The landscape of consumer retail behavior is changing by the minute, with massive implications for eCommerce retailers. The news is not all bad, but it’s important to understand the current reality of purchase dynamics, track changes carefully, and devise flexible strategies to meet consumer demand while supplementing revenue.
eCommerce Reality Right Now: 7 Trends to Understand
Cart abandonment is higher in some sectors than usual, likely due to either website performance problems or product availability issues. To the extent that your business is able to improve on either of those challenges (which may not be possible in the near term), this is a good area of focus to decrease your cart abandonment rate.
Key takeaway: Study your cart abandonment statistics. Understand where the opportunity exists to fully convert. Would an expected ship date or arrival date help? What about a warranty offer that protects the purchase?
Average order value is up in some sectors, largely the ones you’d expect: grocery and pharmacy. But general retail AOV is up as well, and we see increases in the fashion industry as well. Many people are staying home in the hopes of slowing the spread of infection, so some of the dollars that might otherwise be spent in brick-and mortar locations are now being spent online.
Key takeaway: If applicable, and to the extent that you are able to shift any brick-and-mortar marketing channels to online, now is the time to do it. Get creative about fulfillment if you do not already have your own in place, but don’t miss this opportunity.
Generational differences exist when it comes to retail purchase decisions right now. According to a survey, Millennials and Gen Z consumers say they are scaling back their spending, stocking up, and spending less on “experiences.” meanwhile, older generations appear to be somewhat less concerned, and claim that it is not impacting their buying behaviors as much.
Key takeaway: If your eCommerce business targets one or more of these demographics, consider expanding your offerings to cater to their changed and changing preferences, if possible.
Gender differences, too. In the same survey, men also claim that economic and societal upheaval are affecting their shopping habits more than those of women; right now, they are buying more online vs. brick-and-mortar than women, and availing themselves of curbside pickup and subscription-style commerce. The differences aren’t stark, but again may be worth taking into account when you determine how to focus your strategies in this complex moment.
Key takeaway: If your eCommerce brand typically targets women more, consider which of your offerings may appeal to men, and explore online ads targeting them.
eCommerce-only trends show that businesses who do not have any brick-and-mortar presence have seen decreasing revenue and conversion rates. However, recent data suggests that this may be changing and purchases may be increasing as people either grow used to a “new normal” or begin to have more confidence that the economy and overall conditions will improve. This is an area we recommend keeping a close eye on.
Key takeaway: In some cases, the answer is to sit tight. As consumers adjust to their new normal, those whose jobs are secure will eventually turn to eCommerce as the only way to get many of the items they might otherwise have bought in-store.
Subscription services are booming, interestingly enough. While eCommerce sales as a whole are down in many sectors, subscription and convenience services have been performing particularly well, as the graph here shows. There is something about the regularity and expectedness of subscriptions that can be comforting to consumers, and of course the predictable revenue is a boon for retailers as well.
Key takeaway: If your eCommerce business does not have a subscription model, but there is room for it within your offerings, it may be worth considering.
Luxury goods are lagging. This is probably not a major surprise; it’s essentially common sense that luxury goods are the first to go during a major crisis. That said, it’s not the case that no one is buying luxury goods. But it may be the case that those who are would like some extra assurance that their high-ticket purchases are protected before they work up the confidence to actually buy. (Key takeaway: More on this below.)
Extended Warranties Can Increase eCommerce Margins in Uncertain Times
Even in an era like today, people still need and want to make certain purchases. For example, a refrigerator may break down and require replacing. Or someone may want to purchase furniture or electronics that make working from home more pleasant and productive. Others may engage in retail therapy to cope with feelings of stress—fair enough!
So while it’s true that eCommerce numbers may be down overall, we aren’t talking about a complete halt in consumer purchasing. Changes in behavior like those outlined above are real, and may last for a while, so it’s a good idea for retailers to come up with creative and flexible strategies to cope and keep their operations moving.
One way to offer consumers peace of mind when they make purchases, especially big-ticket purchases, is to offer extended protection at the point of purchase.
At Mulberry, we help retailers unlock incremental revenue by embedding extended warranty solutions seamlessly into the customer journey. Merchants earn a commission on every protection plan sold. This enables them to unlock incremental revenue by allowing customers to add a protection plan. Often, especially with certain product categories, this is the difference between a completed purchase and an abandoned cart.
We’ve seen that product protection can account for up to 40% of profit margins at big-box brands, but even smaller eCommerce players can take advantage of this revenue booster while also improving customer loyalty, goodwill toward the brand, and repeat purchases.
If your business is strategizing on how to increase incremental revenue at this moment in time, we’d welcome the opportunity to show you how Mulberry can help.