As legacy wholesalers go online and global retail giants like Walmart expand their ecommerce initiatives, digital competition is heating up. Likewise, competitors in product categories not traditionally in demand online are also competing for ecommerce shoppers. The shift is led by household essentials, health, and personal care.

Competition is also coming from abroad. As COVID-19 spread, consumers began shopping outside their home countries. Cross-border ecommerce spiked 21% year over year from January to June 2020, with online sales of luxury goods increasing by 39%.

According to proprietary data from Shopify, the U.S. leads cross-border ecommerce. But the pandemic has also accelerated this behavior in China.

Shopify data reveals that translation apps spiked 3,309% worldwide during the pandemic. Dropshipping and currency conversion apps have also seen significant increased usage since the pandemic. These types of investments in cross-border commerce suggest overseas and regional competition isn’t likely to subside.

Worldwide, branded commerce and marketplace apps can now cost companies more than $30 USD to acquire a new customer.

The global pandemic has transformed the role and importance of digital experiences in customers’ lives. Today’s consumer expects easy-to-use, intuitive digital experiences across channels and devices. Brands that can deliver on those expectations are seeing the greatest returns. According to proprietary data from Shopify, retail merchants with an omnichannel strategy in place replaced 94% of point-of-sale (POS) purchases lost in the first month of the pandemic with online sales.

But a gulf has opened up between digital-first DTC brands and businesses that are new to ecommerce. Only 38% of the largest companies are capable of competing on customer experience.

“During the pandemic, direct-to-consumer brands with thriving ecommerce experiences were able to very quickly and easily pivot their marketing and messaging, their energy,” says Hana Abaza, Shopify Plus’ global director of marketing. “They didn’t have to fundamentally rethink their business model. They could focus on very different things because they were at a significant advantage.”

The opportunity for DTC brands is to build on their ecommerce expertise. The challenge for everyone else is keeping up.

To capitalize on the ecommerce boom and overcome fierce competition, you need to optimize commerce across channels like online marketplaces, social media, retail, and wholesale. That also means building—or buying—a technological foundation that frees your team to create immersive, unified experiences wherever your customers are. The business benefit is resilience, allowing your business to quickly shift efforts and resources from offline to online, and back again, based on customer demand.

Convert your site to a progressive web app

Progressive web apps offer an optimal mobile experience across channels and can live on a user’s home screen. They’re designed to load instantly, even if the user is offline.

Combine your progressive web app with an accelerated mobile page

Some brands are also combining progressive web apps with an accelerated mobile page, or a mobile-first, stripped-down HTML copy of a web page that loads instantly. Accelerated mobile pages are the foundation of Google’s mobile-first index, which prioritizes mobile optimization in search results. The combination can lead to better search results, more top-of-funnel traffic, and improved site conversion rates.

Headless commerce, an API-first solution, decouples the front-end customer experience from the back-end technology infrastructure. Benefits include:

• Integration: Building custom enterprise architecture with APIs enables deep integration with tools or services of choice (like a separate content management system)
• Flexibility: By separating the back end from the front end, you have full ownership and control of the front-end experience and the tech stack used for building it
• Omnichannel: This flexibility allows you to extend shopping into any customer experience, on any device or platform

Despite the cost and development complexity associated with going headless, many merchants are still willing to adopt a headless architecture in an effort to improve conversion rates. Expect the adoption of headless and lean microservice tech stacks to accelerate in 2021.

Never has the consumer expected more of businesses. Not only do shoppers want to buy online, they also expect it to be fast and convenient.

Consumer surveys indicate that these shifts will be sticky. Of the 75% of consumers who say they tried different online brands during the pandemic, 60% expect to integrate the new brands and stores into their post-COVID lives. Other shifts that took hold during stay-at-home orders are also expected to persist, including shopping online, using mobile payments, and video calling and conferencing.

It’s also possible these behaviors will persist, but not to the same degree as during and immediately after the pandemic. Stickiness will depend on how satisfied consumers are with their new digital experiences. This varies by country. In Italy 60% shopped online during the pandemic, but fewer than 10% were satisfied with the experience, while consumers in Finland will continue shopping online after the pandemic, suggesting the shift will last.

The changes you must make to your business won’t be temporary though. Chief executives around the globe say digital is here to stay, the shift to ecommerce is structural, and behavioral changes are permanent.

“You’re not going to see a full rollback when it comes to ecommerce penetration,” says Hana Abaza, Shopify Plus’ global director of marketing. “Some people will actually shift into buying certain things online, and they’ll keep doing it.”

Focus on creating innovative digital experiences that make life easier for your customers, reinventing traditional shopping experiences for the post-pandemic world, and bringing your brand to life in new ways.

“It’s the consumer who is in control,” says Robert Hein, Shopify Plus’ merchant service experience manager. “Their demand is shifting needs and expectations. Relevant to COVID, there’s probably more interest in safety and security and a combination of experiences: Part of it is digital, part of it is real life. There’s maybe a tangible product and then a digital experience that complements the product.”

Intimate apparel brand Knix pivoted from its international growth plans when COVID-19 hit and launched digital versions of traditional physical experiences, most notably, a virtual fitting room.

Once customers book a 20-minute consultation, they receive a message introducing them to their “Knixpert,” one of the company’s in-store associates who has been redeployed to help shoppers. Customers learn how to take their measurements accurately, and find the right size and fit.

Knix also hosted a virtual warehouse sale that achieved:

• 35,000 people shopping at once within 10 minutes of the sale going live
• Handling 5,000 customers in checkout simultaneously
• The successful launch of virtual fittings

“Retail is being disrupted, and brands need to find new ways to deliver experiences with trust and care,” says Joanna Griffiths, Knix founder and CEO. “The world’s next legacy brands are being built in real time, and I believe Knix will be one.”

Complex consumer demands have coincided with rising shipping costs. The shift to ecommerce has resulted in shippers operating at peak levels for the majority of 2020. In response, they’re charging more. Worldwide, FedEx announced an average 4.9% rate increase for 2021. FedEx also plans to hike rates during peak holiday season, and charge late fees for merchants who don’t pay on time. UPS is also charging more: Its new chief executive has prioritized aligning pricing with the value the company provides.

Ecommerce is also making order profiles more complex: Distribution centers are fulfilling smaller DTC orders faster to meet aggressive cutoff times and shipping deadlines.

The global nature of trade, though strained by U.S.-China relations and Brexit, is also adding complexity. Purchasing power is shifting from the U.S. and Europe to China and Southeast Asia. With China dominant in ecommerce, more than 62% of digital sales were expected to take place in Asia Pacific in 2020. With Asia Pacific as ground zero for ecommerce, fulfillment complexity is compounding for brands selling cross border.

Even more challenging, consumers increasingly expect free returns. The total cost of returns worldwide recently topped $1 trillion, and ecommerce returns in the U.S. are forecasted to surge.

Due to COVID-19, 40% of retailers adjusted return policies. Returns are also rising as more online shoppers "bracket" their purchases, buying multiple versions of a product with the intention of returning some items.

In 2021 protect your margins from rising costs and give customers everything they want—fast, free, sustainable, and branded shipping—by improving your fulfillment capabilities.

Molson Coors Beverage Company equipped its Toronto DTC initiative with both local pickup and local delivery. Customers can choose to pick up their orders or have them delivered from their nearest retail location.

Since using its retail location to fulfill online orders, Molson Coors has:

• Launched an online store in 10 days, with local delivery in Toronto
• Grown sales 188% month over month
• Increased orders 152% and conversions by 109% month over month

“By building our direct-to-consumer service, we’re able to grow sales of our iconic brands,” says Joy Ghosh, Molson Coors’ brand director for North America. “But it’s a lot more about the direct relationship that we now have with our customers and being able to adapt to their needs as we learn.”

While marketplaces are gateways for brand discovery, consumers don’t come to marketplaces to seek out brands. Observers have quipped that “consumers can find anything on digital marketplaces except your brand.”

With the purchase journey increasingly beginning on Amazon, consumers search by categories, benefits, and reviews. Search, according to analysts, has become the new brand:

• 70% of Amazon searches do not include a brand name
• Nearly 90% of Amazon product views result from search, not branded ads or merchandising

Marketplace dominance and search behavior aside, today’s consumer also wants to buy from brands with a higher purpose. Worldwide, shoppers are increasingly spending with their values. Purpose-driven consumers—approximately 40% of all consumers—want products and brands that align with their beliefs, and are willing to pay a premium. Gen Z, now the largest consumer group, leads the trend. They’re also willing to change their shopping habits to reduce environmental impact, and care about issues like sustainability and recycling. The highest concentrations of purpose-driven consumers are in Europe, Southeast Asia, and Latin America.

The demand for purpose-driven brands also aligns with a desire to shop with independently owned businesses. Proprietary data from Shopify shows that 65% of consumers say they support independent brands.

Consumers’ main reasons for shopping at a large, corporately owned business include:

• Good product selection (57%)
• Lowest prices (51%)
• Reliable (34%)

Consumers’ top reasons for shopping at an independently owned business (online or in store) include:

• Supporting entrepreneurship (33%)
• Buying unique products (33%)
• Experiencing good customer service (31%)

Sourced from Shopify

But satisfying this audience segment is increasingly difficult. With so many customer journeys beginning on marketplaces, brands often lack the data necessary to offer the personalized experiences that purpose-driven consumers desire.

Brand discovery might often begin with brandless marketplace searches, but purchase decisions are influenced by the research that consumers do elsewhere online. Reaching the purpose-driven consumer means re-evaluating your marketplace presence and offering rich non-marketplace experiences.

Human connection is the new luxury. Technology fatigue has resulted from tech’s intersection in every aspect of human existence, including transit, work, entertainment, and hobbies. This has left many feeling wary about the role tech plays in their lives, and craving human interaction.

What’s clear is that consumers are increasingly rewarding organizations that humanize the buying journey. In response, brands are prioritizing personalized experiences that can’t be found on marketplaces. From dynamic website content powered by real-time behavioral analytics to helping people customize their purchase journey, offering personalized experiences with a human touch is the antidote to marketplaces.

Personalization, whether it’s delivered by a human or an algorithm, is too lucrative to ignore. Retailers estimate personalization can unlock $2.95 trillion this decade. Delivering on personalization means a combination of new technology solutions, and old-fashioned customer service that delivers unique branded experiences.

A full 74% of U.K. and U.S. businesses say they have a website personalization strategy in place, with significant growth expected in all channels by the end of 2021, including mobile, email, conversational marketing, loyalty programs, and in-store POS.

Each of these channels offers opportunities to add the human touch. Improved collaboration between humans and artificial intelligence helps brands personalize storefronts with real-time publication of dynamic copy and creative. User-generated content promises personal online experiences through tailored microsites, responsive promotional videos, and livestreams with real-time interaction.

New brand-building opportunities are starting to emerge on marketplaces too. Walmart is changing the marketplace experience by enabling more branding opportunities like lifestyle photography. The goal is to make the marketplace local and personal, instead of a massive product dump. As traditional retailers attempt to disrupt the marketplace experience, expect incumbents like Amazon to follow suit.

Gymshark, an aspirational fitness apparel brand, has built a community that connects customers with their fitness idols. These enduring human connections are built on and offline. From trainer-led streaming workouts to in-person expos, Gymshark empowers customers to choose where and how they interact with its influencer network.

Letting customers choose their own adventure—virtually, in person, or a combination of the two—has helped Gymshark become the fastest growing private company in the U.K.

“We are nothing without our community, so we will use this new investment partnership to get even closer to them on a truly global scale,” says Ben Francis, Gymshark’s founder. “I’m incredibly proud of what Gymshark has achieved to date from our roots in Birmingham, but it’s all about looking forward. I firmly believe Gymshark has the potential to be to the U.K. what Nike is to the U.S. and Adidas is to Germany.”

ThirdLove, a bra and nightwear brand, prioritizes segmenting customers based on lifetime value. Instead of one-size-fits-all promotions, ThirdLove uses rewards program tiers to offer increasingly valuable incentives designed to get top spenders to spend even more.

To receive additional perks, customers must spend enough to move into the second ($250 lifetime spend) and third ($450 lifetime spend) tiers.

ThirdLove uses proprietary data to map the customer lifecycle and offer the right incentives at the right time. One example is ThirdLove’s Fit Finder, a data platform that helps the 10 million women who have submitted their dimensions find their perfect fit.

The approach has resulted in impressive sales and retention:

• Revenue up 347% year over year
• Returning customer rate up 62% year over year

“No one can replicate the data that we have,” says Heidi Zak, ThirdLove’s co-founder. “Victoria’s Secret can’t. No other startup can. There is no way they can do it.”