Article summary: In this post, we look at some of the biggest challenges facing ecommerce companies this year and how offering an excellent digital experience can help them overcome those challenges. All data presented here is from FullStory's original research, The State of Digital Experience 2020: Mapping a Path to Digital Experience Maturity.
The global pandemic prompted dramatic changes worldwide. Among those changes: enormous growth in ecommerce. As in-person shopping became difficult or even impossible, people turned to online channels to conduct more of their buying. According to Adobe Analytics, U.S. online sales in April 2020 increased 49 percent over the year prior.
A survey conducted by eMarketer similarly found nearly half of consumers shifted their spending toward online channels across all categories—from grocery to apparel to electronics—during the first months of the pandemic. “Online orders are seeing two to three times year-on-year growth, with some retailers seeing increases of more than 20 times,” the survey found.
While some predict these changes are only temporary while the pandemic and stay-at-home orders persist, research has found these changes could instead indicate the future of ecommerce. According to eMarketer, “Even as stores reopen and brick-and-mortar sales rebound, we forecast that ecommerce will lose just a 0.1% share of total retail sales in 2021, before gaining more than 1 percentage point each year through 2024.” Whether ecommerce continues strong growth once the pandemic has passed or not is still to be seen, but what we do know is the recent boom in ecommerce created another notable shift: The ecommerce landscape has become vastly more competitive. According to a recent report from Shopify, “record ecommerce competition—fueled by legacy wholesalers, global retail giants, and product categories not traditionally purchased online—is increasing and driving up customer acquisition costs.”
Ecommerce companies that wish to succeed long term must figure out ways to overcome obstacles like higher customer acquisition costs. The best way to do so? Focus on digital experience (DX). This may be especially critical for more mature ecommerce companies. According to the Shopify report, “Many new competitors are not equipped to compete on customer experience, a top differentiator online, giving an edge to brands with immersive omnichannel experiences.”
The following are the top five challenges e-commerce companies are likely to face in 2021, along with our research-backed guidelines for generating the type of digital experiences that can help you overcome these challenges.
Ecommerce Challenge #1: Growing customer expectations
Shoppers have higher expectations than ever for the ecommerce companies they buy from. Things that were once nice-to-haves (like 24/7 online support, chat, easy navigation, personalization, and consistent and intuitive digital experiences across channels and devices) have now become table stakes. Yet according to Shopify’s report, only 38 percent of the largest companies can compete on digital experience.
Improving the customer experience to meet growing expectations starts with aligning the organization around that critical objective. According to our research, organizations that are less successful at delivering an ideal digital experience are 33 percent more likely to report that they struggle to create consensus among leaders about top digital experience priorities. Conversely, the data shows that more mature digital experience organizations are 93 percent more likely to agree or strongly agree that “everyone working on digital experience understands the organization’s goals and how to achieve them.” This finding implies that more mature organizations have transparent, shared goals.
Our research also indicates it’s easier to create top-level consensus when there is a digital experience champion involved. In other words, first ensure that digital is a priority at the very top level of the organization, then make sure someone with organizational influence is accountable for that success.
Ecommerce Challenge #2: The growth of mobile shopping
Shopping through mobile devices will continue to rise in popularity and become a larger portion of total retail sales. Consider the following statistics from Review42:
People spend around 5 hours a day on their smartphones
70 percent of web traffic comes from mobile phones
61 percent of users will never return to a website that is not mobile-friendly
Ecommerce retailers need to continue to develop and optimize their mobile-friendly sites. Additional statistics show us how doing so can pay off:
80 percent of smartphone users will buy from companies with mobile sites and apps that are easy to navigate
70 percent of the searches made on mobile phones lead to online action
But organizations shouldn’t stop at mobile enablement. They also need to invest in technology that can provide them a complete view of the customer’s digital experience, including insights into sources of friction. If you’re losing customers at a certain point, you need to know why that’s occurring so you can address it. Yet our research shows that fewer than half (46 percent) of digital experience professionals have full visibility into causes of user frustration.
Investing in tools like FullStory that can capture and analyze both quantitative and qualitative DX data is a great way to analyze where customers may be encountering problems so you can create a better digital experience for your users.
Ecommerce Challenge #3: Growing acquisition costs
Ad costs took a dip during the early stages of the pandemic, but they’ve since bounced back and show no signs of dropping again. According to Shopify, late 2020 paid search spiked 17 percent and paid social advertising increased 24 percent.
At the same time, advertising channels and platforms are constantly expanding. Consumers can find products and brands in many ways today, which makes connecting with and attracting customers more challenging. According to digital marketing company Finch, if you don’t meet—or exceed—your customers’ expectations, they may shop around. And with growing ecommerce options, they have plenty of other places to go. Improving customer retention rates with good DX is therefore vital.
Our research examined how organizations are setting themselves up to deliver more perfect digital experiences and found it comes down to the ability to:
Easily prioritize digital fixes and improvements
Quickly ship digital fixes and improvements
Translate customer insights into action
Optimize the digital experience for key conversions
The most successful companies find it fairly easy to tackle the first three capabilities. But optimizing key conversions can be a bit more of a struggle, even for mature organizations. Our study found 37 percent of all respondents, regardless of maturity, report that this is difficult to do.
Ecommerce Challenge #4: Sourcing the right technology
Delivering a more perfect digital experience requires organizational alignment and agility, so technologies that contribute to that are essential. That means finding technology solutions that give you a single source or seamless integration with your other technologies, provide a complete view of your customer’s digital experience, and proactively surface relevant digital experience insights.
According to our research, only 18 percent of digital experience professionals report they can easily and proactively uncover useful insights about the customer’s digital experience. Fortunately, technologies exist that proactively point you toward actionable insights and automatically surface your most important opportunities for improvement according to potential business impact. Doing this will give you an advantage over most organizations—the ability to quickly identify and act on unforeseen opportunities.
Ecommerce Challenge #5: Combating stagnation
The old adage, “If it ain’t broke, don’t fix it” doesn’t work in the world of ecommerce. Customers want to see a constant influx of new products, information and features. That means organizations should adopt a relentless focus on testing, learning and improving DX.
According to our research, companies that deliver better digital experiences are more likely to encourage testing and learning than their counterparts. And those efforts can pay off handsomely. Research from Optimizely shows that organizations that run a high volume of experiments—21 or more per month—drive a 14 percent increase in revenue. Compare that to organizations running fewer than 20 tests per month, driving 1 to 4 percent increases.
Ultimately, organizations that want to succeed long-term need to encourage testing and learning and constantly and proactively strive to improve their digital maturity and DX. Doing so will prepare them to manage today’s challenges as well as whatever challenges come next.
FullStory helps your organization raise the bar on digital experience maturity. Request a demo today.