Charting a New Path Forward: How to Plan Your Ecommerce Investments for the Future
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It’s not often that widespread change happens overnight, but that’s how it felt for much of the U.S. in mid-March 2020, when the World Health Organization first characterized COVID-19 as a pandemic.
Nonessential brick-and-mortar storefronts closed their doors. 42% of the U.S. workforce started working from home. Needs, priorities, and — for a very large sector of the population — incomes all shifted.
Suddenly, ecommerce became a lot more important. As businesses grappled with the changes, positive and otherwise, it became clear that the strategic plan they brought with them into 2020 needed to be reevaluated.
To better understand the impact of COVID-19 on ecommerce retailers’ investments and strategies, BigCommerce partnered with Retail Dive’s Brand Studio to survey 140 retail executives about their investment behavior before and after the pandemic.
The findings revealed several interesting observations about the state of ecommerce today, as well as clear areas of increase and decrease across various areas of investment.
COVID-19’s Impact on Ecommerce Performance
By and large, the pandemic has had a positive impact on ecommerce. Two out of three ecommerce executives say that the impact was very or slightly positive, while fewer than one-third report a slightly or very negative impact.
The most positively impacted metrics were:
- Website traffic,
- Revenue, and
- Number of transactions.
Fortunately, 79% of retailers believe their technology capabilities set them up to manage the circumstances of 2020 so far — but investment decisions going forward would still have to shift in response to changing shopper needs and behaviors.
Shifting Priorities for the Future
Prior to COVID-19, the top two areas of increasing investments were website experience (66%) and marketing and advertising (58%).
Going forward, website experience (67%) and marketing and advertising (53%) still rose to the top, though at decreased percentages. Gaining increased investment include:
- Logistics and supply chain: +11 percentage points
- Inventory management: +8 percentage points
- Omnichannel selling: +3 percentage points
Fewer executives will be investing in internal operations (-10 percentage points) and third-party relationships (-7).
Executives most frequently reported hiring as the area having decreased investment in 2019 (19%) and moving forward (26%). While marketing and advertising remains a top area of investment, it also saw a rise among executives as an area of decreasing investment in 2019 (10%) and moving forward (20%).
When asked about possible ecommerce changes as a result of COVID-19, there was executive consensus around investments such as:
- Migrating to a new platform
- Not migrating to a new platform/staying the course
- Discussing changes or tweaking current processes
- Freezing wages, streamlining headcount, or other savings strategies
- New delivery modalities
- More social media use
- Changing in-store/online mix
Let’s take a closer look at the three areas with the highest investment priority moving forward:
1. Website experience.
In the context of increased traffic, it makes sense that website experience would continue to be an important priority for retailers that want to continue to develop customer relationships. Today’s digital-first shopping environment means that a retailer’s website is a powerful vehicle for providing a compelling customer experience, meeting demand, and moving products.
“There are three fundamental parts of a retailer’s value chain: capturing traffic effectively, converting prospects into buyers, and maximizing the post-purchase experience,”says Russ Klein, Chief Commercial Officer at BigCommerce. “All three of these critical points of customer experience take place on or in relation to a retailer’s online experience.”
“As such, any investment in that experience should enable a retailer to sell or attract prospective buyers everywhere that those prospective buyers want to be.” — Russ Klein, CCO, BigCommerce
2. Marketing and advertising.
While the majority of buyers adjusted or paused their advertising efforts as an initial response to COVID-19, those who kept investing found the cost on many platforms was going down — and conversion rates were going up.
“Many of the merchants who leaned into the lower cost of advertising and increased their budgets are seeing remarkable results.” — Sharon Gee, General Manager, Omnichannel at BigCommerce
“Many of the merchants who leaned into the lower cost of advertising and increased their budgets are seeing remarkable results, such as Cordova Outdoors, who saw a 3,500% return on ad spend,” said Gee.
3. Logistics and fulfillment strategies.
The drastic year-over-year increase in ecommerce orders, as well as impact on the workforce, created an increase in outages and transit delays for major carriers.
And, while many people see logistics and fulfillment as the technical side of ecommerce, it can actually have a big impact on the customer experience.
“COVID-19 revealed opportunities to streamline and improve the supply chain and shipping and logistics, and retailers must move quickly to address those gaps to remain competitive.” — Matt Crawford, General Manager, Shipping at BigCommerce.
Charting Your New Path Forward
COVID-19 has had a huge impact on the way retailers look at their sales channels, but the goal remains the same: serve the best possible product to as many customers as possible — and make sure they have an extraordinary experience in the process.
The pandemic has not introduced any new themes into the ecommerce space; it simply accelerated the timeline of consumer demand and highlighted gaps and oversights in many retailers’ ecommerce operations.
Retailers today must reassess whether they’re making investments that support the best possible performance of their website experience, marketing and advertising, and logistics and fulfillment — and if not, bravely change course to chart this new path forward.
Take a deeper look at our retail investment survey results. Watch our webinar here.