Businesses and consumers adapt as retail axis shifts online
It’s no secret that 2020 has pulled commerce forward by 10 years. In 2021, we can expect a new normal—especially when it comes to the way we shop.
Introducing the Future of Commerce 2021, Shopify’s first annual report* that marries global merchant and consumer data to predict how the commerce landscape will shift in the coming year and how small and independent businesses are creating a new retail reality. By examining perspectives of both seller and buyer, we aim to capture the full picture of the industry to make predictions that span commerce in its entirety—from shopping habits of consumers around the world to the evolution of running, marketing, and funding an omnichannel business today.
“At Shopify, we believe commerce is more than a transaction; it’s a relationship between a business and its customers. It’s only possible to report on the future by examining both audiences together,” said Harley Finkelstein, President, Shopify. “The importance of this relationship has never been clearer. On the heels of a record-breaking Black Friday/Cyber Monday weekend, and as we close out one of the most disruptive years for commerce and the world, we’re excited to look forward. Looking ahead, we see independent retailers and the next generation of consumers driving shifts that will pave the way for an even brighter future of commerce.”
Analyzing Shopify data from our more than one million merchants around the world and insights from their customers, our first annual Future of Commerce report reveals five key predictions for businesses in 2021 and beyond. They include:
- Young consumers will change the business landscape as ecommerce charges ahead.
- Physical retail as we know it will transform, giving local businesses new advantages.
- Consumers want to shop independent. Businesses will adapt to make that easier.
- More consumers will vote with their wallets.
- Modern financial solutions will disrupt business and consumer banking, financing, and lending.
Snapshot: Shopify Future of Commerce 2021
- Young consumers will change the business landscape as ecommerce charges ahead. While the pandemic kick-started a behavioral shift to ecommerce, the highest shift was seen in young consumers. Brands will need to adjust the way they do business to meet new consumer expectations and have staying power.
- 84% of consumers have shopped online since the pandemic; 65% have shopped in-store.
- 79% of consumers say they will shop online regularly in the next six months; significantly fewer (57%) say they’ll shop regularly in store.
- 67% of younger consumers (18-34) shifted more of their spending to online shopping since the pandemic was declared, compared to the 54% average.
- Brands should pay attention to the habits of younger consumers as they lead the shift to ecommerce, especially because they are more likely to:
- Discover and shop via social media
- Prefer to shop for sustainable and green products
- Shop to have an impact
- Physical retail will transform as we know it, giving local businesses new advantages. Omnichannel features and experiences that retailers adopted in 2020 will give new life to physical stores and allow businesses to take advantage of proximity to local consumers.
- By adapting to consumers’ changing shopping habits, Shopify retail merchants replaced 94% of in-store Point of Sale (POS) sales lost in the first six weeks of the pandemic with online sales.
- Some of these new strategies and technologies resilient retailers adopted and will continue to offer include:
- Contactless payments: Compared to the same period in 2019, the number of shops offering contactless payments on Shopify increased by 122% during the pandemic.
- Alternative pickup and delivery options: Among those who used alternative fulfillment methods, over half did so more often in the past six months than before the pandemic was declared. These include:
- Local delivery: 57% of consumers are receiving items through local delivery more often than before the pandemic was declared.
- Buy online, pick up in store (BOPIS) or curbside: 64% of consumers are using BOPIS or curbside pick up options more often than before the pandemic was declared.
- Pick up point: 57% of consumers are using a pick up point option more often since the pandemic was declared.
- Consumers want to shop independent. Businesses will adapt to make that easier. Consumers expressed the desire to shop with independent businesses but still purchase from marketplaces for convenience. Independent brands will continue to close the gap.
- Half of consumers (50%) look for independently owned businesses to support for reasons including: supporting entrepreneurship, buying unique products, and experiencing good customer service.
- Consumers’ intentions to support independent businesses are not yet reflected in their purchasing habits. However, this may change:
- 62% purchased from marketplaces since the pandemic was declared, while only 55% say they’ll do so regularly in six months’ time.
- 57% of consumers are willing to shop at new brands or stores for the first time.
- Independent retailers should highlight the benefits of their business models and adopt features offered by large retailers to meet consumer needs, including:
- Fast and free shipping
- 59% of online shoppers say free delivery would improve their online shopping experience while 40% say free returns and 34% say faster delivery would make online shopping better.
- 75% of Shopify merchants who generated sales between March through September have free shipping enabled on their stores.
- In Q2 2020, Shopify enrolled more merchants and increased fulfillment volumes for Shopify Fulfillment Network by 2.5 times over Q1.
- Conversational commerce
- Merchant sales attributed to chat on Shopify Ping increased by 185% from March 16 to July 1, 2020.
- Shoppable social media
- At the start of the pandemic from March through April, marketing on Facebook and Instagram via Shopify’s channel integration saw 36% growth in monthly active users—a trend that continues to rise.
- Fast and free shipping
- More consumers will vote with their wallets. Brands must demonstrate authenticity, transparency, and accountability as consumers increasingly support local businesses and sustainable products.
- 53% of consumers prefer green or sustainable products.
- 49% of consumers respond positively to retailers making a donation to a cause with each purchase.
- 23% of consumers shop at local or independent retailers to reduce their environmental impact.
- Consumers’ main reasons for shopping at a locally owned business (online or in-store) include:
- Strengthening the local economy (57%)
- Helping support local job creation (41%)
- Investing in their community (35%)
- During the month leading up to Black Friday/Cyber Monday, GMV for local* ecommerce orders grew 168% YoY.
- Modern financial solutions will disrupt business and consumer banking, finance, and lending. Providing options that traditional banks don't offer, financial solutions that prioritize speed and access to capital, faster ways to pay, and more flexible payments like installments are growing in popularity among businesses and consumers.
- The quality of the digital user experience is a key factor for merchants: 48% say a “good online banking or mobile app experience” is one of their top three most important features when considering a bank for their business.
- More businesses are accessing capital outside of traditional banks: Across the US, Canada and UK, cumulative funding from Shopify Capital reached approximately $1.4 billion at the end of September.
- Buy now, pay later has grown in popularity: The number of Shopify merchants who offer buy now, pay later has increased by 60% since the start of the pandemic.
- In the US, millennial fathers are the most frequent users of buy now, pay later, particularly when spending on high-priced items like electronics.
- Of US consumers that have tried a buy now, pay later option:
- 41% are 18-34 years old
- 56% are men
- 52% have children at home
To download the full report and explore the Shopify findings and predictions, visit our Future of Commerce landing page.
*This report is based on an online survey of over 10,000 consumers in 11 countries conducted in September 2020, as well as extensive global Shopify sales data from January 2018 to September 2020. Certain sections of the report pertaining to business and consumer banking are based on two sources: an online survey of 950 Shopify merchants in the US conducted in September 2020, and an online survey of 1,000 consumers in the US conducted in December 2019.
*Local orders is defined by 25 km or less between merchant and consumer on a given sale.