This year has been a pivotal one for brands and retailers in the e-commerce space. The pandemic challenged them to think of innovative ways to stay engaged and connected with their customers. We have seen the return of QR codes and the many functions they serve; an increased dependence on alternative fulfillment options, such as curbside pickup and buy online, pick up in store; a rapidly increasing demand in the buy-now-pay-later (BNPL) industry; and continued efforts to make the online shopping experience as seamless as possible. We’ve also seen the growing importance of brand ethics, transparency, and commitment to sustainability; the move towards a cookieless world; and the importance of first-party data amidst Apple’s privacy updates.
We chart some of these important events and developments below. This year has also been a pivotal one for Brij, and throughout these changes in the ecommerce space, our team has worked hard to develop a solution that helps brands elevate the consumer experience and stay ahead of the game. We include some of our achievements, as well.
Q1 saw the rise of NFTs, which experienced an explosive growth in popularity and sales, setting a record at $1.5B in transaction volume. The market is currently valued at $22B. The quarter also saw the growth of SMS marketing, spurred by shoppers embracing a “mobile-first” mindset. SMS allows for two-way conversations and more personalized text messages. Sustainability was a priority in the fashion industry this quarter, with fashion brands and retailers announcing new sustainability initiatives. Resale and secondhand initiatives also grew.
We also entered Q1 with supply chain disruptions, which wouldn’t fully affect the public until later in the year. The origins can be traced to the outbreak of Covid-19, which led to factory closures, raw material shortages, and port congestion (including a stuck container), to name a few. High consumer demand further exacerbated the problem.
Q2 saw the rollout of privacy-related features, notably Apple’s App Tracking Transparency feature of their iOS 14.5 software update. With 96% of U.S. users opting out of tracking, this has made it more difficult for marketers, especially those who advertise on platforms like Facebook, to target customers. Marketers are increasingly finding it difficult to rely on traditional methods for targeted advertising, especially with Google’s plan to phase out cookies by 2023.
Meanwhile, there was the growth of subscriptions, driven by the pandemic, increased DTC buying, and the rise of physical subscriptions. There was a 91% subscription growth in 2020 in all categories of subscriptions, such as food & beverage, pet foods, and beauty products. Given the convenience of subscriptions and their ability to turn one-time shoppers into loyal customers, this is a trend to keep an eye on.
Q3 saw massive growth in the buy-now-pay-later (BNPL) industry as major companies moved to partner up with leading BNPL providers. Younger generations are especially drawn to using BNPL because it doesn’t require them to have a credit card. Nearly 60% of Gen-Z and millenials have used a BNPL option to purchase a product on social media. The industry is currently valued at $97B. Speaking of social media, social commerce has grown this year due to the ease and convenience of shopping online. Major social media platforms, such as Instagram and TikTok, have launched initiatives to make it easier for users to purchase products in-app.
The supply chain problem continued to affect companies’ abilities to meet strong consumer demand in Q3. While retailers did well overall in this quarter, many retailers and DTC brands experienced delays in their Q4 orders.
Q4 continues to see developments in the BNPL industry with additional companies capitalizing on the trend, and in the NFT market. The supply chain crisis affected holiday shopping, as high demand and shortages limited availability of items both online and in-stores. According to Adobe Analytics, consumers came across more than 2 billion out-of-stock messages while shopping online in October. Brands and retailers will leverage curbside pickup and buy online, pick up in store options in hopes of bypassing long delivery times.
The new year will house the developments that have occurred this year, such as the changing dynamics between brands and retailers. More brands over the past year began tapping into the DTC channel, which gave them more control over their products. Meanwhile, digitally-native startups, facing rising customer acquisition costs on platforms like Google and Facebook, looked to big retailers to build customer awareness in-store and scale growth. While the 2022 landscape is unclear, we know that it will continue to witness the decline of cookies and an increasing reliance on first-party data. Digital marketing has taken on a new look: brands are relying more heavily on SMS and email marketing amidst privacy-focused changes. The ripples created by these changes show just how interconnected the e-commerce ecosystem really is. With the heart of the ecosystem currently experiencing disruptions, the supply chain crisis is yet another case that challenges brands to be agile and creative to meet consumer demands. Communication has always been the key between brands and their consumers, and it will remain important as ever in 2022.