What Will the State of Commerce Look Like Post-COVID?
Pre-COVID, we saw the impact of online consumer demand growing and behavior adjusting, but brands often had time to analyze how they wanted to respond to it and when. Once the world shut down from COVID, that power quickly transitioned to the consumer, with brands forced to adjust almost immediately if they wanted any opportunity to survive.
In Brightpearl’s own consumer research, we found that 65 percent of consumers will be buying online more frequently over the next 12 months, with 20 percent telling us they’re expecting to only buy online within five years. There’s massive opportunity here, but a lot of companies have missed out, and will continue to fall short because they lost sight of how powerful the consumer experience is, and how unforgiving customers can be if you don’t deliver on your service promise.
Since the start of the pandemic, 61 percent of consumers have experienced some problems buying from brands online — and 25 percent have been let down by an online purchase experience since the crisis started. These widespread errors and delays mean shoppers are missing out on vital deliveries, adding more damage to an already tenuous relationship between seller and consumer.
It’s not all doom and gloom, however. In fact, some brands have risen to the challenge of COVID with even greater levels of innovation. For example, many companies have added more delivery options to support customers’ increased preference for local shopping, and adoption of buy online, pick up in-store (BOPIS) has gone through the roof, both as a necessity of COVID-enforced change, and in response to our data which suggests that 41 percent of shoppers plan to increase BOPIS and curbside pickup this year.
Impact on Physical Commerce
While more physical stores are closing than ever before, the future of commerce post-COVID perhaps yields a new version of brick-and-mortar retail. One that still satisfies the need for consumers to see, touch and try products before they purchase them, but also supports merchants that don’t want to spend massive amounts of money on a physical storefront.
In our study, 75 percent of consumers said they plan to spend more at local shopping streets than before the pandemic, and 71 percent say they will increase spending with independent retailers, illustrating that the trend towards localism is here to stay. This trend is likely to continue to be reinforced by our remote working habits, which are set to remain for the foreseeable future.
The research also notes that one in five retailers are planning to move stores out of major city centers and into local neighborhoods within the next 12 months. Therefore, we could see a future with more pop-up stores in local shopping centers as they become high foot-traffic areas, out-of-town or local stores acting as fulfillment centers for BOPIS orders, or stores sharing space in small metro outlets in these new high-traffic areas.
Technology’s Role in Shaping Future Commerce
As we see the emergence of more cross-generational online shoppers, expectations and demand will keep growing in all areas of commerce, from products to payments, shipping, returns, loyalty and promotions. Furthermore, there are an abundance of emerging technologies that support the development of newer channels — voice commerce, text messaging, augmented reality, new social media outlets (e.g., Reels, TikTok), and even in-app purchasing in mediums like WhatsApp.
One of the impacts of COVID is the clear recognition from brands that they need to diversify their channels in case one of them is suddenly deemed obsolete. We predict retailers will adopt multiple channels for customers to discover, connect and purchase. However, the complexities involved in managing all these channels — while also delivering a seamless and consistent experience for customers — is going to be a growing challenge. To solve for that challenge requires complete visibility across all channels, as well as the ability to quickly and efficiently adjust to sudden changes from internal or external environments.
As the world moves digital, entering into technology partnerships will also become increasingly common for retail brands. Every day we talk to merchants that tell us they have anywhere from 10-50 different solutions in their tech stack. One of the focuses for retailers will be on streamlining their technologies, and ensuring the technologies they use are extensible and that efficiencies can be gained by integrating them. When it comes to technology investments, it’s likely that retailers will first look at front-office solutions because they’re seen as the sexier and cooler tools that correlate directly to customer acquisition.
Technologies that are commonly undervalued are those that sync sales channels and orders with inventory and shipping so consumers get the right product on time every time, as well as tools that help you better manage returns and automate fulfillment so you can exceed consumer expectations. As commerce itself diversifies, we predict greater reliance on ‘back end’ technologies in order to help manage more complex operations and drive better end-to-end experiences. And that’s what matters when you think about the longevity of a brand. Outstanding experiences is what drives loyalty, which ultimately increases customer lifetime value (CLV), arguably one of the most important metrics of a retail business. Companies that are only focusing on acquisition post-COVID risk delivering a substandard experience and losing out on the opportunity of any future sales.
The State of Commerce: A Frictionless Future
As the world slowly opens back up, the state of commerce post-COVID will increasingly focus on eliminating end-to-end friction in the buying process, making it so easy for consumers to shop from a brand that they keep coming back.
Post-COVID, maximizing CLV is going to become even more essential. The Future Consumer Index reports that within the next year, 44 percent of consumers will prioritize brands they’ve purchased from before. And, recently, we’ve seen data supporting the value of retention vs. acquisition. For example, improving customer retention 5 percent increases profits by 35 percent to 95 percent. With this in mind, companies simply can’t afford to utilize weak setups that lead to issues pre- or post-purchase.
The future of commerce will be about building engaging customer experiences that are done right every single time, across every single sales channel. Doing so will help to build brand advocacy, create positive sentiment, and encourage brand loyalty. With a lot of brands out there selling the same or similar products, it’s no longer the product differentiation that helps you win the customer. It’s the experience differentiation.
Creating outstanding experiences requires ownership of all ends of the purchase journey, thinking about the feelings you want to create for customers every step along the way and removing any potential bottlenecks within the pre and post-purchase customer journey, from the website experience to delivery and returns.
Brands that recognize the importance of experience differentiation as well as make the correct technology investments to support customer expectations and frictionless commerce will emerge as the ultimate winners when all is said and done.
Sara Arthrell is the global director of product marketing at Brightpearl, a retail operations platform for retailers and wholesalers with a clear mission to automate the back office so merchants can spend their time and money growing the business.
Sara Arthrell, is the Global Director of Product Marketing, Brightpearl, a retail operations platform for retailers and wholesalers with a clear mission to automate the back office so merchants can spend their time and money growing the business. Brightpearl’s complete back office solution includes financial management, inventory and sales order management, purchasing and supplier management, CRM, fulfillment, warehouse management and logistics.