Relief package to trigger 3rd eComm surge?

The new $1.9 Trillion Covid Relief Bill was signed by President Biden and finalized today. Checks should be issued as early as next week. 

Expect the eCommerce landscape to evolve, yet again.

Back when Covid first hit around April last year, we predicted advertising would be cheap for a few months then skyrocket in Q4. We said companies that spent heavy during the scare of Q2 would see the biggest returns in Q3 and Q4.

Turns out we were right!

In September, we predicted Q4 eComm sales would grow 2-3X from 201, extending through 2021. Also we predicted that brands that invested in growing their lists from Q2-Q3 would see a massive spike in sales through owned channels like email or SMS.

Turns out we were right again! (with the exception of Jan, which saw a drop due to political turmoil - but eComm sales popped back in February).

To help you make better business decisions, I’d like to offer our predictions for 2021 considering factors such as the new government stimulus, 2020 numbers, data from eComm shipping companies, and conversations with our technology partners.

Not saying I’ll be 100% correct, but it could be food for thought!

The New Cash Injection Into the Economy

President Biden just signed the new Covid Relief Package today, and everyone is talking about the new $1400 stimulus checks, but there’s MUCH more cash being injected into the economy.

  • Individuals under $75,000 & couples under $150,000 get $1400
  • + an additional $1,400 check for each dependent
  • Families get $3,600 for each child under 6 and $3,000 ages 6 to 17; up from $2000, with partial tax refunds as early as this summer.
  • + $300 per week in unemployment insurance through Sept 6th. 
  • The first $10,200 in federal unemployment is nontaxable
  • $19B in emergency rental assistance 

This means a lot more cash sitting in consumers pockets. 

And as far as “getting back to normal” goes, it is estimated that we won’t reach herd immunity until September / October 2021, so what will people do with all this influx of cash?

Let’s look at 2020 to find out.

The 2020 eCommerce Gold Rush

Here’s some fun stats from 2020:

  • Consumers spent an additional hour every day online in 2020 - eMarketer 
  • 56% of consumers have tried a new retailer during the pandemic - Narvar
  • Consumers spent $861B online in 2020, up 44% from 2019! Highest U.S. growth in two decades. - DigitalCommerce360
  • Cross-border ecommerce sales grew by 82% year-on-year in 2020 - eShopWorld
  • The rate of ecommerce penetration in the US grew by 10 years in a 90-day period in 2020, reaching around 33%, according to data from McKinsey.
  • 20% have abandoned past brand loyalty in favour of others that were more convenient, inexpensive or had better stock availability - McKinsey.
  • Amazon sales grew 38% in 2020 to $386.1 billion - Amazon

So consumers spent more time online, tried new brands more than ever before, and spent more across the board. Consumer purchasing power was off the charts, despite all the setbacks from Covid.

Smart eCommerce brands knew this. They expanded sales into new markets, whether it be new countries, channels like Amazon, or investing to grow their owned channels (email, SMS, podcasts, online communities).

We can actually track this consumer purchasing power, where things get interesting.

The CARES Act was enacted on March 27, 2020, and $1,200 direct deposits for eligible persons started to arrive on April 13. In the final week of March 2020, parcel delivery volumes increased about 10% from 2019, coinciding with increased lockdowns in the U.S. The pace then increased to 30% during the week of April 12 when stimulus checks were issued and spiked to 55% the week after! Parcel volumes, which are closely tied to e-commerce sales, stayed at +40% before tailing off to +20% by May, almost a month later. eCommerce volume continued to grow and passed April levels by August.

Volume again increased right after the government began issuing unemployment payments of up to $600 on Dec. 29, as part of the second COVID aid package (see the graph below for shipping volume from last year).

Basically, after each cash injection from the government, eCommerce sales spiked and reached new highs which were, for the most part, maintained.

So how will the new Covid Relief Package affect 2021 eComm?

As of right now in March 2021, eCommerce shipping volume is similar to that of Oct/Nov/Dec 2020!

Now that President Biden has officially signed the Covid Relief Package, injecting nearly $2 trillion into the economy, consumer purchasing power for all individual earners under $75K / yr has been increased, and purchasing power for families under $150K / yr has been massively increased.

Covid vaccine doses are being administered at ~2M doses per day, which means the United States will reach herd immunity sometime between August - October 2021, unless the pace increases. There is some possibility of this, with Biden mandating all states have vaccines fully available for all adults by May 1, 2021, but it’s too early to tell how this will change pace.

This means we might see semblance of normalcy right in time for the 2021 holiday season.

But until then, what do you think this massive cash injection to support the individuals, families, and unemployed is going to do to eCommerce? My bet is that the exact same thing will happen as the last 2 cash injections…

Official predictions (prior to the bill signing today) estimated eCommerce growth would not surge this year as much as it did in 2020 since the degree of growth was so high last year, but worldwide ecommerce sales are still approaching the $5 trillion mark. Ecommerce retail sales are projected to grow 14.3% this year.

We might not see the 44% growth like last year, but it’s unlikely growth will be as low as 14.3% either. After all, 2020 changed the habits of consumers, forever. Many changes are here to stay.

How much do you think the industry will grow? And are you prepared for that growth in your business?

The Hottest eCommerce Trends Right Now

1. ADVERTISING: FACEBOOK AND APPLE FEUD

The most influential trend recently is Apple’s announcement to give data privacy control to their users. This caused widespread panic among brands and advertisers. What will we do if we can’t track and optimize our ads!? How severely this will impact the Facebook Pixel remains to be seen. However, smart marketers are evolving, using new techniques and relying on eCommerce platforms and Google Analytics now more than ever before. These changes will only be good for our industry. Committed brands and marketers will evolve; we’re here to stay.

2. STRATEGIC CONTENT MARKETING

Although content marketing in eCommerce has been one of the fastest growing trends over the last year, it was put on the back burner for a couple months with the FB/Apple feud. However, it’s back and growing faster than ever before.

Smart eCommerce brands are ramping up their STRATEGIC content marketing initiatives, as pushing products alone does not work anymore. Neither does “blog and spray”. We must strategically target audience loyalty.

The game has changed. It’s not just about getting in front of your audience for impulse buys, it’s now all about creating strong memory structures in your target audience’s minds. Creating a strong memory structure means that your brand marketing creates a stronger emotional impact on your audience, leading them to think of you first before your competitors. Coca-Cola has been doing it for over 100 years. 

This means communications must have personal, emotive, and diverse content that reaches each major segment of your market in a unique way. We must speak differently to Grandma than Gen Z, to males than females, to potential customers vs VIP customers, etc. Otherwise, as brands are realizing, all their advertising and marketing is not profitable. Competition is too strong.

It’s time to evolve.

3. OWNED MARKETING

Let’s say you make 95% of your sales through Amazon. What if one day Amazon decides to copy your products and knock you down in the search rankings? Or a competitor copies your product and sells it cheaper?

Unfortunately, you will likely go out of business overnight. 

The same thing happens overnight with organic Google rankings, or Facebook ad accounts. These 3rd party platforms make a big change, POOF, gone. 

To reduce reliance on 3rd parties, companies now go to owned marketing channels. Owned marketing channels are where you have direct access to your customer base, without distractions, with minimal competition, and with no advertising costs. They are assets your company owns -- channels that can never be taken away. Email and SMS are the most effective owned marketing channels, but brands are rapidly expanding into new arenas. Brands are creating owned “communities” where they can directly interact with their audience. Some include texting communities, audio meetups or podcasts, or even video streams. 

In other words, they are the most profitable channel a brand can invest in, and the most sustainable for long-term growth.

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There’s a lot going on in the eCommerce world right now, which means there’s a lot to navigate.

If you need any help or want to speak to a strategic advisor, feel free to reach out to us anytime.

See you on the other side,

Ryan