The Annual eCommerce Leaders Priorities Survey Report
According to the latest research, the shift to online shopping has been accelerated by almost 2 years. With lockdowns and social distancing restrictions taking customers off the streets and many brick-and-mortar stores closing their doors for good, eCommerce sales will make up 14.4% of all US retail spending this year and 19.2% by 2024. 1
This is not a short-term change. Consumer behavior is adapting to ‘the new normal’, and retailers are preparing to take on new digital strategies to leverage the growth in traffic, especially when it comes to first-time shoppers.
Through a survey of 100 senior eCommerce managers conducted during November 2020, commissioned by Namogoo and Astound Commerce, this report looks behind the curtain and provides a unique glimpse into the mindset of today’s online retailers. We surveyed more than 11 industries, including Electronics, Speciality goods, Home improvement, Health and Beauty, Department stores, Apparel, and Footwear. While 44% of respondents work directly in eCommerce, we also collected insights from marketing, product, sales, and digital teams. We believe that with such a rich dataset as our foundation, we’ve been able to capture a true understanding of the issues facing the entire eCommerce industry today.
The aims of this report are simple: To better understand where eCommerce companies should focus their attentions for 2021, and to shine a spotlight on the impact of the COVID-19 pandemic, ascertaining how organizations are managing their budgets and priorities for the year ahead to see true ROI.
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1 | Lifetime value tops acquisition cost as the top priority
With the rise in online footfall in 2020, the new metric on every eCommerce manager’s mind is Customer Lifetime Value, coming up as the #1 priority for 58% of respondents. The urgency to improve this KPI has even managed to push the previously untouchable conversion rate, and Customer Acquisition Cost down to the second and third spots, respectively. Today, one thing is clear – a retained customer is more important than a quick conversion.
2 | It’s all about the experience of the first-time shopper
Keeping customers happy for the long haul means getting into the mindset of the first-time shopper. The majority of companies believe that first-time shoppers will be more than a quarter of their visitors in 2021, and yet a staggering 97% of companies see these shoppers as a challenge. 45% perceive first-time shoppers to be less loyal, and 51% say they are more easily distracted, and susceptible to being swayed by the competition. It is also harder to personalize for first-time shoppers, an investment priority for more than half of eCommerce companies in 2021.
3 | COVID-19 has changed the way that brands work, for the long term
We can’t ignore the importance of COVID-19 to our current eCommerce reality. With so many retailers impacted by losses to their offline stores, the impact of the pandemic has heightened the need to optimize the online customer journey, and why 96% of companies are planning to grow their digital budget in 2021. However, it impacts the way that digital teams work. It’s no surprise that 55% of companies are struggling with delivering projects while working from home, and 54% with heavy reliance on data and IT teams.
4 | Removing friction and disruption is more important than ever
ֿֿAs the impact on the economy means that price is a bigger factor than ever for today’s customers, companies are ensuring a smooth route to customer loyalty, with a multi-faceted approach. 79% of respondents believe they can use discounts and incentives to get the attention of first-time shoppers, but more than 1 in 3 companies also believe that an emphasis needs to be put the distractions caused by injected competitor advertising, which was also cited one of the top 3 new frictions for 2021. These tactics are designed to hijack customers to other promotions, targeting first-time shoppers before brand loyalty has been established.
5 | Companies will succeed via innovative solutions that can truly demonstrate ROI
Almost half (49%) of companies indicate that COVID-19 will change the way they select technology solutions, and are aligning their plans for growth with new challenges. In response to these challenges, 74% of companies are looking for technology that shows fast ROI, while 71% insist on remote installation. Essentially though, the top priority for new technology is innovation, with 80% of companies indicating that this is their #1 driver.
In short, today’s eCommerce companies are looking to improve Customer Lifetime Value, by solving the ‘first-time shopper challenge.’ The companies that meet this goal will come out on top – leveraging the rise in online traffic to create a truly loyal customer base. To make it happen, brands are looking for ways to differentiate themselves from the competition, including onboarding innovative technology that delivers fast ROI, and can meet the needs of today’s remote working landscape.
Organizations & Budget
Department Size 2020, and Expected Growth in 2021
Most of the survey respondents (77%) have more than 20 employees in their department, and almost half (45%) work in departments with more than 50 employees.
Looking at the expected department growth for 2021, only 13% of companies do not plan to grow their departments next year and 51% plan to increase by more than 10%.
Digital Budget Growth in 2021
Company budget is growing. In fact, only 4% of companies do not plan to grow their digital budgets in 2021. Of the 87% of companies planning to grow their eCommerce departments (page 8), it should come as no surprise that 96% of companies are planning to grow their digital budget, with 74% planning to increase it by more than 10%.
The realities of COVID-19 have reiterated the importance of a strong digital strategy that can forge customer loyalty.
2021 Challenges, Priorities & Investments
Top Expected Challenges in 2021
We asked eCommerce leaders what challenges they expect to face in 2021 — there were six that stood out. The top four, all indicated by over 50% of respondents, were difficulty delivering projects due to working-from-home (55%), dependence on IT, and Data teams (54%), hiring the right talent (51%), and the ability to demonstrate ROI (50%). 41% also say that they expect to have a reduced budget next year.
Today’s eCommerce managers are grappling with a new work-from-home reality, but have the same pressure to show ROI, often with less budget to play with. New technology needs to be smarter than ever, offering remote installation, quick ROI, and lessening the dependence on in-house IT.
KPI Priorities in eCommerce, 2021
To gauge how companies are prioritizing over expected challenges (page 11), we asked surveyed companies what their most important KPIs will be in 2021. While new traffic acquisition has traditionally been a top priority, these responses see it dropping to #4 on the eCommerce agenda, with half (50%) of companies making it a priority. It’s no surprise that conversion rate optimization is on 53% of company’s minds, but a new KPI priority has taken the top spot – the need to show customer lifetime value.
With the rapid acceleration of eCommerce in 2020, companies are shifting their 2021priorities to focus on optimizing the experience for existing shoppers, to build long-term loyalty and brand relationships.
Impact of COVID-19 on the Selection of Technology in 2021
COVID-19 affects how digital teams work and makes it increasingly difficult for organizations to commit to lengthy or complex projects. Close to half of surveyed companies (49%) indicated the pandemic will cause a change in the way they will select technology solutions in 2021 (Figure 6). When diving deeper to identify these changing priorities, a leading 80% of companies will focus on the most innovative technology providers, 74% will focus on vendors that can demonstrate fast ROI, and 71% will require remote installation.
Ecommerce companies recognize how important innovative technology is in meeting their challenges, but need to be able to align this need with their bottom-line KPIs. Solutions that can prove value, be implemented quickly, and can be managed without over-reliance on IT resources will be prioritized.
“Getting a meaningful return from some of our other solutions requires plenty of human capital to run effectively. Looking at effort versus reward, we’re gaining a very high ROI by eliminating injected competitor ads, with relatively low efforts on our end.”2
Director of Global
D2C Digital Platforms
2 Namogoo Case Study: Carhartt Lifts eCommerce Conversion by Eliminating Customer Journey Hijacking
2021 Top 5 Investment Priorities
When asking companies for their top investment priorities for 2021, we have seen a broad range of responses. The top 5 are improving site performance (70%), personalization (52%), re-platforming and / or headless eCommerce (51%), omnichannel optimization (51%), and product discovery and search (47%).
“We saw huge volumes of new shoppers shifting – and staying – online in 2020. At the same time, digital-natives have elevated expectations of online shopping experiences. The challenge for retailers in 2021 will be in how they meet these consumers’ needs, each with their own unique set of demands. A seamlessly connected customer journey, driven by hyper-personalisation is crucial. Brands and retailers doubling down on investments that unlock these capabilities will thrive in the year ahead.”
The Common Traits of First-time Online Shoppers
How can companies leverage the rise in online traffic? It starts by knowing your customer. With the proliferation of mobile devices, it will come as no surprise that today’s first-time shoppers are majority. mobile (51%). They also tend to be more price sensitive, perhaps due to apprehension concerning the online shopping experience, and in a lower age bracket.
This younger, mobile, and price-conscious shopper is also 37% less likely to be brand loyal, and 31% more likely to get distracted easily.
Expected Rate of First-time Shoppers in 2021
52% of companies estimate that first-time shoppers will be more than 25% of their visitors in 2021 (Figure 10) with 74% of surveyed companies expecting first-time shoppers’ visits to grow by more than 10% in 2021 (Figure 11).
These findings are both an opportunity and a challenge for today’s eCommerce companies. There is huge value in this market for the companies who can leverage the increase in online traffic, but the competition will be fierce. Successful brands need to find ways to create brand loyalty and retention, without allowing first-time shoppers to be distracted, or led astray.
The Main Challenges with First-time Shoppers
Organizations are well aware of the challenges of first-time shoppers. In fact, only 3% of surveyed companies indicated they have no challenges with this audience. For the rest of the 97%, the top challenges were higher price sensitivity (58%), tendency to be more easily distracted by competing promotions (51%), and lower brand loyalty compared to existing customers (45%).
Especially in today’s economic climate, building brand loyalty is harder than ever. Price is a huge factor for shoppers, so competing promotions will easily sway a first-time shopper’s attention. Keeping your visitors on-site and engaged needs to be a top priority.
Top Causes of Friction in the Customer Journey
We asked companies to identify the top frictions they experience with their own customers. Excluding the usual suspects, such as slow website performance, shipping costs and delivery times, we found new focus areas that eCommerce companies should focus on for 2021. Making account creation easier came at #1 (28%), followed by the ability to adequately search (27%), leveraging more product reviews (26%), preventing third-party ad injections (21%), and offering more flexible payment options (20%).
This follows the same pattern as we’ve seen with companies’ investment priorities (Page 14), where eCommerce brands are looking for ways to improve CX, and make distractions less likely. Interestingly, the addition of third-party ad injections, a worry for more than a fifth of respondents, shows that companies must be aware about elements outside of their own control when considering the customer experience on their site.
Strategies and Tactics to Earn First-time Shoppers’ Loyalty
According to The Common Traits of First-time Online Shoppers (page 16), we saw that 37% of companies view first-time shoppers as less loyal. We’ve asked survey respondents what strategies they believe will be most effective to gain those shoppers’ loyalty. The number one tactic selected by 70% of companies is to offer more discounts and incentives. Using behavior analytics to improve personalization (58%) came in second, followed by offering more flexible payments options (52%), and preventing distractions or injected competitor ads (35%). With smarter technology, companies will be able to closely monitor the reasons for customer churn. They can then maximize incentives, and target specific issues with the right personalized, customized solutions, improving ROI.
“Consumers’ patience with poor online experiences has worn thin, and to the point that they will jump to another brand. We keep our ownership of that journey by stopping ad injections from taking that experience somewhere else. Not only does it lift revenue, it also preserves faith and confidence for our customers about our brand.”3
3 Namogoo Case Study: Kurt Geiger Steps Up Conversion Rate & RPV with Customer Hijacking Prevention
Regions of residence and main markets
Annual online revenue and retail verticals