The Role of Emotional Intelligence in e-commerce

Posted on May 13, 2022March 9, 2023 by Jennifer Ryan

The Role of Emotional Intelligence in e-commerce

Shopping is a highly emotional experience. Studies reveal that emotional impulses drive up to 95% of purchasing decisions.¹ The products and services we buy influence how we feel. As society emerges from the pandemic and online shopping continues to flourish, consumers desire a personalized shopping experience where they feel understood. In response, retailers must develop emotional intelligence to attract and retain customers.

Emotional Intelligence Drives Sales

Emotional intelligence refers to evaluating, understanding, and controlling emotions. There is an immense payoff when companies connect with customers’ emotions. Customers who like the companies they do business with are more likely to continue to buy. Additionally, 78% of loyal customers recommend favorite brands and products to friends and family.² Therefore, retailers must develop emotional intelligence to create a retail experience that is in tune with the feelings of their customers. Harnessing the power of emotional intelligence gives retailers the ability to target customers at the right time, through the appropriate channel, and approach them in a way that resonates on a deeper level.

Customer Experience is the New Battlefield

In today’s highly competitive market, conventional business wisdom is not enough to succeed. With countless online retail sites, it is increasingly difficult for brands to differentiate themselves. Creating an emotionally intelligent brand with an optimized website makes customers feel like part of the experience, not just part of a transaction.

For customers, it is critical to feel prioritized by the brands they consume. Research shows that 86% of buyers will pay more for a great customer experience.³ This sentiment has increased the need for brands to take their marketing and websites to a new level by incorporating empathy and emotional intelligence into digital experiences and customer communications.

Emotional Motivators

As eCommerce companies craft their websites, they must remember that customer purchases are inherently driven by emotional responses. A study by the Harvard Business Review studied customers’ interactions with hundreds of brands across all categories. It concluded that more than three hundred “emotional motivators” influence consumer behavior.⁴ Learning which emotional motivators lead to sales help brands strategically target the feelings that motivate customers to make purchases. These motivators provide retailers with valuable insights that can be applied when designing and improving a company’s products, services, and retail site.

Broaden Customer Reach through Digital Channels

Brands must be accessible to their customers on the internet and through their smart devices in this digital age. Tech companies like Amazon, which offer a hassle-free experience and expedited shipping, have encouraged some consumers to skip in-person shopping altogether. To compete with the convenience of retail giants like Amazon, Retailers must focus their attention on developing emotionally intelligent websites to win over shoppers and drive sales. Data shows that 86% of customers with high emotional engagement want access to a brand through numerous channels.⁵ Brands must become both emotionally and digitally intelligent so customers return for the experience as well as the product.

Multiple Payment Options Increase Sales

For a business to succeed, it is critical to offer easy and convenient ways for customers to pay. Providing customers with multiple payment options encourages sales. While credit cards are still the dominant online payment form, accepting alternative payment methods such as PayPal, debit cards, and cryptocurrencies maximizes sales. According to a study by PPRO 42% of consumers in the U.S. say they would not follow through with a purchase if their preferred payment method is not available.⁶ Retailers can also offer deferred payment through Buy now, pay later platforms that make purchases more achievable for some customers. Providing as many choices as possible allows customers to choose the way that works best for their needs at the time.

Building Trust

There is a significant connection between trust and closing a sale. To build trust, retailers should include extensive contact information on their website, provide chatbots, FAQs, and call center phone numbers to answer customer questions, and display customer reviews prominently. Online consumers rely on reviews when making purchasing decisions. Studies show that 93% of customers read reviews before buying a product.⁷ Additionally, retailers should promise shoppers a safe and secure checkout that protects them from fraud.

Incentive Programs

Customer loyalty is essential to growing a business. Repeat customers are extremely valuable to brands. Research shows that 70% of emotionally connected customers spend twice the amount when they are loyal to a brand.⁶ Retailers operating in markets with multiple competitors can set themselves apart from the competition by developing loyalty programs. Creating a customer loyalty program helps incentivize customers to become repeat customers by providing rewards for making repeated purchases. Discounts, rebates, rewards, free merchandise, and coupons motivate customers to spend more with brands and reinforce the consumer/brand connection. Focusing on loyalty programs helps brands align themselves with the segment of their customer base spending the most and deepens the relationship.

Consumers are looking for digital retail stores to go the extra mile and cater to their needs. Approaching the customer experience with emotional intelligence is necessary to drive sales and win repeat customers. Personalizing sales techniques to fit customer needs, being transparent and helpful, and creating incentives to encourage customers to be part of a digital community will drive sales and lead to future purchases. Building websites that connect with the emotions of their customers will lead to a significant return on investment.

Footnotes:

1)https://www.idslogic.com/blog/2017/11/using-emotional-intelligence-to-power-your-ecommerce-website.html

2)https://www.semrush.com/blog/word-of-mouth-stats/

3) https://www.forbes.com/sites/danielnewman/2020/06/23/4-actionable-customer-experience-statistics-for-2020/?sh=25c72d391a84

4)https://hbr.org/2015/11/the-new-science-of-customer-emotions

5) https://cxindex.com/company/blog/emotional-intelligence-the-key-ingredient-to-great-customer-experience/

6) https://www.volusion.com/blog/why-accepting-multiple-payment-methods-is-vital-for-ecommerce-success/

7) https://www.shopify.com/blog/15359677-why-online-store-owners-should-embrace-online-reviews

Building eCommerce For The Greater Good

Posted on April 6, 2022April 7, 2022 by Dennis OConnell

Building eCommerce For The Greater Good

As eCommerce reshapes the modern marketplace, many shoppers are spending more time and money online, leading eCommerce to grow, with sales expected to reach $5.5 trillion in 2022.¹ The accessibility of online shopping and the growing use of digital payment options have resulted in a dramatic shift in consumer shopping habits. While there are advantages to expanding online, the rapidly changing landscape has also created financial, economic and social benefits.

eCommerce Encourages Entrepreneurship

The eCommerce industry encourages entrepreneurship by reducing start-up costs. An eCommerce site can be launched for as little as $1,000, depending on the necessary features for business.² Whereas a significant amount of time and money is needed to open a physical store, an eCommerce store can be operational in just a few short weeks or days. Fewer barriers to start and a more significant market share encourage businesses of all sizes to compete. As more retailers enter the marketplace, sustained growth and competition lead to more innovation and online experiences. To keep customers coming back, retailers must focus on the customer experience and create compelling products that stand out. This focused attention helps attract new customers and incentivizes current customers to return to online shops, driving economic growth.

Widely Available Goods and Services

Businesses can connect with customers through online channels and have far greater reach than physical stores. It’s estimated that 2.14 billion people worldwide, roughly a quarter of the world’s population, will make an online purchase in 2022.³ ECommerce ensures customers can find everything they need in one place. Without the limitations of a brick and mortar store, online retail stores can offer a greater number of products to their customers. In addition to increased purchasing options, customers can browse and make purchases at their convenience. Online stores enable customers to spend their time shopping instead of driving to physical stores or waiting in long lines. Online stores are always open and provide 24/7 access to vital goods and services. Secure payment options, including digital wallets, credit or debit cards and crypto, facilitate payment and encourage sales.

More Affordable Products

The increasing number of online storefronts has resulted in competition among retailers to provide the best deal to consumers. This gives consumers the ability to compare prices and quality. Additionally, lower operating costs allow online retailers to sell products for less than traditional retailers. The demand for certain products encourages companies to create more affordable alternatives. With so many online options, consumers can find products at their desired price point, encouraging even less affluent customers to shop. Retailers can also offer deferred payment through Buy Now, Pay Later platforms that make purchases more achievable for customers. Giving customers the option to pay later can boost sales by making larger purchases more obtainable.

A Lifeline During Uncertain Times

A key benefit of online retail is that it is a lifeline for businesses and customers during turbulent times. As the world went into lockdown in response to COVID-19, commerce habits shifted to online purchasing. Shortages of essential items on store shelves resulted in many customers turning to eCommerce. Online shopping boomed because it was a safe and viable option to obtain necessary items. Companies that focused their efforts on online selling were more likely to survive and grow. Expanding their online presence also meant some businesses could continue to provide jobs to workers during a period of record unemployment and uncertainty.⁴

Career Opportunities

The growth of online retail translates to increased career opportunities. According to the data and analytics company GlobalData, the number of eCommerce jobs has increased by 180% from September 2020 to September 2021.⁵ Jobs in marketing, sales, design, web development and IT positions are vital to keeping an eCommerce company operating. While online websites automate many processes, the human element cannot be eliminated. Talented IT professionals are necessary to create and keep websites up and running, while creative sales and design teams contribute content to educate and connect with customers. Lastly, skilled customer service departments are necessary to handle customer queries.

Why Should Businesses Care

The eCommerce industry has revolutionized commerce worldwide. Entrepreneurs can now set up shop easier than ever, providing new opportunities. The increased number of online retailers has generated more diversity in goods and services, which helps keep costs manageable. During times of uncertainty, eCommerce offers a lifeline that enables consumers to find much-needed supplies. Businesses that shift to eCommerce can continue to expand while helping the greater good by providing employment, goods and services to everyone.

Footnotes:

1.https://www.emarketer.com/content/global-ecommerce-forecast-2022

2.https://www.bigcommerce.com/articles/ecommerce/ecommerce-cost/#conclusion

3.https://www.oberlo.com/statistics/how-many-people-shop-online

4.https://www.forbes.com/sites/johncaplan/2021/05/03/ecommerce-has-been-a-lifeline-for-small-businesses-during-the-pandemic-where-do-they-go-from-here/?sh=e85d61235871

5.https://www.globaldata.com/ecommerce-hiring-increases-180-y-o-y-social-commerce-trends-increasing-hiring-activity-finds-globaldata/

The Future of Retail Part I: Navigating Today’s Landscape

Posted on February 1, 2022February 1, 2022 by Jennifer Ryan

The Future of Retail Part I: Navigating Today’s Landscape

Nothing could have prepared retailers for Covid. Since the pandemic forced the first widespread lockdowns in living memory, some have collapsed, the pandemic hastening their demise after a lackluster few years. Others survived but are changing their business models and spaces, looking for new ways to maintain sales and profits. A third set are buoyant, having seen online sales rocket. All have been deeply affected by the events of the last couple of years and are no doubt wondering what the future will bring.

Whether 2022 sees the last of the lockdowns or not, Covid has changed the way we live and shop for good. The pandemic has not only accelerated digital transformation, it has also necessitated a total rethink of the future of retail in all its aspects: online and in-store, local, downtown or mall, delivered to your door or click-and-collect. Retailers now need to carve out a successful future in this new normal, with agility baked into their operations so they are well placed to respond to changing situations. But what will the new retail landscape look like? Now that the widescale lockdowns are over, what new consumer behaviors are here to stay?

Competition Heats Up Among The Giants: Amazon And Walmart

Apple, Facebook, (Google) Alphabet, Microsoft Amazon and Walmart all saw huge increases in sales and profits since the start of the pandemic. Amazon saw almost every aspect of their business rise, from web services to streaming to home delivery, accounting for 41% of all US online retail sales in 2021.¹ The company has opened Amazon Fresh grocery and convenience stores and is now moving into its own branded FMCG products with Aplenty. Expansion is inevitable, but the brand is keeping quiet about its plans.

Meanwhile Walmart’s ecommerce sales grew 74%, leading them to hire more than 235,000 store associates². Having largely left the Marketplace part of the business dormant for some years, it spruced up its offering, undercut Amazon for commission on some items and reached 70,000 sellers, projected to increase 146% by the end of 2022.³ Amazon’s marketplace is still far bigger, expected to have more than 3 million sellers in the US by the end of 2022 and 7.5 million globally according to Marketplace Pulse. But Walmart has physical stores, which means successful online vendors could find opportunities to sell offline too. The company also apparently has plans beyond retail and is aiming to develop its services in advertising sales and healthcare, where it will be jostling for position once more with main rival Amazon.

A Permanent Shift Towards Online Shopping

Consumers have grown to rely on online shopping, not only for essentials like groceries and toiletries, but also for goods and services to keep them entertained at home. During lockdown the winners were those businesses who, like Amazon and Walmart, were able to meet the surge in demand while maintaining a high level of customer service, as well as those who could quickly pivot their offering in response to changing customer needs.

All the surveys and statistics agree that the shift towards online shopping is likely to be permanent. According to IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years.⁴ A Qubit survey polling 1,500 US and UK customers in July 2021 found that nearly 86% planned to continue shopping as they had over the last 12 months⁵, despite physical retailers re-opening, and the intent was clear in all age groups. McKinsey reports that ecommerce remains at around 35% above pre-Covid levels.⁶ But online shopping brings slimmer margins and moving forward retailers will need to find ways of increasing basket spend and keeping warehousing and delivery costs down, as well as creating experiences that keep customers coming back for more.

Creating experiences fit for the future

BORN has worked with several leading retailers to ensure their online customer experiences are optimized for this new environment. Brooks Brothers, America’s oldest retailer needed to become ‘far more than a store’. Now they have reimagined the online experience, removing friction and telling the brand story more effectively. It’s easier for users to discover new products, educate themselves on the options available and become part of the loyalty scheme to reap future benefits.

Meanwhile, world-leading luxury watch brand Rado needed to create a better experience for mobile. The BORN team redesigned the mobile interface, enhancing the content and navigation to provide a better showcase for products and tackling content management and eCommerce functionality. These retailers are future proofing their online experiences, ensuring that they measure up to customers’ ever-growing expectations.

Delivering For Customers, And The Environment

Efficient delivery comes at a cost, to customers, the retailer and to the environment. But it’s also key to the convenience of online shopping. What could it look like in the future?

Click-and-collect has solid advantages for retailers, driving footfall to physical stores where customers may make additional purchases as well as being a low-carbon option. Businesses finding themselves with an abundance of space are dedicating an increasing proportion to fulfilling click-and-collect orders.

Speedy home deliveries are more of an issue. The problem with next-day deliveries is that it means half-empty vans are doing the same trips, sometimes multiple times a day. That ‘last mile’ comes at a high carbon cost. There’s a commonly held view that people will insist on speed, but a study for a major retailer in Mexico found that slower shipping was acceptable to 71% of customers if they were told it meant saving a certain number of trees, calculated to be equivalent to carbon emissions caused by faster shipping.⁷ The author of the study is hoping that giants like Amazon or Walmart might take note for the future; in the UK ASOS are already offering reduced shipping rates and a discount code for ‘no hurry’ delivery.⁸Perhaps consumers who expect super-fast delivery, can be weaned off it in the interests of the environment, at least for the most part.

Amazon are beginning to invest in electric vehicles for the ‘last mile’, with their robot delivery system Amazon Scout operating in four US states and the business further developing the technology in the UK.⁹ For an even more futuristic, if rather terrifying option, ANYbotics and Continental’s concept combining driverless shuttle vehicles with robot delivery dogs looks uncomfortably like something from dystopian TV series Black Mirror.¹⁰

Footnotes

Amazon Clobbers Competition, Accounting for Over 40% of US Retail Eccomerce Sales In 2021, eMarketer, https://www.emarketer.com/content/amazon-clobbers-competition-us-retail-ecommerce-sales-2021

How Walmart is Responding to Covid-Related Challenges, Forbes, https://www.forbes.com/sites/edwardsegal/2021/09/01/how-covid-repeatedly-put-walmart-to-the-test/?sh=4b190a6617bd

How The Pandemic Helped Walmart Battle Amazon Marketplace For Sellers, Reuters, https://www.reuters.com/business/retail-consumer/how-pandemic-helped-walmart-battle-amazon-marketplace-sellers-2021-04-14/

COVID-19 Pandemic Accelerated Shift To E-commerce By 5 Years, New Report Says, TechCrunch, https://techcrunch.com/2020/08/24/covid-19-pandemic-accelerated-shift-to-e-commerce-by-5-years-new-report-says/

Consumers Plan To Keep Shopping Online, Despite Stores Reopening, Fashionunited, https://fashionunited.uk/news/retail/consumers-plan-to-keep-shopping-online-despite-stores-reopening/2021081257089

US Consumer Sentiment and Behaviors During The Coronavirus Crisis, McKinsey & Company, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis

How To Shop Online More Sustainably, NY Times Wirecutter, https://www.nytimes.com/wirecutter/blog/shop-online-sustainably/

How Does Your ASOS No Hurry Delivery Service Work?, ASOS, https://www.asos.com/customer-care/delivery/how-does-your-asos-no-hurry-delivery-service-work/

Is Amazon’s Scout Delivery Robot Coming to the UK and Europe Soon?, Pocket-lint, https://www.pocket-lint.com/gadgets/news/amazon/153671-is-amazon-s-scout-delivery-robot-coming-to-the-uk-and-europe-soon

This Robot Delivery Dog Can Bring Your Parcel Right To Your Doorstep, Mashable, https://mashable.com/video/driverless-vehicle-deploys-robot-delivery-dogs

How Order Management Systems Can Streamline eCommerce

Posted on January 26, 2022February 2, 2022 by Jennifer Ryan

How Order Management Systems Can Streamline eCommerce

The Covid-19 pandemic has irrevocably changed eCommerce. By April 2020, the industry experienced ten years’ worth of growth in three months resulting from a shift in consumer spending habits.¹ The unprecedented demand for online goods stressed supply chains and forced retailers to reevaluate their operations. As the online shopping trend continues, competition among online retailers has never been greater.

Brands must be resilient and agile to compete against retail giants like Amazon. To offset the difficulties caused by an online-only ecosystem, retailers must find new sales channels and marketplaces to broaden their reach. However, a larger digital footprint and increased sales channels result in a complexity that can be overwhelming when combined with already steep customer expectations.¹ An order management system (OMS) is essential for a business to grow, embrace multi-channel retail, and compete with other online retailers while communicating effectively with customers.

What is an Order Management System?

An OMS is software that enables an eCommerce store to manage the order fulfillment process more effectively. It collects data such as order information, customer data, and inventory levels which allows for the management of critical business areas.² An OMS streamlines the process by unifying data and making the fulfillment process as cost-effective and automated as possible. OMS systems allow operators to manage orders coming in from multiple sales channels and process them from multiple fulfillment points.² An effective OMS can help with various processes and tasks to ensure a business stays in sync and fulfills its promises to its customers.

Key Benefits of Using an OMS

OMS tools are critical because they are more than just a means for shipping orders. Most eCommerce brands cannot grow without an effective OMS in place.³ These tools keep critical business processes organized and running smoothly as a business grows. Having a good OMS in place will also reduce human error, an enormous time and money waster for businesses. Reducing manual tasks will create time for solving complex customer problems, focusing on big picture projects, and optimizing the brand experience.⁴ An effective OMS is essential for sustainable growth and a smooth customer experience.

Customer Satisfaction

Customers have grown accustomed to personalized, efficient, and cost-effective order fulfillment. As a brand grows, systems will be tested, and inefficient processes can result in negative customer experiences and potentially lost profits.⁵ Since order management systems are automated and integrated across every step, brands can ensure a consistent customer experience across every channel. From logging orders to organizing fulfillment to managing invoices and returns, an effective OMS covers each step of the order process.⁶ The goal of the OMS is to get the product to the consumer as efficiently as possible. This is accomplished by managing the journey of each item in the customer’s order from the moment the product goes into the shopping cart until the product arrives on the customer’s doorstep.⁷ A good OMS will integrate with fulfillment centers to keep customers updated on the status of their orders.⁸ By optimizing each step in the process, an OMS reduces shipping and overhead costs and increases the quality of data collected.

Managing Product Availability and Inventory Insights

Selling products across multiple platforms can make it difficult to unify sales data. An OMS can integrate with each platform, collect all sales data, and bring that information together in one accurate and accessible place. Over time, this can provide insights into customer behavior and identify popular products and SKUs.⁹ Based on the collected data, inventory management decisions like what to order from suppliers and which fulfillment locations need new stock are simplified.

Other Considerations

The eCommerce landscape changes rapidly, so a good OMS should provide the flexibility and functionality necessary for a business to grow. It should be intuitive and easy to use by non-technical retail and marketing staff and integrate with existing company technology and infrastructure. Opening new fulfillment options, changing promotions and pricing, and setting up workflows should be straightforward.¹⁰ The ideal OMS will fit seamlessly with the eCommerce system to enhance customer experience and meet business sales goals.

Order Management Systems are the way of the future in the eCommerce world. This innovative software can simplify and streamline every system and process within the supply chain by reducing human error, enhancing delivery speed, simplifying multi-sales management, and forecasting future trends. In the competitive world of online retail, an OMS that optimizes the speed and accuracy of order processing across channels can positively affect the customer experience and give your business an edge over competitors. A seamless order fulfillment process provides an opportunity to enhance brand reputation, provide a positive customer experience, and grow revenue.¹¹ Adopting modern, integrated OMS software is the only way for businesses to keep up with the competition and customer expectations by streamlining the entire virtual business process.

Footnotes

1)https://www.bigcommerce.com/blog/order-management/#what-is-ecommerce-order-management

2)https://richpanel.com/blog/order-management-system/

3)https://www.bigcommerce.com/blog/order-management/#what-is-ecommerce-order-management

4)https://kibocommerce.com/blog/order-management-system/

5)https://www.bigcommerce.com/blog/order-management/#what-is-ecommerce-order-management

6)https://paperform.co/blog/order-management/

7)https://www.bigcommerce.com/blog/order-management/#what-is-ecommerce-order-management

8)https://www.brightpearl.com/ecommerce-order-management

9)https://www.shopify.com/enterprise/order-management-system-oms

10)https://www.smartsheet.com/content/order-management

11)https://paperform.co/blog/order-management/

What’s Causing The Supply Chain Breakdown And Why eCommerce Should Care

Posted on December 23, 2021December 23, 2021 by Jennifer Ryan

What’s Causing The Supply Chain Breakdown And Why eCommerce Should Care

Supply chain disruptions are causing price increases and a growing shortage of goods as the global economy attempts to deal with the ongoing Coronavirus pandemic. Retailers must navigate an unprecedented set of challenges as they contend with delays, stock issues, and customer expectations.¹ As lockdowns lift, extraordinary demand for goods has outpaced supply. Consumers are ready to spend money they saved during 2020 and 2021 and are accustomed to readily available goods and nearly instant gratification.² Unfortunately, the global supply chain bottleneck has resulted in record shortages of once easily accessible products, such as household items, electronics, and automobiles.

What Caused The Supply Chain Crisis?

The pandemic disrupted nearly every aspect of the global supply chain. It placed enormous strain on the usually invisible manufacturing, transportation, and logistics pathway that delivers goods where needed. The supply chain bottleneck led to PPE shortages such as N95 respirators, gloves, cleaning supplies, and other critical care items needed in medical settings, which threatened our ability to fight the COVID-19 threat.³ The supply chain is like an ecosystem with each part playing an essential role and one unfortunate event can result in repercussions downstream. As the world closed down in response to COVID-19, consumers discovered the safest way to buy products was through eCommerce retailers. Skyrocketing demand for products combined with limited supply led to unprecedented delays worldwide.⁴ The shipping industry did not have the technology or processing ability to cope with the extreme shift in consumer behavior, and items became backlogged. The disruptions stemming from the pandemic combined with economic issues, such as energy shortages, production shortages and issues at key shipping ports have all contributed to the supply chain problems eCommerce businesses face today.

Chip Shortages

COVID-19 mitigation strategies reduced the production of goods and services as many factories entered lockdowns. Workplace shutdowns in chip manufacturing companies in countries like China, Japan, Taiwan, Vietnam, and South Korea have resulted in a global shortage. This shortage affects the production of electronics like laptops, phones and webcams, appliances, and new cars in which chips are vital components.⁵ Currently, production of these items remains severely limited, while demand remains high.

Labor Shortages

Much of the world is facing labor shortages. As companies struggle to find workers for their warehouses, production has struggled to keep up with demand. In August 2021, 4.3 million Americans quit their jobs, and the warehouse industry recorded 490,000 job openings.⁶ The labor shortage forces companies to go to great lengths to attract workers. Companies are increasing wages to keep up with rising prices, and in some cases offering incentives like free college tuition. Even with these attractive incentives, many potential workers have difficulty reconfiguring their post-covid work futures and are reluctant to return to work as the risk of COVID-19 infection persists.

The Energy Crisis

In countries with manufacturing economies, energy shortages and power cuts have forced productivity to slow in factories, threatening already stressed supply chains. Natural gas supply has failed to meet post-pandemic demand as the energy sector has recovered more quickly than anticipated following a year of reduced coal, oil, and gas extraction.⁷ Over 20 Chinese provinces are rationing electricity to meet energy efficiency and pollution reductions targets.⁸ However, there is insufficient renewable energy to replace natural gas, and a coal shortage worsens matters. Global prices for goods and resources produced in China, such as steel and aluminum, will significantly increase if factories contend with widespread power shortages.

Transportation and Logistics Challenges

A global shipping problem is compounding the supply chain crisis by making it difficult for sellers to obtain needed goods, even if they are available. Transportation bottlenecks at ports such as Los Angeles, Long Beach, and Oakland have increased wait times for ships to unload cargo.⁹ A robust trade of goods strained the available supply of shipping containers, ships, and port operations worldwide.

When the pandemic halted international trade in April 2020, empty containers were no longer collected and redirected for reuse. Over a year later, shipping companies are still trying to get containers to ports where they are needed most. In response, the cost to ship items has risen by 480%, which makes some international trade no longer profitable.¹⁰ To complicate matters, a shortage of dockworkers and truck drivers prevents goods from being offloaded and reaching their destination in a timely fashion.¹¹ The lack of these critical components results in more scarcity in the supply chain, leading to even more shortages and price increases.

What eCommerce Retailers can do to Mitigate the Impact of the Supply Chain Crisis?

The global supply chain is a fragile and highly interconnected ecosystem. When unprecedented issues occur, they produce a ripple effect that eCommerce retailers can feel on the other side of the world. Businesses will need to be proactive in their approach to managing these effects. Optimizing operational performance and prioritizing efficiency at every leg of the supply chain is essential to ensure the best use of existing capacity. Retailers should consider implementing productivity improvements such as redesigning warehouses and investing in lean operations to increase productivity and mitigate the risk of disruptions caused by labor shortages.¹²It is imperative retailers understand precisely how their supply chain functions. It can be helpful to locate and work with alternative suppliers to ensure a steady flow of necessary parts and materials.¹³ It is tempting for retailers to concentrate the majority of their business with one supplier in pursuit of volume discounts, but fragmenting the supplier base can help to ease capacity constraints and create new opportunities for sourcing materials as demand for products continues to fluctuate.

If a business can source more of their needs locally, that can also be helpful. Though adding new suppliers is not an easy solution and may result in a higher cost of sourcing materials, it can help a business mitigate risk and avoid disruptions to production.¹⁴ Additionally, eCommerce retailers should consider allowing double or triple the lead time for ordering stock due to potential shipping delays.¹⁵ It’s essential to stay ahead of seasonal curves when consumers are more inclined to make purchases. Finally, retailers should maintain customer expectations of quality while being honest with their customers and communicating any potential delays.¹⁶ Customer expectation management is critical when it comes to protecting brand reputation.

1)https://abcnews.go.com/Politics/whats-causing-americas-massive-supply-chain-disruptions/story?id=80587129

2)https://cnet.com/features/you-shopped-like-never-before-the-supply-chain-couldnt-handle-it/

3)https://abcnews.go.com/Politics/whats-causing-americas-massive-supply-chain-disruptions/story?id=80587129

4)https://www.bloombergquint.com/gadfly/supply-chain-disruptions-almost-too-many-reasons-to-count

5)https://www.bloombergquint.com/gadfly/supply-chain-disruptions-almost-too-many-reasons-to-count

6)https://abcnews.go.com/Politics/whats-causing-americas-massive-supply-chain-disruptions/story?id=80587129

7)https://www.bloomberg.com/news/articles/2021-09-27/europe-s-energy-crisis-is-about-to-go-global-as-gas-prices-soar

8)https://blog.edesk.com/resources/us-supply-chain-crisis/

9)https://www.nytimes.com/2021/10/22/business/shortages-supply-chain.html

10)https://blog.edesk.com/resources/us-supply-chain-crisis/

11)https://info.waxie.com/blog/key-factors-responsible-for-supply-shortages-in-2021

12)https://www.mckinsey.com/industries/retail/our-insights/ten-steps-retailers-can-take-to-shock-proof-their-supp ly-chains

13)https://www.mckinsey.com/business-functions/operations/our-insights/risk-resilience-and-rebalancing-in-global-value-chains

14)https://blog.edesk.com/resources/us-supply-chain-crisis/

15)https://www.modernretail.co/startups/dtc-briefing-how-supply-chain-shortages-are-impacting-e-commerce-operations/

16)https://blog.edesk.com/resources/us-supply-chain-crisis/

17)https://blog.edesk.com/resources/us-supply-chain-crisis/

Why Retailers And Consumers Are Embracing The Buy Now, Pay Later Trend

Posted on December 7, 2021December 7, 2021 by Jennifer Ryan

Why Retailers And Consumers Are Embracing The Buy Now, Pay Later Trend

As the popularity of online shopping continues, buy now, pay later (BNPL) platforms are becoming a popular way for businesses to offer their customers flexible payment options. Though larger companies traditionally used this service, BNPL is becoming increasingly popular with companies of all sizes.¹ Providers like Klarna, Affirm, and Afterpay enable shoppers to purchase products online from participating merchants and pay for them through a series of installments, often interest-free.² This app-based hybrid version of layaway and credit is growing in popularity with retailers and consumers alike as brands like Amazon, Walmart, and Target offer installment plans to increase sales.

Buy Now, Pay Later is Gaining Momentum

The continued growth of online shopping resulting from the pandemic has catapulted BNPL into the mainstream. While BNPL was gaining popularity leading up to the pandemic, BNPL deals exploded when retailers were forced to close brick and mortar stores. Covid-19 produced a shift in consumer spending habits as an increased number of consumers spent more time at home and embraced e-commerce.³ BNPL generated almost $100 billion in transactions in 2020 as millions of shoppers financed their purchases.⁴ The pandemic left millions of consumers out of work and in need of greater flexibility with their purchases, which increased the demand for easy online financing options. Unlike credit cards which were intended to be used multiple times, BNPL solutions are applied to individual transactions, which appeals to consumers wanting to make less of a financial commitment.

Advantages for Consumers

Consumers are more likely to make significant purchases if they can pay for them in installments rather than the total price upfront. Popular among people under thirty with tight finances and less available credit, consumers welcomed the ability to delay payment for goods and access financing.⁵ Many consumers see BNPL as an appealing alternative to racking up another high credit card balance. BNPL services claim they are a better alternative to traditional banking and credit cards because it is easy for consumers to get approved for this type of loan, even with a low credit score.⁶ Provided consumers stick to the payment terms, BNPL offers the chance to pay in interest-free installments. Though BNLP offers many advantages to all parties involved, consumers should ensure they understand the repayment terms. Late payments have the potential to affect an individual’s credit score, and customers who default on their payments may be banned from future purchases.⁷ BNPL is a loan, and consumers should plan their purchases with their income and expected expenditure in mind.

Advantages to eCommerce

Just as BNPL is a preferred payment method for many consumers, it can also be useful for businesses. By integrating BNPL, companies can attract new shoppers, improve customer relations, and increase sales. It is important to provide many different payment options to give customers their preferred choices and appeal to as many potential first-time shoppers as possible.⁸ Consumers increasingly utilize BNPL platforms, which means companies willing to work with BNPL providers will appeal to a new set of customers. Millennials and Gen Z are more likely to use BNPL platforms when shopping online than any other age group, so if a business is interested in attracting these age groups, they should strongly consider using a BNPL platform.⁹ Additionally, customers are more likely to return to a business that offers BNPL options, and with so many companies providing this service, it is essential to remain competitive.

BNPL delivers a quick and straightforward payment process and is a viable alternative to traditional payment methods. BNPL platforms allow a business to get paid in full immediately, while the consumer has the instant gratification of receiving the product directly at a low upfront cost. In exchange for providing interest-free loans to customers, these platforms take only around 5%-6% of the purchase cost from retailers.¹⁰ If the customer does not make the payment on time or the payment is not collected, businesses do not have to worry about lost revenue.

Why Buy now, pay later platforms can be a valuable tool for both businesses and consumers. The potential for BNPL platforms to drive sales and increase income with no risk to the company is an appealing prospect, and customer demand for this payment method is high. While consumers must be mindful of their purchases and not spend beyond their means, BNPL can be a great way to finance items if used responsibly. With research from Kaleido Intelligence estimating that online consumers will double the amount of money they spend using BNPL to $680 billion by 2025, there is a massive opportunity for businesses to profit.¹¹ BNPL is here to stay for the foreseeable future.

Footnotes

1) https://www.paymentsjournal.com/buy-now-pay-later-what-businesses-need-to-know/

2)https://www.wsj.com/articles/when-to-buy-now-pay-later-and-when-to-just-pay-now-11631957401

3)https://www.cnbc.com/2021/09/21/how-buy-now-pay-later-became-a-100-billion-industry.html?utm_term=Autofeed&utm_medium=Social&utm_content=Tech&utm_source=Facebook#Echobox=1636972847

4)https://www.forbes.com/sites/ronshevlin/2021/09/07/buy-now-pay-later-the-new-payments-trend-generating-100-billion-in-sales/

5) https://www.paymentsjournal.com/buy-now-pay-later-what-businesses-need-to-know/

6) https://www.investopedia.com/buy-now-pay-later-5182291

7)https://www.wsj.com/articles/when-to-buy-now-pay-later-and-when-to-just-pay-now-11631957401

8)https://www.paymentsjournal.com/buy-now-pay-later-what-businesses-need-to-know/

9)https://www.cnbc.com/2021/08/07/why-millennials-and-gen-zs-are-jumping-on-the-buy-now-pay-later-trend.html

10)https://gocardless.com/en-au/guides/posts/how-does-buy-now-pay-later-affect-your-business/

11)https://www.businesswire.com/news/home/20200922005066/en/Buy-Now-Pay-Later-Digital-Spend-Led-by-Klarna-PayPal-Afterpay-to-Double-by-2025-Reaching-680-Billion—Kaleido-Intelligence

Recommerce: Exploring Reselling Within eCommerce

Posted on November 19, 2021November 19, 2021 by Antony

Recommerce: Exploring Reselling Within eCommerce

The resale market is getting a makeover. Companies are finding ways to take back used consumer goods and repurpose or resell them to interested customers. Recommerce refers to the buying and selling of previously owned items and is set to grow at a rate of 11x that of regular retail.¹Consumers are keen on the idea of recycling and repurposing and have been increasingly buying secondhand goods. In response, the number of online resellers has exploded to keep up with consumer demand for affordable and sustainable alternatives to buying new. While the concept of reselling goods is nothing new, the way that consumers and sellers are coming together is currently evolving.² Recommerce platforms have enabled peer-to-peer transactions to increase. Even high-profile brands recognize the opportunity resale has to offer, and have created their own recommerce marketplaces. Recommerce is more than just a cost effective way to achieve sustainability; it is a business opportunity rooted in circular economic principles.

The World of Recommerce is Changing

Once confined to brick and mortar stores, sites like eBay and Etsy now provide a platform that allows buyers and sellers to purchase and sell items in a thrift-like marketplace. However, a plethora of online startup recommerce brands like Poshmark, Mercari, Tradesy, ThredUP, and The RealReal have allowed the industry to grow to new heights.³ While eBay and Etsy allowed for sellers to list just about anything for sale, these newer sites have boosted transactions by building online communities and using data to learn which brands are currently trending. Poshmark’s annual report revealed consumer buying habits depend greatly on generation. Baby Boomers favored well-known, higher-end brands, like Coach and Michael Kors, while Generation X preferred more mid-priced goods like Tory Burch, Kate Spade and Patagonia. Millennials are most likely to purchase goods from brands that would typically be found in an American mall, like Nike and Antrhopologie, and Gen Z purchased secondhand items from across the spectrum. Their top Poshmark brands are Gucci, Adidas, and Brandy Melville.⁴

Recognizing the success of recommerce among peer-to-peer platforms, large companies, particularly clothing retailers, are seizing the opportunity to connect with consumers like never before. For example, buy-back campaigns create incentives for recycling and strengthen the relationship with consumers by offering a way to address concerns over sustainability.⁵ In moving towards a circular economy, companies can generate profits and eliminate waste by keeping materials in use for as long as possible. The cost effectiveness of recommerce combined with the ability to strengthen the bond between retailer and consumer makes it an appealing strategy for businesses.

Recommerce is Gaining Traction

An emphasis on conscious consumption has grown in the past few years, but changes in attitudes and actions have increased significantly in response to the pandemic. Consumers are concerned about the effects of their purchases and are re-evaluating their priorities and choices. By changing their buying habits, consumers can continue to shop while still caring about sustainability, and resellers can earn extra money, save space and avoid waste.⁶

Already gaining popularity pre-pandemic, recommerce websites received a huge boost when COVID-19 forced many stores to close their doors and individuals to tighten budgets.⁷ With more free time, reliable internet (5G), and a desire to escape the pandemic, shoppers discovered an endless aisle of secondhand goods to browse on the internet. Despite decreased disposable income, retail therapy continued to thrive as recommerce websites connected shoppers with affordable goods without ever leaving home. To make the situation even more appealing, apps like Poshmark accept almost every form of payment including credit or debit cards, Affirm, Apple Pay, Google Pay, PayPal, and Venmo.⁸ All of these factors encourage shoppers to visit recommerce marketplaces and contribute to the growing recommerce economy.

Benefits of Recommerce

Both individuals and large companies can benefit from recommerce. While individuals have much to gain from peer-to-peer platforms that allow for an easy exchange of goods, large companies are finding different ways to capitalize on the recommerce industry. Consumers are concerned about the negative impact of their purchases on the environment and are looking for ways to reduce their consumption. In response, retailers are developing creative solutions to source and reuse materials for new products so that consumers can feel better about buying their products.

Upcycling, the act of converting a used product into something new,⁹ is a concept that is being adopted by many notable companies such as Timberland, Adidas, Zara, and Patagonia to name a few. Timberland is reusing rubber from used tires for the soles of many of its boots. Similarly, Adidas has produced nearly 6 million pairs of shoes using recycled ocean plastics, and Zara is producing a line of denim made exclusively from recycled denim waste.¹⁰ Programs that provide customers with incentives for recycling such as Patagonia’s Worn Wear initiative encourage customers to return used goods to be refurbished and sold in exchange for credits towards future purchases once received.¹¹ All of these measures are cost effective means of sourcing materials.

Recommerce is Here to Stay

Many notable companies are embracing the concept of recommerce as a way to reconnect with customers. There is a changing consumer mindset regarding ethical and environmental issues. Younger consumers care deeply about the environment and will continue to demand accountability from companies.¹¹ According to a study conducted this year by Green Print, an environmental technology company, 75% of Millennials and 63% of Generation Z are willing to pay more for an environmentally sustainable product.¹³ In many cases, younger consumers prefer secondhand products because they are more affordable and better for the environment.

Recommerce offers an avenue for retailers to acquire new customers who might not have previously purchased full-price items in the past. For example, Levi created a buy-back and resale program where customers return their used denim in exchange for a gift card. Levi then sells the used clothing at a fraction of their original cost on the store’s website. This allows Levi to reclaim and authenticate its goods at a low cost to them, and turn a profit on an item that they have already sold once. This is a win-win as shoppers know they have made a sustainable purchasing decision, and Levi can earn additional profits, protect the authenticity of their brand, and strengthen the relationship they have with their customers.¹⁴

There is real consumer demand for sustainable recommerce models. Consumers will seek products from brands that align with their values and will expect retailers to offer transparency regarding how they source materials and manufacture goods. Through the implementation of recommerce initiatives companies can save resources, restore value to used items, improve brand image and generate profits. With increased pressure on the retail sector to act more socially and environmentally responsible, recommerce offers an opportunity for businesses to succeed in the post-pandemic world.