Looking Back to Get Ahead in the New Year

As the world has learned to coexist with the pandemic and move towards the ”next normal”, eCommerce growth has begun to stabilize. On a global scale, Insider’s recent Global eCommerce Forecast predicted that 2021 would end with approximately $4.921 trillion spent online, while spending in the United States peaked at $768 billion, according to a Statista report released in January 2022.

Even with the resurgence of in-person shopping since the height of the pandemic, eCommerce penetration has kept a positive trajectory. McKinsey found that consumer online penetration in October 2021 remained about 30% above pre-pandemic levels in the U.S., meaning that the overall exodus to digital storefronts will continue into next year.

With the table thus set for the continued importance of online shopping, it’s an ideal time to start planning your annual eCommerce strategy. Our recommendation is that whether you experienced success in 2021 or need to go back to the drawing board, the road to improvement lies in effectively using the experiences and data of the previous year.

So, where is the best place to start? We recommend that you refer to this article as you begin to analyze your 2021 commerce performance. The following sections encompass key metrics and KPIs that shed insight on your wins and losses over the course of the past year.

In this guide to using the experiences and data of the previous year, you’ll learn all about:

• Reviewing 2021 Performance
• The Customer Experience
• Order Fulfillment
• Traffic and Conversions
• Infrastructure Performance
• Sales Events (Peak Season)
• What If You Sell to Other Businesses?
• Taking Action
• Frequently Asked Questions about planning your annual eCommerce strategy

Reviewing 2021 performance

Reviewing your 2021 performance can be done relatively quickly if you focus on the right KPIs and customer behaviors at each stage of the buyer’s journey. The framework outlined below identifies some key considerations for surfacing both potential problems and hidden opportunities.

The Customer Experience

Customers will continue to demand a higher level of personalization and satisfaction throughout each stage of the purchasing process. Whether that includes curated product recommendations or having the ability to complete the shopping experience across multiple channels, it is paramount that companies focus on personalization to retain new and existing customers in an era of shaky brand loyalty. A McKinsey and Retail Industry Leaders Association Report further concluded that 76% of consumers switched retailers or changed their shopping behavior during the first year of the pandemic.

Even though tailoring the customer experience is a highly discussed topic, only 15% of retailers have fully utilized omnichannel personalization. Therefore, your company is (or could be) positioned to lead the pack by prioritizing personalization when evaluating your past year of performance.

When you evaluate your customer experience, here are some things to consider:

• Does your website content refresh often (for example, every day or every week)?

• Does your website serve up personalized content and offers based on shopper behavior?

• Does your website offer personalized product recommendations?

  • If so, do you use machine learning or AI to generate recommendations?
  • Do you provide recommendations in real time?
  • Do your recommendations perform well with new and existing customers?

• Can customers take advantage of BNPY (Buy Now, Pay Later), which saw 166% YoY growth in March 2021?

• Can customers take advantage of BOPIS (Buy Online, Pick up In Store) and/or curbside pickup?

• Can customers easily check their order status?

• Does your website offer live chat and if so, is it easy for customers to engage with the live chat?

If you answered “No” to any of these questions, you have identified an opportunity to improve customer experience. As you integrate personalization into your upcoming plans for the year, you can learn more about key elements of an engaging customer experience from the following Adobe Commerce blog posts:

• The Salesperson of the Year Is Your Digital Storefront: A Guide to Perfecting Your Customer Experience for Peak Season

Order Fulfillment

The pandemic has uncovered just how much customer expectations around fulfillment have increased; and conversely, how much patience has decreased. A three-month McKinsey study in late 2021 concluded that when faced with ‘out of stock’, only 13% of customers will wait for the item to come back in stock, while 70% opt to switch brands instead. Given the long-term reality of global supply chain issues, it is crucial that companies adapt to these changes by providing alternative options for customers, or at the very least, remaining transparent when shortages inevitably occur.

Forrester emphasizes the importance of centering the customer in their 2022 retail forecast, predicting that brands could lose up to 50% of sales on backordered items if they take no action to alert the customer.

Here are a few questions to ask yourself as you evaluate your company’s ability to handle out-of-stock situations:

• When an item is out of stock, does your website suggest in-house alternatives?
• Can consumers sign up for stock alerts for their favorite products?
• When an item is backordered, do you proactively communicate this to customers, so they are made aware of expected availability?
• Do you showcase inventory levels on your site to better set consumer expectations?
• Does your company offer pre-orders for any of your products?

If you’ve covered these bases, but still receive negative feedback from customers, consider taking a look at your operations to find opportunities to stabilize your supply chain, so that items run out less frequently.

Traffic and Conversions

Traffic and conversions are what separate a good site from the ones that are truly successful. In addition to preparing a well-rounded and fully functional customer experience, you must also ensure that your website is attracting the right visitors and leading to purchases.

In the first eight months of 2021, Adobe’s Digital Economy Index found that conversion increased to 4.1% on desktop and 1.9% on smartphones, which is indicative of a higher quality customer experience. It’s important to look at your traffic and conversions for all of 2021 (and even 2020) as well as during peak seasons and sales events.

Here are some KPIs to consider when you review your performance:

• Site traffic trends, especially how traffic compares between 2021 and 2020 – this can help inform projections for 2022
• What kinds of traffic (mobile, desktop, channel referrals, etc.)
• Which landing pages converted most and least
• Which offers and seasonal promotions converted most and least
• Which products were most and least likely to convert, and at which times of year
  • Were any of those items out of stock at certain times of the year

Infrastructure Performance

How quickly your webstore can load pages and process transactions is critical to both your digital customer experience and your sales. Buyers tend to leave pages that take too long to load, and slow page load speeds can also hurt your Google rankings.

To gauge how well your infrastructure is handling both normal traffic and transaction surges, look at two kinds of metrics:

1. Availability. These metrics tell you if your site was up and running consistently. Whether your eCommerce platform is on premises or on a third-party cloud infrastructure, you should be able to get an uptime/downtime report for the year. If you notice downtime during peak selling seasons, you might need to scale up your infrastructure and, as applicable, request stronger SLAs from your service providers.
2. Speed. These metrics tell you if your website is working fast enough. Examples include average page load times and transaction processing speed. Red flags like slow-loading pages and lengthy transaction processing delays suggest that your infrastructure needs attention.

If your metrics seem OK, but you have received negative feedback from customers, you can also work with your IT and development teams to test your website’s speed.

Sales Events (Peak Season)

When you look at your sales data for 2021, identify any particular days or time periods in which traffic and sales are exceptionally high. Preparing for these sales events (which may also be your peak season) is especially critical because they often represent a very large share of your annual revenues. Examples of sales events include Black Friday and Cyber Monday, Valentine’s Day and Easter for chocolate companies, late spring for swimwear companies, and so on. B2B companies can also have peak seasons that are tied to customers’ fiscal quarters or years.

After you identify these sales events and other planned periods of high traffic, take a deep dive into the strategies that worked—and did not—in 2021 and plan for this year’s biggest selling opportunities right now. This includes defining your eCommerce experience, developing marketing and sales strategies to improve performance, and identifying KPIs. Review the following posts in our Peak Season Performance blog series for help getting started:

• The Salesperson of the Year Is Your Digital Storefront: A Guide to Perfecting Your Customer Experience for Peak Season

What If You Sell to Other Businesses?

B2B businesses that sell to wholesalers or via distributors may have some special considerations. As noted above, their sales may not be related to holidays at all, but rather to quarterly budget deadlines and procurement cycles. Also, many businesses have reduced spending in the face of ongoing economic uncertainty, which means they need to find creative ways to increase revenues.

Two digital strategies that businesses may want to consider in 2022 are:

1. Upgrading their online experience: Since existing customers account for more than 75% of annual revenue for B2B organizations, it is crucial to set up an intuitive site that allows business buyers to engage and purchase online – with or without help from a sales rep. Key features you’ll need for B2B selling include customer-specific product catalogs and pricing, online price quotes and configuration, automated approval workflows, and support for seller-assisted shopping.
2. Adding a direct-to-consumer website: Some B2B business offer products that can be sold to both businesses and consumers. For example, this is true of many consumer-packaged goods companies that sell through grocers and through their websites. If your business has a product you could sell to consumers, consider adding a direct-to-consumer website to your eCommerce platform. This may be easier than you think with Adobe Commerce, which is designed for “hybrid” B2B and B2C use cases. And, with some careful planning, it’s also possible to minimize channel conflicts.

Taking Action

As you complete your look back on the previous year, you may see some obvious places to make immediate changes. For example:

• If your website crashed or slowed down during last year’s sales events (or for any high traffic event), you’ll want to make infrastructure a priority—and address it now rather than attempting to make just-in-time updates.
• If your mobile conversion rates are low but your mobile traffic is consistently high, you may want to consider redesigning your mobile experience.
• If your conversion rates are lagging overall, you may need to drill down into possible explanations—pricing, product messaging, page designs, and so on—and also choose new KPIs to monitor in the coming year.

We hope you’re feeling inspired to take a closer look at your eCommerce results from 2021, as well as your overall online customer experience. This 360-degree website assessment is a great place to start.

Frequently Asked Questions about planning your annual eCommerce strategy

What are the five KPIs?

Key performance indicators are measurements that can be quantified and used to gauge overall long-term performance. They help to determine a company’s operational, strategic and financial achievements and how they relate to competitors.

Although they can vary, the five most common KPIs are:

1. Customer satisfaction
2. Client retention rate
3. Profit margin
4. Revenue per client
5. Revenue growth

What is omnichannel personalization?

Omnichannel personalization is a marketing effort driven by data, in which you use a given channel to provide a personalized experience. It’s based on data you collect from user behavior on other channels. You can collect user data from anywhere and leverage it to give a personalized experience to customers through different touchpoints.

How can you improve page loading speed?

With so many sites to compete against, it’s important your site is optimized for speed.

To improve performance, consider:

• Optimize images – large images can considerably slow page loading times, so consider compression and changing file formats
• Choose an effective hosting platform – don’t be tempted to pay less and settle for a poor host with slow loading times
• Get rid of unnecessary plugins – a bloated site is going to run slower, so consider streamlining these