sales opportunities.
So, what should online retailers do to keep those recently acquired customers? The most important thing is to remember what drives consumers to choose (or abandon) a retailer in the first place: the overall experience. That experience is defined by convenience and trust.
When it comes to convenience, consumers expect the online shopping experience to be as frictionless as possible. Every step of the customer journey — from account creation, item discovery, purchase approval, delivery to returns — provides an opportunity to delight (or lose) customers. For retailers that want to build customer loyalty, it’s vital to make sign-up as simple as possible so consumers won’t simply default to one-click pay alternatives or guest checkout. In fact, Bain & Company research found that a mere 5 percent increase in customer retention can boost the bottom line by 25 percent to 95 percent.
Online retailers also need to remember that while consumers are open to buying online even when brick-and-mortar options exist, they still want to replicate some of that in-store experience. It’s become common, for instance, for consumers to buy a number of products to try on or test at home, sending back those items that don’t fit or they don’t like. Returns are now a routine part of online shopping, therefore offering easy returns is more important now than ever.
Trust is a two-way street when it comes to online commerce. Consumers want assurances that they’re buying from a reputable retailer and that their money, personal information, and data are secure, while still having a positive experience. Retailers, in turn, want to ensure that they’re dealing with genuine customers and not fraudsters. It’s essential to leverage technology to strike the right balance when it comes to identity verification so that consumers feel trust in the transaction — both that they’re information will be secure and that the experience won’t be cumbersome — and retailers feel confident that they know who the person behind the transaction is.
At this point, it’s clear that newly increased consumer expectations, propelled by the pandemic, are here to stay. Recent data from McKinsey suggests that even in an uncertain economic climate consumers are buying more both online and in-store. However, they're also more willing to switch brands and retailers to find better experiences and value. In other words, online retailers that want to consolidate the gains they made during the pandemic need to continue improving the experience for their customers to stay competitive.
Steve Marsh is vice president, global product marketing at Ekata, a Mastercard company, where he leads a team of product marketers as they bring Ekata’s suite of digital identity verification products to market.
Steve Marsh is the VP Global Product Marketing at Ekata, a Mastercard company, where he leads a team of product marketers as they bring Ekata’s suite of digital identity verification products to market. Steve is passionate about driving the creation and marketing of innovative technology products and has almost two decades of product management and product marketing experience in cybersecurity, governance and compliance, and identity verification and fraud detection. He has successfully built and managed product lines and product teams to support high-growth businesses at large enterprise software companies such as Microsoft, Nucleus Cyber, and Metalogix Software. Steve has a PhD in Microelectronics and Physics from the University of Dundee.