2016 in Review: The Biggest Trends that Impacted eCommerce
As we get ready to finish another trip around the sun, it is important to stop and reflect on the year behind us. The online channel continued to dominate retail news in 2016, pushing the envelope in terms of innovation, leaving brick and motor stores speeding to catch up. Online penetration continues to grow across almost every category, with mobile use becoming more critical.
Mega Sales Days Are Here to Stay and are Growing Fast
In 2015, we wondered how Amazon would follow up on the first ever Prime Day. This year, we saw Amazon have immense success on the second annual Prime Day, as sales events have been a major success in the ecommerce channel. And with the proliferation of mobile devices, shoppers can easily browse deals all day from their home, a train, or at work. Mobile technology allows retailers to connect with shoppers all day long, helping fuel impulse purchasing and deal shopping.
JD saw success with its anniversary sale event in China, which we expect to grow in 2017 and beyond. At the same time, Singles’ Day blasted past all previous records, dwarfing any other single shopping day anyplace in the world. China has an unprecedented number of connected, social shoppers that leave tens of thousands of reviews per item and see their phone as the main portal to purchasing a wide range of goods.
In the United States and United Kingdom, Amazon, Walmart, and almost every other ecommerce retailer continued to partake in both Black Friday and Cyber Monday. What made this year different was that the sales dates were extended significantly, with Amazon running deals for weeks both before and after the traditional Black Friday weekend.
With traditional sales days expanding and new ones becoming popular, it is not clear at which point shoppers will reach “sales fatigue.” But 2016 was not that year, and we expect to see retailers continuing to push these events bigger than ever before in years to come.
Walmart Refocused its Strategy
Walmart was the latest big American firm to fail to crack the Chinese market, instead opting to sell Yihaodian to JD, and opening a Sam’s Club storefront on JD. Like other big brands, Walmart will offer western goods in China through one of the local giants instead of on its own platform. For one of the biggest companies in the world, and by far the largest brick and mortar retailer in the US, this is a major step back in China. To help right the ship, Walmart made a big acquisition of Jet as a way to shore up its online operation in the United States in order to compete with Amazon. Walmart has pledged billions in order to continue its expansion online and will remain the biggest competitor to Amazon in the United States for the forseeable future.
Amazon Fresh Flexed its Muscles
Amazon Fresh had a breakout year in 2016, finally being rolled into the main Amazon website to help with visibility. Being part of the flagship Amazon website represents a major push for online grocery, as Amazon.com is one of the top 10 most visited websites in the United States. To better help shoppers consider Fresh, Amazon also removed its $299 yearly fee, a price that was causing sticker shock for many shoppers accustomed to paying shipping fees on a per-order basis at competitors like PeaPod. Instead, Amazon started offering shoppers the ability to be a Fresh member by paying $12.99 per month on top of their Prime membership.
Amazon was not only focused on the U.S. market, but launched Fresh in the UK. The UK market actually has a higher online penetration for online grocery, so it is an excellent market for Amazon to expand into. Finally, to further aid growth, Amazon expanded its Private label brands to encompass baby food, snacks and other home items to help boost the appeal of both Fresh and Prime Pantry.
Amazon is a leading firm in the online grocery category, but increased penetration across both the UK and US will drive demand for PeaPod, FreshDriect, Walmart Grocery, and many others. In the coming years we may start to see one or two retailers pull ahead in terms of offerings and market share, but right now the market remains small and divided among many competitors.
Looking Ahead to 2017
These are some of the key events we saw happen in 2016, and we expected 2017 to be another strong year as shoppers continue to look online to fulfill their various product needs. You can read our full 2017 predictions here.