How Cross-Border E-commerce Retailers Can Plan for the Next Phase of Recovery

March 17, 2021

We are now more than a year into a global pandemic that has presented multiple challenges and disruptions for e-commerce merchants. Many online stores have spent the last 12 months quickly pivoting to better serve their customers who transitioned to a life spent working, child-rearing, and shopping from home. E-commerce websites saw unprecedented growth in traffic as home-bound shoppers turned to the internet for their most essential items as in-store shopping was no longer an option. When domestic retailers couldn't offer the selection consumers needed, they looked to cross-border e-commerce merchants for help. With vaccines now being distributed worldwide and a sense of cautious optimism returning, how should e-commerce retailers plan for what's next? The next few months will be a transition period. Gartner predicts that circumstances won't be back to normal until the fall of 2021 or later. As countries begin to slowly reopen schools, office buildings, and retail shops, many brands ask the question: what will the impact be on cross-border e-commerce? Here are a few considerations for how things may change over the next few months.

1. Consumers will stay in self-protection mode until they feel safe.

In some countries, such as Israel, more than half the population (57%) have already received their first dose of the coronavirus vaccine. Schools and workplaces have opened. Life is slowly returning to normal. But in most of the world, there's still a long way to go. Italy, for example, has just issued yet another national stay-at-home order as COVID-19 infection rates are on the rise again. Changing market conditions make e-commerce website localization even more important because the situation on the ground in each global market varies wildly. In the interim, Gartner predicts that global consumers will still take protective measures, even as they venture out of their homes, to keep themselves and their families safe. And this behavior will continue to drive e-commerce. Even when physical stores reopen, consumers will look at hybrid models such as buy online, pick up in-store and curbside delivery. Gartner notes:

"This realignment of life isn't going away anytime soon, so brands need to find ways to meet consumers where they are. Now is the time for marketers to lean into the aspects of their brand values that support consumers' self-protective instincts."

2.  Sweatpants and pajamas may give way to jeans, shoes, and makeup.

Last year, apparel retailers made the pivot to athleisure as more consumers worked from home. But we may see a return to pre-COVID clothing routines. Brands like Anthropologie and Urban Outfitters are seeing an uptick in consumers purchasing dresses in the first quarter of 2021. Heading into warmer weather in many countries, consumers who spent the last year in hoodies and joggers are longing for a reason to wear more formal clothing. As the NPD Group explains:

"Once people return to work and going out....We may see strong demand for categories that have been less in demand, such as apparel, beauty, and footwear, as consumers look to refresh their wardrobes. At the same time, there may be a temporary pullback in some industries that did well in 2020, and specifically among products that improve home life as many consumers have already bought those products and will be eager to re-prioritize their spend."

3.  The home fitness trend is here to stay.

While gyms and fitness centers are reopening, consumers have experienced the benefits of having their own workout space and equipment at home. E-commerce retailers selling home fitness equipment saw an increase in demand of up to 30% in some geographic regions. Exercise equipment such as treadmills and stationary bikes, as well as yoga mats, dumbbells and exercise bands were top consumer choices. Experts predict that revenue in the home gym equipment market will continue to grow at a CAGR of close to 9% through 2025. But smart retailers will think beyond the initial  sale and find ways to keep consumers coming back.

4.  Consumers will struggle with time management, and e-commerce can help.

Parents of school-aged children will have a rude awakening as they suddenly find themselves adhering to the old routines: catching the bus, manning the carpool, planning out meals, and gearing up for after-school sports and activities. The Harvard Business Review refers to this as "time poverty" and predicts that the old anxiety around managing all the many societal obligations will return in a major way. It will be vital for e-commerce retailers to anticipate this and provide even more seamless and easy online shopping experiences for time-pressed consumers.

5.  Purpose-driven brands will be more relevant than ever.

Retailers may believe that consumers have reached the point of fatigue with the social justice movement. But while they may be tired of television ads that spout platitudes such as "We're all in this together," consumers still expect brands to take a stand. The racial, gender, and income equality movements that gathered momentum around the world in 2020 will continue to have a meaningful impact on consumer values--and they will use these values when deciding where to spend money in 2021. Gartner advises:

"Given the growing importance of equality, inclusion and diversity, marketers need to review both short- and long-term brand and communications strategies and realign themes to leverage consumers' increased focus on social justice and civic engagement. Marketers should also emphasize the aspects of their brand values that speak to social justice or empower consumers' participation in civic dialogue and expression."

Successful cross-border e-commerce retailers should examine these trends and decide how they will impact their business models. There may be a need for yet another pivot or reinvestment, whether that be in new product categories, a more diversified logistics strategy, or improving your online store's customer experience in each market where you do business. Times of transition can also be times of great opportunity for e-commerce merchants who demonstrate understanding of what their target customers need in the moment. Innovation in e-commerce should always focus, first and foremost, on delivering a customer experience that not only meets expectations, but surpasses them. To find out more about how Flow's cross-border e-commerce platform can help prepare you for whatever comes next, get in touch with us today.

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