The e-commerce vertical has easily been one of the most fruitful since the onset of the pandemic. Although frivolous spending for the majority of consumers dropped considerably over the last year and a half, many e-commerce brands saw an increase in engagement, sales, and customer lifetime value. Why is this, you may ask? Given most of the U.S. and global populations were at home during the height of Covid spikes, the need for access to goods and services online increased dramatically. These spikes in demand provided even more opportunities for e-commerce marketers to increase consumer touchpoints. These touchpoints have manifested in a variety of ways including on new social media platforms, such as TikTok and Clubhouse; marketers also saw an increase in consumer engagement by investing in social commerce on traditionally content-only platforms, such as Instagram and Pinterest.
So what does all of this mean for the future of e-commerce? Will this upward trend plateau as the global economy returns to normalcy, or even possibly decrease as consumers begin in-person shopping once again? Let’s take a look at the numbers, what our peers in the performance industry are experiencing, and what consumers themselves are projecting.
The Rise of Social Commerce
For those who may not be as familiar, social commerce is the practice of driving consumers to shop for a good or service directly on a social media platform. Social commerce existed prior to the pandemic, most recognizably through Instagram’s “swipe up” feature, or influencer’s use of “link in bio” calls to action. At the onset of the pandemic in March 2020, consumers began engaging with social commerce in a way that these platforms had never experienced before. This included utilizing influencer marketing on a performance model, in which marketers were paying influencers and bloggers on a cost-per-acquisition basis. A few months into the pandemic, many marketers doubled down on social commerce after seeing an influx in sales and consumer engagement. This unforeseen growth in the channel drove social commerce to be one of the main sources of sales in 2020, trailing only behind mobile and online commerce.
At the close of 2020, there were nearly 80 million social buyers in the U.S. alone – a 30% increase from the year prior. Of course, the upward trend didn’t stop there. 2020 saw social commerce sales rise by a total of 38.9%, while 2021 follows close behind at 35.8% so far this year. As the marketing industry heads into what is arguably the most profitable time of year for e-commerce brands, marketers are chomping at the bit in anticipation of even more social shoppers this holiday season.
Will E-Commerce Continue to Soar?
As consumers welcome some of their old habits back into the world’s new normal, marketers wonder how the return to in-person interactions will affect their business. A 2021 report showed 43% of consumers stated they would shop in brick and mortar locations the same amount that they did in 2020, while 20% said they would shop in-person more, and 16% reported they would shop in physical stores less. Seems like a pretty healthy split, however, looking at the reasons why shoppers chose those answers makes the data a bit less clear.
The fact is, the pandemic forced marketers to shift to an entirely digital marketplace, which came with its own set of challenges including shipping delays, frequently lost packages, and return complications. These issues began to instill a sense of distrust in consumers who were frequently interfacing with online retailers. Consumers who had been comfortable shopping online prior to the pandemic were accustomed to a seamless shopping experience, wherein a lost package or delayed order was the exception. Unfortunately, the rapid shift to an entirely online shopping experience threw those expectations out the window as supply chain challenges, shipping delays, and lost orders became the norm. As consumers showed an increasingly high demand for products and services, e-commerce marketers had no choice but to adapt.
Now, as the economy and businesses begin to stabilize, what are consumers thinking about shopping in-person versus online? The 2021 State of Consumer Behavior report found that 48% of consumers have replaced products they’d typically buy in-store with online alternatives. Taking all of these factors into consideration, in the short term, it seems as though e-commerce’s exponential growth streak will continue. Q4 2021 will be an extremely crucial period for e-commerce marketers to reinstate themselves as a trustworthy channel for an efficient shopping experience.
What About E-Commerce in Performance Marketing?
Simply put, the performance marketing industry has seen remarkable success over the last decade, with affiliate marketing spend expected to increase by at least 10% over the next few years. How about today, though? What is happening to e-commerce marketers within the performance channel right now?
Throughout 2020 and into 2021, Perform[cb] saw its e-commerce clients drive incredible growth to their campaigns. For example, one of the leading e-commerce marketers globally drove more than 70,000 installs to their app in just one month during Q3 2021. This success illustrates that e-commerce is clearly not limited to the desktop space. Nearly 80% of smartphone users have made a purchase online using their mobile devices in the past 6 months. Both in-app and mobile web placements provide great opportunities for e-commerce marketers to create additional touchpoints for consumers throughout the buyer’s journey.
However, after 2020, many advertisers were looking to cut back on paid placements to conserve ad spend for their high-seasonality months. Perform[cb] saw this firsthand when a well-known sunglasses retailer decided to cut back on promotions in 2021 after investing heavily in paid promotions during the peak of the pandemic in 2020. By strategically distributing the brand’s content calendar to a variety of publishers, Perform[cb] was able to drive a 180% increase in sales month-over-month for this marketer. These campaigns are just two of many examples of how e-commerce marketers are winning using the cost-per-acquisition (CPA) pricing model. As this model continues to evolve and grow, marketers will have countless opportunities to reach consumers throughout the buyer’s journey.
As we as an industry enter the first weeks of Q4, this is the time to keep an eye on e-commerce performance as a whole. Q4 is notoriously known for being the biggest buying season for consumers, and this year’s holiday season will be especially telling for how consumer buying habits are shifting. With 90% of consumers prioritizing a seamless shopping experience, combined with the heightened interest in shopping via social media, social commerce will likely continue to be a primary channel for e-commerce through the end of 2021. Additionally, e-commerce brands have the opportunity to regain consumer trust by providing high-quality customer service and prompt order fulfillment this holiday season.
By investing in promotions on a performance model, e-commerce marketers can reach buyers throughout the buyer’s journey while only paying for genuine sales and conversions. Looking to maximize your reach this Q4 using this pay-for-results model? Get in touch with Perform[cb]’s team of CPA marketing experts to get started today.