We are all currently feeling the effects of the coronavirus pandemic – a crisis that has completely changed the way we interact, view, and engage with day-to-day life. Over 75% of companies have experienced negative impacts due to COVID-19, and disruption to supply chains this year has exposed America’s overreliance on one country for sourcing.
E-commerce merchants – already part of a growing industry – were put under the spotlight during the crisis that forced huge waves of consumers online. Naturally, the unprecedented uptake in activity resulted in stock shortages and fulfilment issues, forcing merchants to consider new approaches. Forecasts suggested global e-commerce sales would increase by 19 percent by the end of 2020, and while there is no way of knowing whether the trajectory will continue into 2021, some trends and changes are appearing to be more permanent than others. In the face of future disruption, it will be vital now, more than ever, to anticipate what could happen.
To prepare for what is to come, expect these three upcoming trends in 2021:
1.Growth of the online marketplace
During the pandemic, we have seen mass disruption across a multitude of sectors lead to an unsurprising reliance on e-commerce, with global online marketplaces pivotal to their expansion. Platforms such as Amazon, eBay, Etsy, and Taobao have all experienced record growth this year – essentially becoming the international, “virtual malls” of the future. So much so, that almost half of online shoppers admit to heading straight to a large e-commerce marketplace when making a purchase, with $1.97 trillion spent in 2019.
The once localized market reserved for brick-and-mortar stores has gone global, with sellers and consumers alike realizing the variety of products available online. Exclusive online marketplace sales including Prime Day and Singles Day have almost generated double of their year-on-year revenue — growing an international presence is easier than ever before. By utilizing the right logistical and visibility tools such as customer relationship management (CRM) systems, progressive web apps (pwas), cognitive supply chain management, and subscription services, experienced sellers can continue to capitalize on a cross-border market that is expected to grow 27% to reach nearly $5 trillion by 2026.
2.The new normal of fast delivery
Changes in consumer behavior geared towards quick, efficient, and easy delivery times have set the pace merchants will need to match. One-day delivery, a previously expensive and less prioritized option for shoppers, has become normalized through subscription-based services, and in 2021, we could see a huge 80% of consumers prefer same-day or fast delivery.
Lengthy online delivery times affect sales, with over a third of online shoppers citing long delivery times as one of the key reasons to shop in store. This could leave sellers with questions and a hard decision to make in regards to managing fulfilment. Understanding what goods will be in demand next year will be essential to meeting dynamic consumer shopping trends and demands.
One thing is for sure: Investing in the right logistics and fulfillment services should be a priority for any merchant this year. A seller’s worst nightmare is having stock in a warehouse they cannot shift, and analyzing what is coming, going, or needed in turbulent market conditions will be crucial for mitigating disruption.
With hidden fees, high exchange rates, and pricey tax conversion costs associated with cross-border e-commerce platforms, sellers will need to take the time to consider the right shipping solutions and international supply chains. Up to 10% of profits can be saved using the right cross-border payment provider, and ensuring you have all the appropriate tools could make all the difference.
3.Diversify supply chains
A large number of businesses – including online merchants – had to evaluate and rethink their global supply chains when coronavirus disrupted the world’s factories earlier this year. Without the means behind production, businesses stopped, orders were cancelled, shipping became expensive, and workforce shortages showed the fragility of relying on components from one single market.
As a consequence of this crisis, the shift to diversification has been supercharged for sellers and businesses that would have otherwise continued with existing suppliers. Sellers should, if they have not already, map the areas most vulnerable to further disruption and ascertain which areas to diversify. Checking if the distribution facilities are working well, as well as finding the fastest possible transportation network and quickest inventory replenishment are just some of the many issues to be investigated.
Online merchants will find some regions that can produce a similar service or grade of product that a seller is accustomed to, and this can completely vary from product to product. It can be difficult to build this new infrastructure, and traditional hurdles of having a localized bank presence, costly exchange rates, and drawn-out shipping times have always held back the big jump.
Fortunately, cross-border e-commerce tools that have emerged over the last few years (such as localization services, market insights, and global payment providers) are bridging the gap for sellers with their eyes set on global growth. With the right network of innovative partners and taking heed of key market trends, cross-border sellers have access to better knowledge of international markets than ever before. If not, they could miss out in 2021.
Kenny Tsang is Managing Director of FinTech Unicorn PingPong Payments.
This article originally appeared in the January/February 2021 issue of PARCEL.