Considering the year+ many people have had to endure it may seem illogical, but consumers now have, on average, more disposable income than they had before. In Dec 2020 in the U.S., the average person saved around 14% of their income, up from just 7% a year prior. Coming out of a period of utilitarian spending habits emerging and the prohibition of some normal spending behaviours, people now find themselves with fuller pockets with more brands now ready to open their doors; figuratively and literally.
The transition back to normal life will be a mix of nervousness and excitement. People will look at old items with new eyes and emotions. Consumers can't wait to rediscover old comforts, and new spending occasions.
What we could see is a period of Revenge Spending, where financial stability is exchanged with heavy spending that (practical or otherwise) provides a sense of joy to consumers. This mindset will push Canadians to buy, more often and will require brands to provide best-in-class eCommerce experiences to satisfy the coming need.
Successful brands will be those who are prepared for the anticipated period of hyper-spending. Here we’ll explain what prepared actually looks like, and how to achieve it.
Agility in commerce experience
Being able to adapt to observed behaviours and market indicators will be necessary to ensure brands are providing products and experiences that promote conversion. In competitive periods, brand simply can’t wait for 3rd parties to facilitate those reactions.
True ownership over the brand experience through a DTC model is the best way to curate target-specific experiences and offers. Management through a single, simple, and user-friendly CMS, like Shopify’s out-of-the-box CMS and OMS capabilities make managing multiple stores, fulfillment centers, and relationships easy.
With experience management and control being a top priority for brands, it’s no wonder DTC now accounts for 40% of ALL sales growth in the CPG category.
Managing order and traffic spikes
If your media efforts are driving towards a self-hosted platform, you’d better hope you can keep up to provide a solid experience. Customer experience is the new battleground and hiccups in that experience won’t be tolerated by consumers.
Walmart indicated that they saw up to a 2% increase in conversions for every 1 second of improvement in load time. Every 100ms improvement also resulted in up to a 1% increase in revenue.
Shopify Plus’ cloud-based infrastructure—which powers over 1.7M merchants at 80,000 requests per second at its peak—works on a cluster of Shopify’s own servers running Docker with the Rails app, along with a few AWS feature-based augmentations.
It was built to be resilient, with systems for controlled latency and solutions to ensure no single point of failure. To maintain peak performance, Shopify’s in-house team manually performs extensive passive load testing and optimizations by combing through critical parts of the platform.
The result is 99.99% uptime, with servers capable of handling thousands of transactions per minute, all without slowing a brand store’s overall performance.
Reducing checkout friction
Consumers are aware of the number of commerce options they have at their disposal and therefore expect a level of ease throughout the entire experience. This includes speed factors at the lowest point of the funnel: payment.
A reported 18% of consumers will abandon their cart if the checkout procedure is perceived as being too long or too complicated. Autofill can increase checkout speed by 60%, but not everyone has that enabled. Enabling Shop Pay directly on the platform, however, leads to 1.72 times higher checkout-to-order rate than those going through regular checkouts. This rate increases even more—to 1.91 times higher—for mobile users.
Enabling Shop Pay is also proven to increase frictionless payments on third-party shopping platforms, such as Facebook and Instagram.
Managing shipping cost by incentivizing behaviours
An estimated 40% of consumers research shipping costs before purchase. If you guessed the magic number they were looking to see was $0 for shipping, then you guessed correctly.
Nothing is ever free, including shipping. To offer 0$ shipping, brands either need to pay for the expense or increase the cost of their products to cover it. However, the Shopify platform allows brands and consumers to benefit by offering incentives like free shipping:
- With a minimum order value
- As a one-time promo code to new email newsletter subscribers
- Only to loyalty club members
- Exclusively during peak sales periods
- Or on select products or combinations of products—you can use Shopify to automatically calculate and offer free shipping at the checkout when a customer’s cart contains a combination of items you’ve predetermined will fit inside a flat rate shipping container
If that seems difficult to manage, it’s not. Shopify Scripts allows the creation of simple script types, ranging from line-item discounts to automatic shipping rates to customized payment methods. These are particularly important as customers hit the most critical moment in their shopping experience: check-out.
A final question
An anticipated period of increased spending is right around the corner. The consumers that we remember pre-pandemic may be gone, in favour of ones that expect more of a thorough and thoughtful commerce experience. Consumer options and category competition have increased, adding additional pressure for brands to get it right in 2021 and beyond.
The best time to get ready may have been weeks or months ago, but the next best time is now. With an average build time of around just 2-4 months (while the other guys will take anywhere between 5 and 12), Shopify shortens the time to market, allowing brands to capitalize on the coming period of revenge spending.
Is your brand ready?