2021 in eCommerce: Trends and regions to watch

The eCommerce industry in 2020 has surely undergone an intense transformation. The COVID-19 pandemic has changed the way people purchase products and services, accelerating retail digitalization drastically. What upcoming eCommerce trends should we expect? What is globally trending this year, and what is happening in different parts of the world? Let's figure that out.

A short time ago Shopify released its annual "The future of eCommerce" report. In case you haven't dug into it yet, we've got you covered. The five trends featured in the report include tough online competition; new product niches going online; next-level shipping; marketplace dominance; and prioritizing customer retention.

Despite eCommerce growth is going to slow down ultimately, sales are at an all-time high after the acceleration caused by the pandemic. Global retail giants, wholesalers, and not-so-typical for online sales products are fueling the market, which results in higher customer acquisition costs. Brands with omnichannel experience are more likely to win in the race for customer attention span, which keeps decreasing.

Consumers start to buy online groceries, health and hygiene, and home essentials — products that very rarely ended up in their carts before. The pandemic has increased the craving for convenience and immediacy that vastly impacts customer satisfaction level. Retail is heading towards mass acceptance of augmented reality and virtual reproduction of the in-store shopping experience.

Today's successful order fulfillment must meet a few criteria: fast, free, sustainable, and branded shipping. However, a great practice is to implement a minimum order threshold for free shipping. This way, you cover your expenses, as shipping costs may vary for different destinations. Also, do not forget about automatic returns and flexible delivery options, for example, curbside pickup.

Building a brand nowadays becomes more and more difficult. Half of all global eCommerce sales are made via marketplaces, where customers are mostly looking for solutions, not brands. Still, you can always turn your marketplace product page into a unique customer experience.

Customer acquisition costs are increasing worldwide across all channels, with rates on Facebook rebounding to pre-pandemic highs. Brands are prioritizing retention, rewarding and incentivizing existing customers to spend more.

Emarketer forecasts the retail sales to recover gradually, with a year-to-year sales growth of 2.3%. The 32.4% eCommerce growth in 2020 will slow down the pace in 2021 and reach 6.1%. Some local trends for this year:

• Amazon will keep its position as the most popular and successful platform. Retail brands such as Walmart, Best Buy, and others will put more effort into enhancing their omnichannel sales.
• Brick-and-mortar retailers will lean towards the usage of digital technologies in-store to make the purchasing process more comfortable. Cashierless checkout, click and collect, contactless payments, and digital signage will streamline in-store transactions.
• Online grocery shopping is becoming a habit, so we expect more customers there.
• Social commerce will gain momentum and play an essential role in brand discovery.
• Another promising idea — "Buy now, pay later" services that make purchases affordable for more and more customers.

China has been representing the biggest eCommerce market in the world for a while now. It's three times bigger than its nearest follower, the United States. During the last years, the Chinese economy has become more domestically driven due to the fast-paced expansion of its consumer market and local innovation prioritization. Central tendencies for this year include:

• The government will unleash regulations on tech giants.
• The shift to digital consumption will accelerate in 2021.
• China is ready to transform the eCommerce industry with the implementation of 5G that will empower new technologies.
• DCEP, a digital currency electronic payment, will allow consumers to choose from a broader list of mobile payment options, thus increasing people's ability to pay.

The European Union represents a large eCommerce market with yearly B2C revenue of around €700 billion and annual growth of ~13%. 2021 is an important year for this region because of the EU eCommerce VAT package that comes into force on July 1. Value-added tax (VAT) obligations will be simplified for companies carrying out online cross-border sales of goods or services. Here you can find the explanation notes posted by the European Commission. Also, a new scheme is announced for the products with the price tag below €150 imported from third-party countries with a new web interface supporting it.

On the other hand, cooperation with Britain is becoming more complex as a part of the Brexit consequences. Sales to and from the UK are now subject to new regulations, customs, and duties. The new duties and taxes make international purchases less attractive for British customers. Businesses need to collect VAT on orders shipped to the UK below ￡135. Those valued above ￡135 are subject to duties and import VAT. More information on the topic is available on Shopify. In line with these events, online payments in the EU shops are becoming pricey for British customers. Thus, Mastercard is increasing fees more than fivefold when a British shopper uses a debit or credit card to buy from an EU-based company.

India's online retail growth hasn't reached the numbers shown by more mature markets — the growth results are just 7-8%. Satish Meena, a senior forecast analyst at Forrester Research, explains that it happened because companies were not ready for the three months of the local lockdown, and they missed the great chance. However, currently, the number of new shoppers is rising. The most promising niches here are grocery and pharmacy stores. Trends expected to succeed the most are social commerce and super apps.

eCommerce industry continues to grow. The pace may slow down a bit this year, but the overall forecast is positively optimistic. Region-based events, novations, and regulations will be shaping a new reality both for eCom and online businesses overall, so keep those on the radar.