2021: All Upside for Digital

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E-commerce skyrocketed in 2020, and Udayan Bose, founder and CEO of digital marketing agency NetElixir, sees nothing but upside as we move beyond the pandemic.

As retailers try to determine how to welcome customers back in person while expanding digital efforts that accelerated last year, Bose weighed in on what to expect from commerce and why retailers should invest aggressively in online channels.

The coming “hyper-boom”

Q2 is poised to be one of the strongest in the last 20 years (driven by a combination of factors like 13.6%+ personal savings, infusion of additional stimulus money, pent up demand for categories like fashion, very high consumer confidence, rapid vaccination, rapidly declining unemployment rates, etc.). As some semblance of normalcy is restored in our lives, consumers are expected to be more liberal with their shopping spend. In the first quarter, the e-commerce sales (for our retail and DTC customer base) increased by 22% year over year. We expect this Y/Y growth to cross 25% in Q2 (yes, 25% growth over a very large base — online sales spiked during Q2 2020 as most of the country went into a lockdown). Marketers are investing aggressively to protect and grow their share of voice (average Google Ads CPC across categories is up by 32.3% Y/Y). 

Why the e-commerce boom will persist

The continuing Y/Y growth across retail e-commerce categories shows a fundamental shift in retail shopping from in-store to online. There were an estimated 7.4 million first-time online shoppers added last year (per eMarketer). Many of them seem to be continuing to make regular online purchases. I

If we break down the e-commerce revenue increase into more specific elements, average order value has gone up (across categories) by 14%+ and also the conversion rate is up by around 10% Y/Y. People are also buying more quickly (time between first website landing and purchase has shrunk) and more frequently. All these trends clearly show that the PRESENT and FUTURE ARE ONLINE. Per our research, 22% of all retail sales are now happening online (a sharp increase from 15% in Feb 2020). We are confident that e-commerce contribution to total retail sales will keep increasing through this year and beyond.

How retail will fare

Online shopping is booming, and most retailers will successfully grow their online sales. We expect all retail categories to grow by double digit percentages Y/Y, including food and grocery in 2021. However, there is going to be a power shift with the rapid growth of DTC brands that are investing aggressively to grow their online sales.

What marketers need to do

Marketers have to be extremely strategic with their investments. They know that with the deprecation of third-party cookie tracking, a new digital marketing landscape will emerge. They have to invest now to remain relevant in the new digital marketing world. At the same time, they need to continue to strengthen their channel-specific campaign management capabilities since, in the new world of walled gardens, the competitive intensity is likely to be higher than what they face now. Last but not least, they need to ensure they are not losing channel-specific share of voice through this transitory phase.

Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018. Joe is an ad/martech veteran who has covered the space since 2015. You can contact him at [email protected]