With incessant reporting on the supply chain challenges that retailers faced leading up to the holidays, it was really anyone’s guess as to whether the November/December shopping peak would be a boon or bust.
Now that holiday season 2021 is one for the history books, we can safely say consumers didn’t let the gloomy outlook impact their search for the perfect gifts. U.S. retail sales rose 8.5% during the 2021 shopping season (from November 1 to December 24), powered mainly by rising ecommerce sales, which increased 11% according to a late December report from Mastercard.
As Covid-19 continues to shape the way we live, travel, work and socialize, it’s apparent it has also dramatically transformed consumer shopping habits and will continue to do so well beyond the pandemic.
Amid the twists and turns over 2021, we’ve seen some overarching e-commerce-related themes — from changes in consumer privacy, to the growing prevalence of rewards incentives, to the changing role of financial services providers — that companies should take note of as we move head in 2022.
Privacy Effect on Marketing
At long last, consumers and legislators are getting smarter about consumer data protection and privacy online. Because of this, retail brands will be forced to adapt marketing strategies due to the evolving privacy landscape.
Multiple states have legislation pending that will restrict websites from providing personally-identifiable customer data to third-parties. Add to that, the iOS Safari web browser, in use by approximately 24% of the global mobile browser market, already blocks third-party cookies completely.
These changes, coupled with the impending changes by Google to eliminate third-party cookie support by 2023, mean that the “traditional” methods used by many marketers and retail brands — often using third party cookies — will be phasing out.
With this in mind, brands will pivot their online marketing budgets to focus more on privacy-friendly channels such as affiliate marketing to comply with requirements in a privacy-sensitive world.
Importantly, affiliate programs do not convey any PII to third parties. Instead, affiliate marketing relies on first-party data, in which an affiliate, or publisher, has their own set of users. Marketers, in turn, utilize affiliate programs to access those users. Typically, affiliate networks pass anonymous transaction data between publisher and brand, such as order number and cart value, for tracking.
In addition to benefits from a privacy perspective, affiliate programs have long been known as one of the most efficient and high-ROI marketing channels for retailers, since marketing spend is based purely on performance, which adds to their appeal for marketers.
These qualities mean affiliate marketing will step up in both attention and spend from marketers, all while keeping compliant with today’s privacy concerns.
Rewards and Discounts
Consumers have come to expect rewards from online shopping, stemming from the widespread popularity of companies such as Honey, Rakuten, and Capital One Shopping. As a result, look for more companies to deliver online shopping rewards and discounts to meet those demands.
But today’s customers are savvier than ever. They no longer simply expect cash back from these proprietary apps and providers. They expect e-commerce rewards from all the brands they do business with.
From banking to web browsers, cash-back rewards are becoming an integral part of customers’ expectations. Indeed, an August 2021 survey of banking customers by American Banker/Monigle Agency found that “rewards and loyalty remain paramount to the customer experience, regardless of the type of financial institution or product.”
Products such as the Microsoft Edge web browser and the Acorns Earn investing app have differentiated themselves by incorporating shopping rewards to their services and allowing customers to earn cash back from shopping seamlessly while they use these products.
However, this early differentiator of offering cash-back rewards is rapidly becoming table stakes. In addition to the explosive growth of e-commerce, further magnified over the past two years, inflation is on the upswing; meaning customers are looking for ways to save as much money as possible on each shopping trip to offset costs from rising prices.
Due to this confluence of factors, e-commerce cash-back rewards are entering the mainstream. Look for them to increase in popularity even more in 2022 as platform and service providers make it increasingly fast and easy for existing providers such as financial institutions and other consumer services to deploy these programs.
New Financial Wellness Tools
The traditional role of a bank is, at its core, a tool to move money around. But now financial service companies are having their “aha moment” and realizing that they can be a helpful tool to touch every life stage, and every aspect of a customer’s lifestyle, going far beyond just a “moving-money-around, paying-bills” function.
Today’s banks must move beyond their legacy position as an administrative, back-office place in customers’ lives, and into more central roles in customers’ experience. From financial wellness to retirement planning, to teaching their kids how to manage money, more banks will connect with their clients for the things they do daily in 2022.
To this end, financial service providers such as Capital One, PayPal, Acorns, and Douugh have expanded their traditional “payments facilitator” footprint to offer e-commerce rewards earned from customers’ shopping. By introducing tools which make them valuable shopping companions for their customers, they’re providing a service that touches most aspects of their consumers’ daily experience — buying products and services online.
With the help of these shopping assistants, these banks and digital challengers alike are enabling their customers to be smarter with their money while online shopping, surfacing discounts and offering cash back as the shopper browses and buys. Shopping companions like these enable financial services providers to become more of a “life partner,” rather than just a utility their customers use to pay bills and move their money around.