And shop they did: between March and April of 2020, e-commerce penetration in the US skyrocketed from 16% to 33%, a level that, pre-pandemic, no one expected to hit until 2030. Globally, digital sales surged 71% — no, that’s not a typo — in Q2 alone, with numbers only increasing from there.* Suffice it to say, even the most optimistic forecasters didn’t see that coming.

With such explosive and, yes, unprecedented demand, e-commerce companies had to learn to adapt, and fast, to a whole new ecosystem. Those that got it right emerged stronger, setting themselves up for whatever comes next. The pandemic won’t last forever, but there will always be storms to weather and potholes to avoid. Let’s dig in to uncover the top e-commerce lessons of 2020 — and what they mean for the future.

The Seven Hard-Earned E-Commerce Lessons from 2020

Lesson #1: Always, always, always back up.

We’re talking logistics here, not files — though really, it’s 2021; back those up, too! Think of backup logistics as another form of insurance, protecting your business in case — well, in case of 2020. The pandemic strained global logistics carriers immensely, causing delays and hurdles at virtually every touchpoint. Domestically, commercial airlines were forced to slash their routes, leaving less cargo room for the likes of UPS, FedEx and USPS to transport packages. Internationally, shipments from China and other manufacturing hubs also saw significant delays as COVID-19 forced logistics carriers to change their operating procedures. 

The result? Shipping delays, lost packages, miscommunications — in short, logistics hell. Businesses who had invested in comprehensive backup logistics managed to swiftly switch gears, allowing them to return to business as usual...or something close to it, at least.

Lesson #2: Consumers can only buy what you can sell.

We know what you’re thinking: don’t hold excess inventory. But we’re here to advocate for smarter inventory management, not leaner. Shoppers can’t buy your product if it’s out of stock, costing you potential customers and frustrated existing ones. Packages can get lost, especially if logistics partners are overwhelmed. A single storm in your region can knock out your entire operation. With insufficient planning, any one of these exposures can spell bad news for your business. 

The solution? Assume things will go wrong, and plan for redundant inventory accordingly. Decentralize inventory across multiple warehouses to make sure products reach customers in the cheapest, most efficient manner possible. And while you’re tracking inventory, make sure your products are priced fairly by your 3P sellers. Charging two hundred dollars for a bottle of hand sanitizer is not a good look for your brand and is a sure-fire way to get delisted.

Lesson #3: Prevent any hold-ups in your logistics chain.

Businesses leaned on their third-party logistics partners more than ever before to meet changing customer needs. A reliable partner meant the complicated path from purchase to delivery would remain as uninterrupted as possible, even in challenging environments. 

The catch here is that businesses who relied on a single logistics provider to fulfill 100% of orders were left vulnerable as high demand caused supply-chain shortages. To avoid that exposure, it’s a good idea to maintain the ability to switch to merchant-fulfillment and manage your own logistics — complicated though they are — to gain a major competitive advantage. 

Lesson #4: Transparency matters.

As usual, Mom was right: honesty really is the best policy. In a crisis, things can get complicated fast, and open communication becomes essential on every front. The goal is to offer accurate and timely information to help manage expectations, shut down the rumor mill and keep customers happy.

Don’t have a PR agency? No problem. Connect with your customer base directly via social media to keep them up-to-date, and issue press releases when appropriate if a more formal statement needs to be made. Remember that customers tend to be a bit more, well, vocal during challenging times, so look for opportunities to connect with them in reviews and social media comments. They’ll appreciate the effort and repay you with their coveted brand loyalty. 

Pro tip: Don’t forget to communicate critical information to your B2B and retail partners, which helps them manage their downstream. Help them help you!

Lesson #5: Love the ones you’re with. 

A global crisis is not the time to implement that new customer-growth strategy you had planned. (Unless, of course, you sell toilet paper.)

Instead, take this opportunity to reconnect with your existing customer base. Join them on social media. Engage them through compelling brand partnerships. Team up with an influencer. Deliver meaningful branded content to their inbox. It’s not a revenue play, but Gallup research shows that companies that serve as “trusted advisers” to their customers see “50% high revenue/sales, 34% higher profitability and 63% lower customer attrition.” In other words, stick with them, and they’ll stick with you. 

Lesson #6: Don’t be afraid to think big.

Some businesses weather a crisis simply by treading water, and in a “whatever it takes” environment, that’s just fine. That said, don’t let a complicated market dictate your every move: there are still plenty of opportunities for entrepreneurs of all backgrounds to innovate, launch products and capture new markets. Hot chocolate bombs, anyone? 

Other entrepreneurs capitalized on the booming digital marketplace not through revenue, but by choosing to exit while things are hot. As the e-commerce space rapidly consolidates, experienced buyers have their eyes on homegrown brands they can refine and grow — and with more than $1bn in funding out there, this means sellers have a prime opportunity to consider: is it time to move on to whatever’s next?

Lesson #7: Learn from the past, but look to the future. 

Getting to 2021 wasn’t always easy, but what can sellers expect now that we’re here? We should continue to expect the unexpected, but opportunities abound for dedicated retailers. We’ve got four e-commerce projections for the coming year — and they bode well for business owners:

1. The customer stays king: The winners of 2021 will continue to focus on customer satisfaction:  delivering high-quality, desirable products, controlling logistics to meet demand quickly, and taking a customer-centric approach in every engagement. 
2. Third-party sellers reach the big time: The total value of merchandise sold by third-parties will cross +$350bn in 2021 — a YoY increase of about $50bn. We predict the market will grow to $1 trillion between 2025 – 2030. 
3. Consolidation accelerates: As the e-commerce market evolves, it will naturally seek out efficiencies. Third-party sellers will consolidate to eliminate redundancies and better serve customers, and the buyout market will double to more than $2bn in 2021. Service providers from agencies to SaaS products will follow a similar trajectory. 
4. Funding for e-commerce deals increases: The secret’s out: 3P e-commerce sellers are turning profits and blowing projections out of the water. Traditional lenders are eager to get into the space as it gains in credibility and acceptance, so sellers can expect bigger and better working capital funding options compared to previous years. Cha-ching!
   

2020 hit hard, but as business teaches us, on the flip side of every challenge is an opportunity. Consumer demand reached all-time highs, accelerating growth beyond all expectations. Companies are better prepared to face the unexpected, and there’s a renewed focus on customer satisfaction. And as the market continues to expand, more sellers have the opportunity to make a profitable exit. Thinking of doing the same? Connect with us anytime to discuss your options.