By Vini Ratnamaheson, Manager, ChannelAdvisor
Could the last 18 months actually leave the retail sector stronger than ever? While there’s no denying that many businesses have been hit hard, UK brands selling online have managed to thrive. Even as lockdowns lift around the world, e-commerce’s growth shows no signs of slowing – UK online spending hit a record £10bn in July, the highest monthly spend so far in 2021.
Alongside a surge in online revenue, brands have acquired valuable lessons, accelerated digital strategies and expanded into new channels in order to reach their target customers. Many businesses may still be on the road to recovery, but has this intensely challenging period actually future-proofed these retail brands more than ever before?
Diving into D2C
For many brands, the last year and a half has provided a crash course in rapidly accelerated direct-to-consumer (D2C) selling. After years of behaving more as manufacturers and suppliers, these brands have weaned themselves off the traditional total dependence on intermediate retailers, by also selling through their own sites, third party marketplaces and social channels. This transformation has not only helped them survive the last 18 months, it has also supercharged brand confidence and spurred many to invest further in new capabilities.
ChannelAdvisor recently surveyed 304 CMOs working at UK brands selling online. 91% of CMOs said they feel confident that their brand’s revenue would grow over the next 12 months, with a quarter feeling very confident in revenue growth. Respondents were also self-assured about customer growth, with 92% expecting it to become even easier for their brand to attract and retain online shoppers across the next 12 months, with 32% saying they expect it to become ‘much easier’.
Customer insights
In order to best cater to their customers when selling D2C, many of these brands deployed customer insight-driven strategies. When the entire process is within your control there are data points up for grabs, from where a customer clicks through to a brand site from, the products they viewed, to basket abandonment rates and how quickly specific products sell.
29% of the surveyed CMOs said they had noticed an older demographic of shoppers purchasing their brand’s products online. 31% said they had noticed that shoppers were purchasing online more frequently than before COVID, while 28% observed that consumers were demanding more flexibility in when and how their products were delivered compared to before the pandemic.
These insights are then key in informing wider strategy decisions. For instance, 84% of CMOs say their brand has increased the speed of their average delivery time since the start of the COVID-19 crisis, driven by the rising importance of this customer demand.
As these brands started to regard these sales channels as a source of insight in their own right, they have now got a much better understanding of the whole consumer journey. This understanding, as well as the ability to capture changing consumer behaviour, has set them up in pole position to react in a timely manner to meet new demands. On a broader scale, insights gained about a brand’s customer base can also be used to inform cross-border expansion decisions and future avenues of selling.
The fragmented path to purchase
The volume of online purchases has certainly skyrocketed over the last 18 months – but more than that, online has become an entrenched research destination for shoppers. According to ChannelAdvisor research, 56% of UK shoppers admitted that they research online more before shopping in-store than they did before lockdown, rising to 72% for those aged 18-25. The most popular channels for research were Google (64%), Amazon (61%), Retailer Website (58%), Brand Website (47%) and eBay (36%).
The customer’s journey is a lot more fragmented than it used to be, coming from a number of different possible starting points in order to inform their purchasing decision. It is vital that brands understand how their target shopper not just buys but researches products and presents them with the relevant information in the places they are looking for it. If consumers can’t find these details or they are not clearly presented, most will simply exit and opt to research via a competitor.
Acknowledging that shoppers need to easily research across channels, brands spent to optimise their online presence. When asked about areas they have made significant investments in across the last 12 months, 49% of CMOs say their brand has invested heavily in optimising their presence on online marketplace channels, while 38% say they have invested in optimising their own online stores.
What’s next?
As restrictions lift and consumers return to shopping in-store, brands continue to invest in their online capabilities. When asked which hires would be most sought after by their brand over the next 12 months, the CMOs say e-commerce expertise was ranked first. 91% expect their digital ad spend to increase further over the next 12 months.
Where previously D2C channels have been comparably under-utilised, online websites are now the face of the brand, where the customer might discover, learn and go ahead and make a purchase. As the world returns to a new normal, innovative brands will continue to deploy and learn from their agile D2C channels. They are now poised to react to changes and experiment, targeting new customers as shopping habits continue to change over the coming years.
