Ecommerce: Trends, Data, and Sales Drivers
Estimated reading time: 8 Min
In the wonderful world of ecommerce, we find experts like Leslie Alonso, our guest today on EcommerceAlCubbo, who is the current Director of Operations at Pabis Retail and has extensive experience in analytics and data monetization, supply chain, trade marketing, and strategic thinking.
Don't miss this article! Learn how the channel is moving and actions you can implement in your ecommerce to improve your growth and sales levels. We'll talk about…
- Consumer trends before and during the pandemic, winning categories
- Drivers that influence demand
- Digital analytics. The power of data for decision-making
- Data volume and how to turn it into money
- Tips to boost online sales
- And much more!
Let's get started…
What's the most curious thing that's happened to you in ecommerce?
"For the last Christmas, I went into a well-known Marketplace in Mexico. I was looking for gift wrap paper, found some gorgeous styles at very low prices, bought them, and when the order arrived, they were tiny sheets for writing letters—nothing like what I expected. In the description, the product had no measurements and said gift wrap paper, which didn't match reality at all."
"When I got together with my family at Christmas and told them my story, I realized I wasn't the only one—most of them had experienced something similar. In other words, descriptions that don't match the product are a more common error in ecommerce than I thought. There's the expectation, and then there's the reality of what you buy. That's where we notice the huge impact of the person who categorizes products, and how their management affects the shopping experience."
What were consumer trends before and during the pandemic?
"In the ecommerce channel, there are categories that have traditionally performed very well, such as technology, clothing, or high-priced items; others, like groceries, didn't have as much movement. During the pandemic, this changed and different consumption phases emerged: initially, we had the canned goods stage, toilet paper, disinfectants, frozen or refrigerated food, where categories like ham, cheese, and yogurt began to grow."
"After that, the electronics and entertainment boom started: cables, iPads, computers, chargers, and video games—the latter with sales increases of up to 400%, all following the goal of staying connected and entertained from home. Then, sales of exercise products and home décor increased. People were spending much more time at home—they worked there, exercised there, and lived there, so they sought to adapt it as best as possible."
"Right now, healthy products like fruits, vegetables, and proteins are doing very well, as is the basic grocery basket, but with a shift toward more affordable brands; people are going back to bulk buying because it's less expensive."
"The only category that has remained stable in sales throughout all months, except when there were certain restrictions, was wine and liquor; nationally, it's one of the best-performing categories."
What's your projection for consumer behavior over the coming months?
"In 2020, people still had savings and jobs. By 2021, many lost their employment and no longer have money. This is the year we're already paying for the 'broken dishes' of this situation. Many media outlets report on sector performance based on sales revenue, but we exchange goods by units, by pieces, by physical products, so volume must also be considered."
"Analyzing sales from more than 4,000 stores nationwide across different categories, 2020 saw a 7% increase in purchase volume compared to 2019; in monetary terms, the figure rose 19%."
"For 2021 to date, we've recorded a decrease in purchase volume of approximately 3%. What's happening? People are buying less, and when that happens, manufacturer costs start to rise. If a plant was producing at 100% capacity, its production costs were diluted; now, if it manufactures at 60, 70, or 80% of capacity, production and logistics costs go up, profit margins are affected, and prices increase, which is passed on to the consumer."
"Evaluating different categories, many are increasing their prices by an average of 20%, which clearly affects consumption. With all of this, we're entering a non-virtuous cycle: because it's more expensive, we buy less; because we buy less, installed capacity is used less; with that, costs are diluted less and prices increase—this is called inflation."
What are the drivers that have boosted demand in ecommerce and retail during the pandemic?
"I'd venture to say that 90% of demand in these channels is driven by mobility—we're practical and we buy wherever suits us best at a given moment, whether because we're at home and shop online to avoid going out, or because we pass by a supermarket, decide to go in, and buy. In this case, what's important is giving the customer what they're looking for in each of the channels."
What business practices have been identified during this period?
"For both channels, ecommerce and retail, there's a behavior that in my view shouldn't exist: prices throughout the year are often much lower in ecommerce than in physical stores. Clearly, the goal is to incentivize purchases in this channel—but all year long? For me, buying online should have an equal or higher price than in retail, because of the logistics factor."
"We live in a price war to win over the consumer, which isn't healthy at all. Today, brands don't worry about prices in ecommerce; for many, their participation in this channel is still low, so they don't care if that percentage of sales records negative profitability, as long as the strong percentage of their physical sales is doing well."
"The problem will come when 30, 40, or 50% of their volume happens in ecommerce under these price-war conditions—it won't be good business for anyone, only for the consumer, but it won't be profitable for suppliers, which can slow digital transformation and the satisfaction of an omnichannel consumer, due to these bad practices and technology execution."
How much has traditional retail fallen and ecommerce risen?
"For December 2019, the participation we saw in self-service of the digital channel versus retail was 0.9%. For the same month in 2020, this percentage increased to 6.8%. During 2021 it dropped to 5%, due to the lifting of quarantine measures that allow people to make more physical purchases."
"For me, there's no cannibalization of ecommerce versus retail—it's a matter of omnichannel presence, of being available to the consumer when they need it and through the channel they need. It's the same store; it just receives the purchase through one channel or the other."
Why should companies invest in their digital channel?
"When a client tells me: I'm not going to invest in a channel that makes up 1, 2, 4, or 5% of my sales, I say: you're wrong, the premise is poorly formulated—it's not about sales, it's about being relevant to your consumer. That user you've sold to for many years and with whom you built an entire business model won't be around in 30 years—so how much life does your company have left?"
"Younger generations are increasingly digital. This doesn't mean the physical store will disappear, but we'll become more and more omnichannel—here lies the relevance of investment and being prepared for the consumer of the future. Within this scenario, as a characteristic, we find that our clients who have invested most in ecommerce have generated more participation and gained greater market relevance."
How does data work in the digital channel?
"Data collection in ecommerce is easier than in retail—all the information is there, at hand. From this, there's a field called digital analytics, where we can analyze and understand how a user consumes across our different digital sales channels; we can see how they behave on our site, where they click, measure social media, analyze interactions and content to profile users and see which were most relevant, understand which products are displayed, how they're rated, at what price they're being sold, etc. This lets us understand how the digital store is being executed, as if we were in the physical store."
"Before, the practice was to buy databases that could take months to arrive; today, with technology and robots that automate tasks, you can update data every day and at great speed. We have sales information, content information, store data, social media data, everything… What's important is proper data management and using it for smart, informed decision-making."
How to manage data and turn it into money?
"We have so much data to build strategies with, but the truth is it's not that easy. What do you do with so much information? In fact, this was the first problem Big Data presented. Starting from the huge volume of data, it's essential to determine its VALUE—which data points are truly important and how we can turn them into money, being more agile, assertive, and competitive."
"In many ecommerce businesses there's no clarity in strategy—they haven't defined what they want to achieve. What problem do you have? What's your business plan? What are you losing? What goal aren't you reaching? Defining these aspects is the first step to transforming information into utility."
"Many companies half-explore and understand data but don't reach something tangible to turn it into money, which only happens when they start taking data sets to model them and build action plans focused on meeting objectives."
What role does Pabis play in information management?
"At Pabis we automate the information process—we take all our clients' data from different channels and give them a consolidated view of sales, inventory, prices, orders, returns, etc., across all stores, every day. This way, they can know exactly what's happening with their products in real time."
"Regarding prices and relevance, some clients ask me: How can I verify that the price displayed in the digital store is the same as in the physical store? Pabis has a component that lets it pull product information from the client's stores, analyze it, and compare it."
"Regarding relevance, we evaluate our clients' promotional banners against those of the competition, determining whether there's a correlation between the number of impressions the competition generates versus what our clients are selling. We help them create small use cases based on analysis of their information—we show them how to use and leverage it."
What are those 3 winning tips that generate high impact in ecommerce?
There are 3 things that are very simple to implement and generate good results:
1. "Trust content: What is this and how does it translate in ecommerce? Trust content is the comments people leave, the star ratings they give you. Before buying, people review this information to get an idea of product quality and ecommerce service—how positive or negative the comments are will motivate or stop the purchase. All ecommerce businesses should enable these sections on their page and deliver on their value promises to the customer. It's a major driver for users."
2. "Consumer benefits: discounts, free shipping, return policies, shorter delivery times are decisive factors in the purchase—small extras that create a differentiator."
3. "Campaigns across different channels: use different media to drive users to your ecommerce. In this case, it's essential to have an integrated digital marketing strategy that can include social media, articles on websites, brand ambassadors, marketing and email campaigns, etc."
3 things that could happen in the future of ecommerce?
I think the following scenarios could unfold:
1. 100% automated restocking and supply tasks, with artificial intelligence that will handle demand planning.
2. The disappearance of mass communication. In the future, communication will be micro-segmented and personalized. Brands will have more information about the customer to generate micro-segmented emails based on purchases, characteristics, and consumer preferences.
3. Cannabis ecommerce: it's already in countries like the U.S. and will spread worldwide. Cannabis will be delivered by couriers and purchased by people to treat pain or manage anxiety. Many brands start selling in ecommerce to save costs and then move to retail—this will surely be one of those industries.
Investing in a digital channel requires not only marketing and data, but also a solid logistics operation. Having a fulfillment service in Mexico City allows ecommerce businesses to respond quickly and efficiently to high demand.
Looking for a Fulfillment Center for your ecommerce? Don't hesitate to contact us—grow your business while we operate for you. Just click here
