With over half of all global eCommerce sales through Marketplaces can an Omni Channel Strategy be ignored?
“Digital transformation is no longer optional. Covid will finish what Amazon started”
Natalie Berg, Founder of NBK Retail
The above quote from Natalie Berg seems to sum up perfectly the transformational disruption of eCommerce over the past year, which has tested the limits of supply chains, distribution and eCommerce capabilities. It is estimated that consumer adoption of and familiarity with online shopping has accelerated by four to six years. With over 32% growth it is forecast that U.S. e-commerce sales are forecast to reach nearly $795 billion in 2020. Across Europe it will grow by just under 13% to a forecasted €717 Billion.
Without a doubt the most significant beneficiaries of this consumer shift has been e-Marketplaces who were in prime position to react quickly and to meet consumer demand.
Amazon leading the way:
Amazon is at the forefront of these Marketplaces, having grown their US market share to 39%. (eMarketer, 2020) and their European Share to 9.8%. Very significantly they have also seen the highest growth in membership in four years, bringing the number of Prime members globally to more than 150 million. Retention of Prime members is extremely high, with more that 93% of consumers continuing to pay for the program after one year. According to Digital Commerce 360 a survey of Prime members showed:
- Free Shipping is their top reason for shopping on Amazon.
- The ability to find products quickly was the second most popular reason.
- At least 70% of them are very or extremely satisfied with their experience on Amazon
- ⅔ or more spend more on Amazon now than when they first signed up for Prime.
From the above we can deduce that Amazon delivers to the core consumer demands for Convenience, Certainty, Choice, Value and Trust.
A lasting change in Consumer Behaviour:
Numerous studies have shown that a large percentage of consumers continue to have concerns about visiting bricks and mortar stores. Over time these consumers, many of whom may have been new to online shopping, will become increasingly comfortable with the process. If the benefits to them outweigh any initial reservations that they may have had, it is increasingly likely that the shift that we have seen will prove to be a long lasting change in fundamental consumer shopping habits. What became an important resource to consumers during the pandemic will simply become a convenient and trusted shopping solution.
eMarketer (2020) is forecasting that eCommerce sales in the US will grow from 14.4% at present to 19.2% by 2024. While in Europe user penetration is expected to grow from 59.7% to 67.1% by 2025 with annual revenue growth of over 5% per annum.
An Omni Channel Strategy:
As consumers continue to minimise their in-person shopping visits, brands have to adapt and optimise an omni channel strategy. Many lessons have been learnt over the past year. Those brands that had an exclusive reliance on a single channel, such as Amazon were left vulnerable to nonessential inventory restriction and delivery delays. Brands that were entirely focused on their own website and lacked an advanced fulfilment network were often unable to fulfill orders in a timely fashion. Finally those brands that focused on bricks and mortar outlets and have been slow to adopt an eCommerce strategy risked being left behind completely.
In 2021 brands and retailers must really get to know their customers, They must understand where they begin their product search, where they look for product reviews, their preferred shopping channel. They must work to optimise their omni channel touch points to meet consumers at their moments of need. They have to offer a diversified presence across multiple channels and to bring these channels together to deliver a cohesive and singular brand experience.
Given their market share, it would be an oversight to exclude marketplaces from this omni channel strategy, and given Amazon’s global positioning and growth rates it would be an oversight for many brands to exclude Amazon from a marketplace strategy.