Growth

The Wild New World of eCommerce

Walmart, DTCs, and the unprecedented expansion of eCommerce space.

No futurist could have seen that by mid-2020 eCommerce sales levels would look more like 2030-era expectations. But here we are! Spurred by a global pandemic and social-distancing mandates, eCommerce has fulfilled an unexpected role in keeping economies going and critical supplies flowing.

As we explored last week, nimbleness and innovation have defined the ways that businesses have adapted to the new needs of consumers and the requirements of an upended supply chain. But what does the future beyond the next few months hold? Well, as we are definitely learning, there are no guarantees. But if the changes underway continue, the new consumer habits and trends taking root right now are what will drive us there. Let's take a glimpse at our wild new normal.

Every Day Is a Holiday, But Bigger

Everyone from traditional retailers to digital-first startups has seen the coronavirus pandemic condense weeks of normal online activity into days. Spending on eCommerce surged 78% in May, hitting the $82 billion mark—with levels of engagement and sales on a regular Taco Tuesday in April looking more like they would on Black Friday or Cyber Monday.

More importantly, the new online habits of consumers seem likely to hold firm even after stores reopen. A report from PYMNTS suggests that,"24.6% of bridge millennials, 23.8% of millennials and 17% of Gen Z consumers have shifted some routines to digital channels and plan to maintain those changes even after the pandemic." Leading the way are those once tech-skeptic Gen X buyers, 26% of whom say they'll keep their new routines.

It's easy to look at these developments as well as Amazon's insane growth over the past few months and make conclusions about the future of eCommerce. But there may be more wisdom in looking at Walmart, which is rushing and experimenting to make up ground on Amazon and is making some real headway too.

What Walmart Shows Us

Earlier this week, Walmart announced a partnership with Shopify that would bring 1,200 new vendors in the behemoth's fold in the coming months. The news came on the same day that Walmart, for the first time in its history, managed to outsell eBay online in the U.S. over the course of a single month. It wasn't even close. In May, Walmart captured 5.8% of U.S. sales, eBay had 4.5%. (Of course, Amazon had 38%, but by now that's hardly surprising.)

After being late to the digital infrastructure party, Walmart has achieved this in part by rapidly growing its number of partner vendors in less than a year. Last June, Walmart had just shy of 24,000 third-party vendors on its Marketplace site. This June, it has 45,000. This expansion doesn't come without risk—after all, Walmart is a brand and each of these tens of thousands of partners brings operational, reputational, and regulatory complications to the process.

Last June, Walmart had just shy of 24,000 third-party vendors on its Marketplace site. This June, it has 45,000.

But that's not all the tinkering that Walmart is doing. Last year, the company also started testing its own fulfillment service, which its rival Amazon launched all the way back in 2006. Between third-party vendors and an internal control over product, the result is an apparatus built for online sales and maximum profitability. Vendors shoulder the shipping costs and pay fees on their sales, Walmart gives them a platform for its 120 million monthly visitors. Elsewhere, at one brick-and-mortar location, the company is testing a store entirely made up of self-checkout lines, a reflection of labor costs and their popularity among shoppers. They're also getting deeper into healthcare. All said, they're taking the widest view they can and scaling out to see what works. And you don't have to be Walmart to do that.

Our Omnichannel Future

For some smaller brands, getting into the stores and onto the platforms of big-box retailers can make a huge difference as shoppers embrace new retail and fulfillment offerings. For example, in late May, Target announced that its same-day delivery, including buy online, pick up in store (BOPIS) has grown 278% in the first quarter while overall digital sales rose 141%. "While BOPIS [buy online, pick up in store] was a niche delivery option pre-pandemic," one Adobe analyst explained, "it is fast becoming the delivery method of choice as consumers become more familiar with the ease, convenience and experience BOPIS offers."

Startups and DTCs may not have the footprint and capacity to expand like Amazon and Walmart. But what they can do is sell and adapt and built loyalty in ways that the titans can only dream of. Right now, millions of new consumers are coming online for the first time and becoming intimately familiar with different brands and unique experiences through social media, personalization initiatives, remote selling, subscriptions, and rapid support, all of which are not easily produced on a large scale.

Ultimately, for customers, it all comes down to options and control. In a recent survey conducted by Adobe, 23% of respondents said they prefer buying online, then in-store or curbside pickup over home delivery. As retail tech creates new ways to order, fulfill, pick up, or bundle, a whole slew of acronyms will emerge. But the general baseline of what customers want is still very much the same.