To help us better understand what’s happened in the last few months and what will likely happen in the year ahead, Shopify released its annual “The Future of E-commerce Report” for 2021, which analyses information from:

• Reviews of multiple third-party data sources including Statista, Deloitte and McKinsey & Co
• Two dozen interviews with industry leaders and subject-matter experts
• Internal surveys of Shopify Plus merchants around the world

Key Trends

‍In the report, Shopify identifies 5 trends (as reported by Shopify Plus) it thinks will shape the future of e-commerce:

Trend #1: E-commerce boom fuels record online competition.

• Because of the pandemic, e-commerce sales are at an all-time high as years of growth happened in just weeks. However, global e-commerce growth may slow down marginally in 2021 before picking up again in 2022.
• Record e-commerce competition, fuelled by legacy wholesalers, global retail giants, and product categories not traditionally purchased online, is driving up customer acquisition costs.
• Many new competitors are not equipped to compete on customer experience (a top differentiator online), which gives an edge to brands with immersive omnichannel experiences.

Trend #2: New consumer behaviours are reshaping the future of retail.

• Since the pandemic, consumers worldwide are buying items that were rarely purchased online, like groceries, health and hygiene products, and home essentials.
• The pandemic has amplified the consumer’s desire for convenience and immediacy. The permanency of these shifts will be determined by how satisfied consumers are with online experiences.
• Unlocking the future of retail means developing offline-online innovations that allow consumers to try on products with augmented reality (AR) and buy anywhere they shop, as well as engineer virtual versions of retail shopping experiences.

Trend #3: Fulfilment emerges as a competitive differentiator.

• Today’s brands have a four-pronged fulfilment mandate: fast, free, sustainable and branded shipping.
• Brands will need to establish free-shipping thresholds to protect profit margins as consumers worldwide expect e-commerce orders to be delivered quickly.
• Brands can turn fulfilment into a competitive advantage by placing inventory closer to customers, automating returns and offering flexible options like curb side pickup.

Trend #4: Brand building challenged by marketplace dominance.

• Half of all global e-commerce sales occur on marketplaces, where consumers search for solutions rather than brands.
• Building a brand has never been more important—or more difficult. The good news is that socially conscious consumers are more willing to pay a premium for brands with a purpose.
• Brands should turn their marketplace product pages into rich, immersive experiences, while offering unique customized products through their own channels.

Trend #5: Retention becomes a top priority as acquisition costs spike.

• Customer acquisition costs are increasing worldwide across channels, with rates on Facebook rebounding to pre-pandemic highs.
• Globally, consumers and regulators are wary of big tech, prompting Google and Apple to consider making it harder to target ads across channels.
• To combat rising acquisition costs and advertising uncertainty, brands are experimenting with new channels like voice-powered shopping. They’re also prioritizing retention as well as rewarding and incentivizing existing customers to spend more.

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