The future of ecommerce is here – Are you ready?

Amelia Ward and Alex James
By Amelia Ward and Alex James | 9 November 2021
Alex James

PHD's Amelia Ward, Head of Digital Sydney, and Alex James, Head of Strategy Melbourne

COVID has been the epicentre of our lives for 18 months, so while you might be tired of hearing and reading about it, it’d be remiss not to consider how Covid has already changed the way we live, and how it will continue to shape our future. This is especially true in the e-commerce space. Over the year that was, we saw some huge behavioural shifts in the e-commerce realm. Amazon exceeded a hundred billion in quarterly revenues for the first time ever in the fourth quarter of 2020. Meanwhile, in early lockdown, Nike hit their 2023 target of 30% of goods sold online.

Over in the APAC region, we saw a total growth of 26% in the e-commerce industry. And while you might be thinking that as we come out of the pandemic e-commerce will contract slightly, findings show this isn’t the case. In fact, over half of the Aussie population is stating they expect to behave the same way in terms of shopping online as they have over the last year. What does this mean? It means we’re still predicting double digit growth in the field of e-commerce. And, it’s not just the youth who are flocking to online shopping – it spans across all ages and demographics across a myriad of categories.

Now, with these facts and figures it seems like it’s an easy job to encourage people to buy online, right? However, when you look at Australia’s proportions of retail spend last year and across e-commerce, e-commerce is only sitting at 16.3% of our overall spend, so there’s a lot of room to grow. The promising news is that businesses who actually embarked on an e-commerce journey ahead of last year ended up making the biggest leaps in 2020 to seize more growth from this rapidly expanding channel.

What this shows us is that businesses in today’s environment require imaginative thinking and transformative leaps forward in order to succeed and continue to grow. In the advertising and marketing industry, we need ideas that go beyond expectation, thinking that lifts our industry, our brands, and our people. That’s where e-commerce comes into play. And if you’re not ready, the reality is you will be left behind.

Maximising the Value of E-Commerce

Data shows that Australians (when not in lockdown) are still spending most of their dollars in physical stores. This begs this question: what’s stopping e-commerce from taking a greater share of how people shop? There are some factors that we can’t change, like our physical distance in Australia. However, one thing 2020 taught us was that consumer demand sets the space for things we can change. To understand how to maximise this opportunity, we need to know what consumers want.

So, what do consumers want? When asked, it’s often centered around what e-commerce doesn’t deliver. Pain points include lack of free shipping or free returns, with consumers consistently seeking out online retailers who can offer same day or next day delivery. Yet as consumer demands grow, keeping the process frictionless becomes a lot harder.

Bottlenecks happen at many points of the online buying process, with some of the main points of friction including extra costs for shipping, having to create an account in order to proceed through checkout, or even a slow website. These bottlenecks dramatically increase the chances of an abandoned cart.

What would happen if we were to fix these issues? There would be an estimated extra 2-4 trillion global dollars per year coming through e-commerce. Clearly, there is a lot of growth at stake. So the question becomes: how can you make the transformative leap forward into the e-commerce space?

3 Steps To Transforming Your E-Commerce Offering

When you break it down, there are three key steps to take when it comes to transforming an e-commerce offering:

  1.  Planning e-commerce as part of the full funnel
  2.   Extending physical to digital availability
  3.    Underpinning what you do with a base of brand trust

Let’s break it down further.

  1.    E-Commerce As Part of the Full Funnel

In order to ensure that e-commerce plays a cohesive role within a media marketing strategy, it needs to be considered as part of a full funnel. The first part of the funnel is really understanding how consumers' shopping behaviours influence our strategy and our plan.

The key stat here is 28% – almost a third – of Aussie shoppers say they expect their online shopping frequency to remain higher than it was prior to the pandemic. This highlights a sustained participation in digital commerce. By tapping into this behaviour change, we can begin to develop a full-funnel, category-specific approach for clients, which is relevant to the customer.

We also consider this beyond just pure play online commerce, and examine the wider digital commerce environment. Gaining a deep understanding of consumer expectations around brand experiences online, and having an approach which leverages the consumer journey will enable us to provide an enhanced digital commerce experience for consumers.

Consumers have an omnichannel approach to buying and researching, so brands need to think of their digital commerce strategy the same way. People research and compare online and buy in-store, or vice versa, and their expectations are that the brand experience doesn’t change throughout that journey.

Voice activated search has become a huge part of how Australians shop online, for example asking Siri to “search for the cheapest HP Envy laptop”, or asking Alexa to order shopping. Again there is an expectation to have your brand available in a world of voice commands.

Then there’s QR codes (which aren’t just for checking in). If consumers are out and about, scanning a QR code enables immediate access to information and the opportunity to purchase. This is about accessibility in moments that matter.

  1.   Extending your brand availability from physical to digital

So you may have heard of mental availability – the definition of which is the probability of a consumer noticing, recognising and thinking of your brand in a purchase situation. We spend a large amount of time at PHD helping the brands we work with to cultivate mental availability, as it's critical that when triggered to buy, people think of your brand first.

This works cohesively with physical availability – the breadth and depth of your distribution in time and space.

But now it is important for brands to consider how to maximise the breadth and depth of distribution online. Digital availability is about maximizing your brand experience for consumers beyond the standard e-commerce “at the shelf” space, most commonly discoverability and point of purchase.

This is because although we're dealing with new technology and changing behaviours, consumers themselves haven't shifted that seismically – meaning proven marketing principles still apply in the digital environment.

A real opportunity for brands is to extend beyond this and consider the strategic and operational goals “behind the shelf”. Considering elements such as overarching business objectives, or harvesting key target audience insights & behaviours can enable a true advantage within their category or cohort.

The pandemic has created opportunities for brands to build online brand experiences and e-commerce opportunities where they didn’t exist previously. An example of this is using augmented reality for a virtual shopping experience, which is becoming increasingly important to shoppers. You can see this playing out in Volkswagen’s smallest dealership campaign. It’s a purely virtual brand experience, activated with the use of augmented reality, enabling VW to truly extend their digital availability.

  1.    Risky Business – Don’t Forget About Brand Trust

When you think of risky business, online shopping probably isn’t the first thing that comes to mind… or is it?

When asked in a Newsworks study in 2020, even people who define themselves as risk takers were still saying that they found online shopping to be risky. And as quoted from the Risk Report in 2021, Roy Morgan stated that distrust remains the number one risk factor for Australian brands as it's the toxic element in brand equity. Even for a brand like Amazon, it's critical to build a base of brand trust – they ranked third in distrust in Australia on the 2021 risk report.

But let's understand this concept of risk and trust a little more.

For most consumers, shopping journeys are about making the right decision and offsetting risk. To offset this risk, we need to adopt strategies that help make decisions more easily.

Looking at the psychological drivers when shopping, we want to be competent and show autonomy in making a decision – we’re anxious to not make a mistake and find it an inherently risky endeavour.

Even in the offline world, shopping journeys are about making the right decision, and offsetting your risk.

We adopt strategies to assist us - and the downside is that e-commerce as a channel is set up to encourage what is known as ‘maximising’ behaviour: exhaustively seeking out the best option – involving a lot of effort and lower satisfaction levels post purchase. Maximisers are much more likely to delay a purchase to avoid making the wrong choice (hello abandoned carts), are more likely to regret purchases and wish they could turn back time and choose another option. If only there was a way to help people make a decision more quickly, with more satisfaction?

This is where brand trust comes to play. The more you trust a brand, the more you trust the decision and offset your risk mentally. This is shown in ‘satisficing’ behaviour when shopping - and leads to higher levels of satisfaction.

So creating trust in your brand is critical across omnichannel – but as Byron Sharp asserts, it's even more critical online where brand loyalty is higher, through things like saveable shopping lists and recommendations.

You can even see an example of this from something like a catalogue from Australia's most trusted brand in 2021: Woolworths. Things that transmit trust in the offline world, like quality imagery and brand messaging, also transmit trust in the digital world. Dwell time on-site has increased over the last year, highlighting the customer's willingness to be inspired by brand and product messaging.

Even seemingly small elements to increase brand trust can increase the likelihood of purchase - and satisfaction with that purchase.

We’ve learned a lot as an industry over the last 18 months, and one such learning is embracing e-commerce now will only lead to growth for your brand. If you want to find out more about how you can begin taking that leap forward and build a successful e-commerce strategy, head here.

Amelia Ward

Amelia Ward

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