It's 2020. The future is here. Upcoming is likely the most important election of our lifetime. Climate change is rapidly changing the world in which we live. The winds of political change have been blowing like a tornado for years now. All the while, the economy keeps growing, and retail, specifically e-commerce, along with it. Given the potential risks that lie ahead, those beautiful e-commerce charts that show continued growth until 2025 and beyond have to be taken with an asterisk besides them.
Here at Verbal+Visual, we believe in the power of thoughtful consumption. Consumers are rapidly becoming more mindful about the brands they interact with and the products they purchase. As a result, the most successful brands are being driven by community building, crafting high quality products that last, and thoughtful approaches to consumption and recycling. We believe that the brands who are adapting rapidly will continue on the path charted in those graphs, (somewhat) independently of the ups and downs of the economy, and flourish in 2020 and beyond.
With that, here are the trends we've identified for 2020 in the e-commerce space.
DNVB Growth Will Slow, Omnichannel Will Grow
The 2010's saw the rise of the Digitally Native Vertical Brand (DNVB), with a slew of now household names such as Bonobos, Casper, Goop, & Away leveraging focused paid social marketing campaigns to get off the ground and grow rapidly, acquiring customers for their Direct to Consumer e-commerce experiences, often to the tune of short term losses with the desire to build the brand long term. That playbook lost significant steam over the recently completed decade, with CAC on Google and Facebook becoming a break even or losing proposition instead of a source of growth due to astronomically rising advertising costs and privacy rules restricting access to consumers data more and more.
In recent years, while traditional retailers shuttered stores at alarming rates, DNVB’s have opened stores and pop-ups, and even expanded into the wholesale world. Conversely, the traditional retailers who stayed ahead of the curve were able to apply DTC best practices to their businesses. We're now in a place where the right mix of online, offline, and retail.com can lead to a successful mix for any brand, whether it’s been around for one year or one hundred.
Brands can utilize tools like Buy Online & Pick Up In Store, and View In Store Availability to effectively leverage their stores as micro fulfillment centers. This model will diversify customer acquisition strategy and create a more sustainable model. DNVB’s will continue to grow, with an omnichannel approach that supersedes the paid social strategies of the 2010’s.
Retention & Profitability over New Customer Acquisition & Discounting
Premium brands that have built large followings and customer bases are doubling down on moving potential customers at the top of the funnel down towards a purchase, or enticing existing customers to come back and buy a complimentary product, instead of spending to continuously attract new potential customers against rising CAC costs.
In addition, brands are looking for ways to highlight a product’s lifetime value and compel customers to connect to the brands’ community, abandoning the discounting model. Excessive discounting cheapens the perceived value of a brand, and it is incredibly difficult to convert back to a premium or luxury standard when discounting becomes the norm. Given the rising costs of CAC and more battle-tested and weary investors, a focus on retention and profitability will become even more prominent in 2020.
Subversion of DTC Norms (Content > Community > Commerce)
2PML writer, @web, recently wrote about the subversion of the "traditional" D2C model of Content to Commerce, while Leann Abad of Ash & Erie added in the increasingly important Community aspect to this model.
Brands are now subverting the approach of the last decade, choosing the longer term strategy of building a community of evangelists who believe in the brand and are willing to pay full price as repeat purchasers. They’re building online community centers where customers can interact beyond the product, feel a part of the community, talk to one another, and help each other out; this ultimately generates engaging user content that brands can leverage to build trust among customers.
Goop has been a huge pioneer here, and other brands such as Outdoor Voices have followed suit, crafting their own digital experiences centered around joint storytelling and consumer interaction. This has allowed consumers to gain knowledge in their respective spaces, leading to long-term engagement and awareness when a purchase becomes imminent in the consumers minds. Brands that are top of mind when it comes time to purchase something, and who make it easy, come out on top.
The brands we work with at Verbal+Visual are premium brands that foster this approach in their outreach frequently. Carhartt WIP, for example, curates live drops, hosts events, shares their music, and has a lively blog to help bring their brand and community to life.
Brand Focused Retailers Will Take An Anti-Amazon Approach
In 2019, Nike made the seemingly controversial decision to move completely off of Amazon. We salute them, and feel that brands should own their commerce, content, and community experiences themselves, not Amazon. Amazon is the place to go for commodity goods, and in that category they have the undeniable lead, and for good reason. Premium brands looking to differentiate themselves now have the tools they need to compete with Amazon and it’s becoming fun to see the arms race between Amazon and Shopify Plus. The Shopify Plus platform provides brands with the foundation to build and grow their own omnichannel presence, and it's doing so at a rapidly expanding rate.
Admittedly, we are biased. Amazon’s infrastructure wipes out smaller brands and even established boutique brands, and we’re not in favor of a commoditized world. We want experiences worth remembering and products worth keeping. While the convenience of Amazon should be and is lauded, we feel that the price that the world is paying is not worth the convenience of one less day on shipping or a wider product category. We believe retailers who value the brand equity they’ve worked so hard to build will follow Nike’s lead and abolish Amazon from their omnichannel approach.
Purpose Will Take Center Stage
The world is literally burning, and the masses are starting to pay serious attention to what they wear, how it got to them, and what happens after they are done with those products. Brands that are poised to fly in 2020 and beyond will be the Patagonia's of the world. They’ll stand for a cause that fits in the world we live in, scream it from the mountaintops, and live it themselves. As a result, they’ll build truly authentic followings that have a strong and ever-growing base of customers. Given the stakes in 2020, we think this is the year that the tide turns in people's minds, and they’ll double down on brands like United By Blue (responsible supply chain) and Olivela (supporting girls’ education) who are mission driven and wear it on their sleeves.
In addition, brands will look for opportunities for buy back and donation programs, allowing consumers to create closed-loop environments for their clothes to be worn, given back, and repurposed. This sort of conscious use of products can and should become the norm, giving consumers the satisfaction of wearing the products they love for a period of time and then making sure those products have second and third (and fourth and fifth) lives. Creating closed-loop / circular economies significantly cuts down on CO2 emissions and helps us reduce the production of new clothes and ensures brands don’t need to burn new clothes ever again. The EPA has estimated, based on information from the American Textile Recycling Service, that the recycling rate for textiles in clothing and footwear is only 13% percent, so these closed loop systems are vital in reducing the amount of landfill waste.
Personalization Will Become Table Stakes
Personalization, specifically using A.I. and Machine Learning, will go from sometimes used to the norm in e-commerce. With tools like SearchSpring, Nosto, & Dynamic Yield focusing on delivering the results that you want, and making it easy to implement these tailored experiences on your site, delivering a personalized experience will become commonplace. This space is ripe for the taking, with weather, past purchases, location, intent, and more on the table.
Thoughtful brands will be able to take multiple inputs and combine them into messaging and content that speaks directly to a consumers intent in a perfectly timed symphony of retail magic. As an example, imagine that it’s raining outside, and you had been looking up running shoes on the site in the last week. A brand can show its most popular waterproof running shoes, combined with motivational messaging for running through the elements to reach your goals. Coupled with a strong online community, this type of nuanced personalization will not only get customers to buy, but get them to become brand evangelists for years to come.
Compliance & Privacy Will Continue To Take Center Stage
Compliance & Privacy were two hot topics in 2019 for retailers, and that trend will rightfully continue in 2020. People should be treated as equally as possible when online, and also be able to protect their data, given that it is the most valuable asset in the world.
With compliance, specifically ADA Compliance, there is a lot of fantastic work happening for people who have traditionally been underserved in the online space. While we’re not a fan of legal firms pouncing on retailers multiple times for compliance, the law itself is true and just. We worked with A360 throughout 2019 to ensure compliance for the sites that we work with, and are continuing to ensure our clients are fully compliant. This will keep the web equitable and allow all users the ability to explore online in a way that feels right to them.
On the privacy side, Shopify Plus and their strongest technology partners have done a fantastic job of ensuring privacy, specifically for the GDPR and the CA Privacy Laws, making sure consumers’ data is fully protected. As more laws are enacted throughout the country and world, it’s a huge positive to see technology companies taking consumer privacy concerns with the utmost seriousness. Without strong data protection, consumers are subject to a variety of violations of trust and privacy that ultimately take advantage of consumers’ data for profit.
Additional New-ish Key Commerce Concepts
Here are a variety of other trends and technologies we see as targets for growth in 2020:
Checkout on Instagram: We’re hoping for a Shopify <> Instagram checkout collaboration in 2020, which would be a huge win for both in the battle against Amazon.
Flexible Payments: While becoming commonplace, we think these incredibly helpful flexible payment options such as Afterpay and Klarna will become the norm this year for premium retailers.
Headless Commerce: While it’s not right for everyone, when it is right, going headless provides flexibility and scalability. It can be expensive, though, so it’s wise to ensure it makes sense for your brand. There are many articles on headless if you’d like to learn more, including here and here.
Situational Ecommerce Experiences: Think Day Mode vs Night Mode, showing different content based on devices, and leveraging ambient sounds and lights to affect the customer experience. These more advanced personalizations will enhance and enliven the consumer experience, providing delight and encouraging customers to interact more.
Energy Conservation Focused Ecommerce: Designing with energy conservation in mind is becoming more prominent in UX designers minds. Implementations that utilize darker backgrounds to use less energy, crafting lightweight sites to decrease load time, and even extending energy conservation into packaging, returns & exchanges, and more, all give the earth an assist. Brands can also craft messaging around why their site is dark or their site is more minimalist in nature, creating trends that encourage all brands to partake in the environmental revolution.
Our trends for 2020 are focused on impact; the impact we expect to see, and the impact we hope for from retail brands. We want brands to become more socially & environmentally conscious, to streamline experiences for customers and admins, and to leverage technology appropriately so that they soar in 2020 and beyond. What changes do you see coming, and why? We’d love to hear your thoughts. firstname.lastname@example.org