Predictions for E-Commerce in 2021 and How to Position Your Brand for Success
During a typical year, brands execute their strategies while making occasional adjustments. Sometimes changes are made for reasons such as performance, budget fluctuations, and more. And a lot of time, energy, and resources are used to plan for the year ahead. However, in 2020, there was no such thing as following the standard blueprint. Instead, brands had to completely overhaul their plans in real-time without enough certainty to plan ahead for more than a few weeks. Now that it's right around the corner, we're sharing our predictions for e-commerce in 2021. Throughout we’ll share advice on how to position your brand for success.
Brands will Continue to Increase their Ad Spend
Before the pandemic, we would have anticipated a continued increase in ad spend on Amazon and other online marketplaces. Yet, the onset of COVID-19, its impact on businesses, and coinciding shifts in consumer behavior have altered original predictions. However, it may not be as much as one would expect.
Pre-pandemic forecasts outlined a steady increase in digital ad spending. And, after nearly nine months, increases are still expected. While the numbers may not be as high, they’re not far off. And it’s worth noting a widespread decrease in spending is not anticipated.
In fact, according to Statista, Amazon Advertising’s revenue in the US is expected to grow by 23.5% year over year. Increases are also expected for both Google and Facebook. With this in mind, the digital advertising duopoly of Google and Facebook has evolved into a triopoly with Amazon Advertising's consistent growth. In addition to Amazon, evolving advertising platforms as seen on Walmart.com and Instacart are ones to watch as we enter 2021.
The Move from Retail to E-commerce will be Faster
Throughout the world, retail sales are expected to plummet when comparing to last year. The US alone is projected to see a more than 10% decrease in retail sales by the end of the year.
In light of these numbers, brands of all sizes and in all categories will need to make major adjustments. Especially since a full economic recovery isn't expected until at least 2022. Businesses will need to make the most of 2021 to recover on their own terms and make up for the lost time. In part, retail brands will have no choice but to transition to, or fully embrace e-commerce.
Increased Usage of Data and Testing Opportunities
Data has been an integral part of a brand's e-commerce strategy, long before 2020 and 2021. Whether it be consumer data, shopper data, or other trends, analytics are key to an informed plan of action. And we expect it to become even more important next year.
We also expect to see more opportunities for brands to leverage data and testing like we saw this year on Amazon. Brand Analytics and A/B Title Testing for example. With Amazon improving the data they provide brands, staying up-to-date on the latest platform features and opportunities will be necessary to compete.
Ongoing Evolution of Amazon’s Search Engine Results
The search results on Amazon are always changing. This has created the need for brands to always be learning the new ways their products are presented to consumers. In 2020, MPS noticed a handful of consistent changes to the search results that affect how brands go to market.
Some of these changes include:
- A steady increase in the number of Sponsored Product placements
- Sponsored Brand placements becoming more prominent
- Continued preferential placement of Amazon's products; at the top of search results or other prominent placements
- Increased usage of Sponsored Brand Video and placement higher in the search results
Most of these trends require brands to evolve their strategy and regularly improve to stay ahead of competitors and Amazon. The need to be on the cutting edge of Amazon’s ad products will only become more prevalent in 2021.
A Diversified Media Strategy is More Important than Ever
As alluded to, digital advertising is becoming increasingly competitive. On Amazon, CPCs are increasing due to competition on the channel. And Amazon's search results are more saturated with sponsored placements. In addition to these developments, brands are maturing in their understanding and execution of a marketplace media strategy.
This has created a more urgent need for brands to leverage DSP to move up the funnel and engage with customers as they are in the research phase. It's no longer enough to only have Sponsored Product Ads and get in front of shoppers before they purchase. In today's landscape, brands need to invest earlier in the shopper journey to educate them on why their product is superior.
Brands are also responding to increased competition by expanding to social media and other marketplaces. Doing so improves efficiencies and insight into consumer behavior beyond a specific channel.
Although this past year has been unprecedented, the year ahead is full of opportunity. It's up to brands to ensure they're in a strong position to take advantage of something new. Whether it be something as small as testing a different feature or something as large as embracing e-commerce in 2021 for the first time.
We also still believe Amazon remains a must for brands. And those already well-versed in the channel could consider expanding to other marketplaces. Walmart and Instacart will solidify themselves as viable channels in 2021 and early adopters will reap the benefits. Perhaps these marketplaces will be what it takes to overcome the deficits of this year.
Finally, it will always be crucial to stand out among competitors and be one step ahead of consumers. With this, it's important to pause and consider what it will take for your brand. Testing, data analysis, advertising, and expanding your presence will be necessary during a year crucial to the survival of many businesses.
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