It’s no secret that 2020 has pulled commerce forward by 10 years. Regardless of what 2021 brings, the result is a new normal – especially when it comes to the way we shop.
Shopify’s first annual report* Future of Commerce 2021 marries global merchant and consumer data to predict how the commerce landscape will shift in the coming year. By examining perspectives of both seller and buyer, it aims to capture the full picture of the industry to make predictions that span commerce in its entirety – from shopping habits of consumers around the world to the evolution of running, marketing, and funding an omnichannel business today.
“At Shopify, we believe commerce is more than a transaction; it’s a relationship between a business and its customers. It’s only possible to report on the future by examining both audiences together,” said Harley Finkelstein, President, Shopify. “The importance of this relationship has never been clearer. On the heels of a record-breaking Black Friday/Cyber Monday weekend, and as we close out one of the most disruptive years for commerce and the world, we’re excited to look forward. Looking ahead, we see independent retailers and the next generation of consumers driving shifts that will pave the way for an even brighter future of commerce.”
Analyzing Shopify data from our more than one million merchants around the world and insights from their customers, our first annual Future of Commerce report reveals five key predictions for businesses in 2021 and beyond. They include:
- Young consumers will change the business landscape as ecommerce charges ahead.
- Physical retail as we know it will transform, giving local businesses new advantages.
- Consumers want to shop independent. Businesses will adapt to make that easier.
- More consumers will vote with their wallets.
- Modern financial solutions will disrupt business and consumer banking, financing, and lending.
India Snapshot: Shopify Future of Commerce 2021: Capturing Indian Buyer Sentiments
1. Young consumers will change the business landscape as ecommerce charges ahead: While the pandemic kick-started a behavioral shift to ecommerce, the highest shift was seen in young and middle aged consumers. Brands will need to adjust the way they do business to meet new consumer expectations and have staying power.
Consumers are hesitant to return to in-store shopping.
- 84% have shopped online since the pandemic; 38% have shopped in-store.
- 85% of consumers said they will shop online regularly in the next 6 months.; significantly fewer (31%) say they’ll shop in-store regularly in the next 6 months.
- 85% of younger consumers (18-34) & 90% middle aged consumers (35-54) years shifted more of their spending to online shopping since the pandemic was declared, compared to the 86% average.
Brands should pay attention to the habits of younger consumers as they lead the shift to ecommerce, especially because they are more likely to:
Discover and shop via social media
- 55% of younger consumers who purchase from independent retailers discover brands via social media compared to 45% of middle aged consumers 35-54 .and 33% of older consumers 55+
- 41% of younger online shoppers said they purchased via social media, compared to 44% of middle aged online shoppers and 22% of older online shoppers.
Prefer to shop for sustainable and green products
- 83% of young consumers(18-34) prefer to shop for sustainable and green products compared; 93% in the middle aged bracket also prefer to shop for sustainable and green products
Shop to have an impact
- 42% of younger consumers who shopped from independent retailers since the pandemic was declared did so to have a positive impact on society, compared to 26% of middle aged consumers
“Although we have seen the greatest shift online among young consumers, the other key segments including middle aged and older consumers are also seeing significant numbers starting to go online for their shopping needs,” said Sandeep Komaravelly, Director of International Growth at Shopify. “We expect such habits to persist in 2021 as Indian consumers increasingly prefer to support independent brands and local businesses.”
2. Physical retail will transform as we know it, giving local businesses new advantages: Omnichannel features and experiences that retailers adopted in 2020 will give new life to physical stores and allow businesses to take advantage of proximity to local consumers.
Some of these new strategies and technologies resilient retailers adopted and will continue to offer include:
- Contactless payments: 82% consumers are more comfortable making in-store purchases with digital / contactless payments (81% – younger consumers, 86% – middle aged consumers, 76% – Older consumers)
- Alternative pickup and delivery options: Among those who used alternative fulfillment methods, over half did so more often in the past six months than before the pandemic was declared. These include:
- Local delivery: 71% of consumers are receiving items through local delivery more often than before the pandemic was declared.
- Buy online, pick up in store (BOPIS) or curbside: 69% of consumers are using BOPIS or curbside pick up options more often than before the pandemic was declared.
- Pick up point: 69% of consumers are using a pick up point option more often since the pandemic was declared.
Consumer pain points: Merchants will need to improve the following aspects of consumer touch points for better online experience. Top factors that made shopping online frustrating for consumers include:
- 42% say limited stock is a concern
- 36% feel shipping took longer
3. Consumers want to shop independent. Businesses will adapt to make that easier: Consumers expressed the desire to shop with independent businesses but still purchase from marketplaces for convenience. Independent brands will continue to close the gap.
Consumer intentions lean toward supporting independent & locally owned businesses.
- More than half of consumers (81%) look for independently owned businesses to support for reasons including: supporting entrepreneurship, buying unique products, and experiencing good customer service.
- 86% of consumers say they support small businesses, while 83% say they look for locally owned businesses to support
Consumers’ intentions to support independent businesses are not yet reflected in their purchasing habits. However, this may change:
- 44% purchased from marketplaces since the pandemic was declared, while 52% say they’ll continue to shop from Local / Independent businesses regularly in six months’ time.
- 76% of consumers are willing to shop at new brands or stores for the first time.
Independent & Locally-owned retailers should highlight the benefits of their business models and adopt features offered by large retailers to meet consumer needs.
Fast and free shipping
42% of online shoppers say free delivery would improve their online shopping experience while 28% say free returns and 42% say faster delivery would make online shopping better.
75% of Shopify merchants who generated sales between March through September have free shipping enabled on their stores. (Shopify merchant data)
In Q2 2020, Shopify enrolled more merchants and increased fulfillment volumes for Shopify Fulfillment Network by 2.5 times over Q1. (Shopify merchant data)
As e-commerce continues to grow and retailers navigate challenges presented by COVID-19, fostering an online dialogue between merchants and customers is becoming increasingly important.
Merchant sales attributed to chat on Shopify Ping increased by 185% from March 16 to July 1, 2020. (Shopify merchant data)
Shoppable social media
Independent retailers are increasingly adopting ways to meet customers where they spend their time online.
At the start of the pandemic from March through April, marketing on Facebook and Instagram via Shopify’s channel integration saw 36% growth in monthly active users—a trend that continues to rise. (Shopify merchant data)
4. More consumers will vote with their wallets: Consumers will make an informed decision while choosing brands. Brands must demonstrate authenticity, transparency, and accountability as consumers increasingly support local businesses and sustainable products.
- 87% of consumers prefer green or sustainable products.
- 80% of consumers respond positively to retailers making a donation to a cause with each purchase.
- 27% of consumers shop at local or independent retailers to reduce their environmental impact.
Consumers’ main reasons for shopping at a locally owned business (online or in-store) include:
- Strengthening the local economy (37%)
- Helping support local job creation (41%)
- Investing in their community (22%)
35% of Indian shoppers purchased something from an independently-owned retailer in the six months since Covid-19 was declared a pandemic
Top reasons for shopping independently include: having a personalized shopping experience (43%), having a positive impact on society (36%), and to reduce their environmental impact (33%)
More than (58%) of consumers who shopped at independently-owned businesses found them through recommendations, followed by through social media (48%)
5. Modern financial solutions will disrupt business and consumer banking, finance, and lending: Providing options that traditional banks don’t offer, financial solutions that prioritize speed and access to capital, faster ways to pay, and more flexible payments like installments are growing in popularity among businesses and consumers.
- The quality of the digital user experience is a key factor for merchants: 48% global consumers say a “good online banking or mobile app experience” is one of their top three most important features when considering a bank for their business.
- More businesses are accessing capital outside of traditional banks: Across the US, Canada and UK, cumulative funding from Shopify Capital reached approximately $1.4 billion at the end of September.
- Buy now, pay later has grown in popularity: The number of Shopify merchants globally who offer buy now, pay later has increased by 60% since the start of the pandemic