The pandemic marks a turning point for retail: shopping will never be what it was before. What can explain the dominance of marketplaces like Amazon, and why is gaming the new shopping? A new report points out the trends. Keep an eye on TikTok, too…
The new normal is digital
E-commerce was a lifeline for many consumers during the lockdowns, and all indications are that it has changed shopping behaviour forever and drastically. That is one of the conclusions of the comprehensive study The Future Shopper Report 2021 by Wunderman Thompson, which surveyed more than 28,000 consumers in seventeen markets.
80 % of shoppers say the way they shop has changed and 62 % say they will use digital channels more often. This percentage does vary by region: it is higher in Asia and Latin America, lower (29 %) in Europe.
The main driver for changing shopping behaviour is the fact that consumers are now more familiar with digital technology: a logical consequence of being forced to use these tools. Another driver is fear: 41 % of shoppers say they are still afraid to shop in a store.
Omnichannel becomes the norm
Still, that does not mean the end for physical retail: 62 % say it is important that a brand has a physical store and 64 % prefer brands that have a presence both offline and online. Consumers also expect those brands to communicate with them seamlessly across channels; remarkably, it is mainly the younger generations who think such an omnichannel approach is important: they expect maximum flexibility in how and when they shop.
The bar is set high: three quarters (73 %) of shoppers believe retailers need to get better at offering the products, services and experiences they want. More than half (56 %) say they will not shop with someone who does not meet their digital expectations.
Marketplaces dominate
Around the world, the big marketplaces are showing the way: Amazon in the West; Tmall, Lazada and Taobao in Asia; Mercado Libre in Latin America. Marketplaces are often the first destination where shoppers look for inspiration online. Their great strength is that they are able to attract and retain shoppers throughout the entire customer journey, from inspiration through search to purchase. Indeed, 80 % of shoppers want to go from inspiration to purchase as quickly as possible, which plays to the marketplaces’ advantage: they offer the ultimate ‘one stop’ shopping experience.
In many markets – including Europe – the search for products starts more often on Amazon than on Google – except in the Netherlands, where the search starts on “other marketplaces” thanks to a few local heroes. It is also noteworthy that the importance of social media is growing rapidly: in many markets, it is already the third favourite search option.
Amazon, Mercado Libre and the Asian marketplaces already have a 42 % share of wallet worldwide. Amazon has the highest market share in Germany: 33 %. As a result of the pandemic, supermarkets experienced enormous growth online and already have an 18 % share of online spending. Delivery apps such as Deliveroo or Uber Eats are already cycling away with 11 % of the pie.
Directly to the consumer
Direct-to-consumer channels of brands have seen a sharp rise in popularity during the pandemic. For those brands, it is an interesting channel: they have control over customer data, shopping experience and service. Demand rose sharply as consumers experienced delivery problems at major retailers due to the large peak during the initial lockdown. In food, for instance, brands such as Heinz and Pepsi launched D2C channels as a result. In fashion, 23 % of all online purchases take place on brand websites.
However, when asked which online shopping channel gave them the best experience, consumers ranked D2C fifth with an average score of 6 %, far behind Amazon (29 %) and other marketplaces (23 %), as well as retailer websites (11 %). Brands need to do better in terms of service, price, offer and delivery options.
Who will win the delivery race?
One of the main battlegrounds in digital commerce is anything but digital: delivery. Consumers say things cannot be delivered fast enough: three quarters (76 %) of shoppers worldwide expect delivery in less than three days, one third (30 %) even in less than 24 hours. In addition to speed, online shoppers also expect more delivery options: precise delivery times, the choice of more delivery locations (besides home, also at work or on the go), more pick-up locations and contactless delivery are on the wish list.
And the winner is… Amazon: 36 % of shoppers worldwide consider Amazon to be the best in fast delivery. In European countries, this percentage is even higher than 60 %. Delivery is a bottleneck for physical products, but as many as 33 % of all products and services people buy online are digital. In those cases, shoppers expect to be able to download the product immediately, without waiting.
TikTok versus Facebook
Interest in social commerce is growing rapidly: already 44 % of the surveyed consumers say they have bought something on a social platform. In China, this figure is already 69 % – and these percentages will only increase: 56 % of shoppers say they will do this more often in the future. Especially young people buy via social media channels.
Europe, however, does not seem to follow this trend. Only 22 % of Europeans already shopped on social media and 70 % say they will not do it more often. In fact, 40 % of European consumers say that nothing will convince them to shop more often on social media in the future. Remarkable is also the low interest in Europe for livestream shopping: only 5 % are interested, compared to 17 % in Asia.
Facebook and Instagram are by far the most popular shopping channels, but the popularity of TikTok in China is astonishing: the video app already accounts for 68 % of all social purchases and 70 % of consumers consider TikTok the best channel for social shopping. Considering its enormous growth in the United States and Europe, the company could become a major challenger to Facebook and Instagram in this area.
Digital stores
The future of commerce will be digital or will not be: 66 % of shoppers expect brands and retailers to innovate more. Again, this is especially true for Asia and Latin America. 60 % are enthusiastic about cashless payments, 62 % want till-less stores. Shoppers also expect digital technology in physical stores: 48 % are open to biometric payments with, for example, a fingerprint or iris scan as identification. Among the older generations, this enthusiasm is significantly lower.
76 % of consumers are prepared to share purchase history and personal preferences with companies in exchange for free samples, and an astonishing 44 % are even interested in “buying from the grave”. The concept: you could link an AI-based avatar to your bank account to continue making purchases even after your death, to continue to take care of your loved ones… Again, this idea is significantly more accepted in Asia than in Europe.
Gaming is the new shopping
Consumers spend more and more time online and use digital identities or avatars to interact with others in the virtual world. We see this in the world of video games. Gaming is more than ever a social activity: gamers make new friends all over the world, and during the lockdowns there was plenty of time to play.
As a result, video games are now also becoming a retail channel: 59 % of gamers spend money via the gaming platforms they use. This is not just about in-app purchases related to the game itself: 56 % of gamers say they want to spend money on products for their avatar, their digital self: virtual outfits and accessories, for example. A new market is opening up.
Technology and subscriptions
The acceptance of new technology also accelerated. Voice shopping is on the rise: 38 % of consumers have already used smart assistants such as Alexa or Google Home to make online purchases. Another 21 % plan to do so in the future. Adoption is high in the US, low in Europe. An important factor is Amazon Prime membership: 47 % of members use voice.
Automatic purchases – such as HP Instant Ink or restocking your Nespresso coffee capsules – are also starting to catch on after a slow start, especially among younger consumers. Subscription plans, on the other hand, are seeing a decline: 38 % of shoppers worldwide subscribe to one to three services. A year earlier, this was still 56 %.
More info on The Future Shopper Report 2021 by Wunderman Thompson can be found here.
