One of the clear winners of the global coronavirus disease (COVID-19) pandemic is the e-commerce industry. It has seen a huge boom due to the physical lockdowns that have taken place in countries around the world. As consumers were stuck in their homes, the e-commerce industry grew in stature to become the superhero of the moment and meet most consumer needs.
As inoculation in the United States accelerates in 2021, it will be interesting to see how the e-commerce industry continues to capitalize on its growth momentum. Here are some big ecommerce trends to note.
Logistics. Since the COVID-19 outbreak, there has been constant pressure on the global logistics supply chain and the shipping industry, in particular, to deliver supplies on time and with minimal disruption. The just-in-time supply that the modern global economy relies heavily on has proven to be volatile in times of crisis, as countries, states and local governments constantly change their guidelines and regulations due to the challenges of COVID-19. The glut of supply, bottlenecks and price inflation of air freight, container transport and trucking are expected to continue to evolve in 2021 and into 2022.
An example of how a global logistics bottleneck recently exacerbated the delicate balance of the shipping industry is the huge container ship Ever Given, which got stuck for a few days in the Suez Canal. in Egypt, a major global artery for the shipping industry. . This painful bottleneck created another unexpected disruption in global shipping and caused a global chain reaction with further shipping price inflation, massive logistical re-routing and the rescheduling of late deliveries around the world. The container shipping industry is currently experiencing a severe shortage of space and capacity, as the freight utilization rate was already at an all-time high.
E-commerce sellers can expect further price increases in transportation costs due to the high demand and current volatility in the global logistics industry. Higher supply and transport costs could also lead to an inflation trend in consumer product prices in the near future.
Amazon is coming out. Amazon FBA (Fulfillment By Amazon) brand aggregators are the rising stars and hottest trend in the ecommerce industry. Also known as roll-up companies, FBA brand aggregators often buy accounts from Amazon FBA sellers that are profitable and pay a certain annual multiple of the company’s bottom line.
The major liquidity event related to the purchase of an Amazon FBA business by aggregators provides a tremendous opportunity for e-commerce entrepreneurs to successfully exit by selling their FBA business for millions of dollars. This reality has changed the paradigm of e-commerce sellers. It’s now safe to say that launching an online private label that is only successful on Amazon is a good business model that can lead to a life-changing exit for aspiring online entrepreneurs. That being said, the competition to find and buy the best FBA brands is going to intensify dramatically, and more institutional money should be shifted into this very hot trend.
Innovation. There is an incredible array of entrepreneurs and businesses that keep innovating in the e-commerce industry. They seem to continue to advance at lightning speed. Innovative solutions help online entrepreneurs build and operate online retail businesses. Many companies host online marketplaces which act as an independent online ecosystem where consumers can purchase products online. Each platform has its own unique characteristics that each ecommerce seller must adapt to successfully utilize the available opportunity in each market. The challenges that each platform brings, lead to an abundance of companies with innovative solutions that help ecommerce vendors to create and consolidate their success.
The e-commerce industry has seen explosive growth during COVID-19. There is an incredible amount of innovation behind the e-commerce industry’s noble effort to offer an endless variety of competitively priced products to be quickly delivered to your doorstep. Areas of innovation in e-commerce include software, marketing, packaging, logistics, communications, and finance.
Competition. As more and more players rush into the gold mine, the space simply begins to get more crowded. There are over 2.5 million estimated sellers in the US Amazon marketplace alone, and over 6 million Amazon sellers worldwide and the number of sellers is growing steadily. This means that to truly be successful in this space, an Amazon seller must become a true professional. Many Amazon sellers are starting to sell on the platform as a side business just so they can earn extra income. That reason might justify starting the Amazon Trail, but it’s not a good reason to stay and thrive in terrain that can sometimes prove to be harshly relentless and ruthless.
The sooner Amazon sellers treat their online business as a business and not a hobby, the faster they seem to grow, prosper and dominate in the space. As mentioned, many of them ultimately find a very successful outcome for all of their hard work in the form of an exit with great financial benefit.
Finance. E-commerce sellers are still underserved by traditional commercial banks. FinTech companies are stepping into this void to take advantage of the opportunity to fuel the e-commerce gold rush and its growing share of the retail pie. By truly understanding the profile and financial structure of e-commerce sellers, fintech companies are creating innovative technologies that quickly assess the risk of underwriting loans for e-commerce sellers and how to properly structure the collateral needed in the event of default. . More funding allows more products to be produced, purchased and offered online. It’s the magical cycle of e-commerce, which swept the world of consumerism just in time for a once-in-a-century global pandemic.
Institutional money from financial giants has already been placed on some online betting by allocating funds to large e-commerce companies.
Many types of trading players are pivoting to position themselves in the global ecommerce gold rush at this point, and there are so many parts and pieces to this pie. The next few years are expected to be even more eventful as the competition intensifies and the stakes rise every day.