Covid-19 has been a huge catalyst for growth in the eCommerce industry. In the UK, online sales rose sharply to a record high of 33.9 percent as a share of all retail spending, climbing from 20 percent pre-lockdown in February 2020.
And beyond the pandemic, the opportunity for online sellers remains high. A 2021 report from Retail Economic and Natwest found that, since the pandemic began, nearly half (46 percent) of UK consumers bought something online that they had previously only purchased in a physical store.
New consumer habits have been formed and embedded over the past sixteen months. As a result, many high street retailers have closed, and those that remain open will require a significant strategy shift to thrive in the coming years.
But for eCommerce brands with an established online business model, where is the new growth opportunity when convenience is a given? What factors other than price can differentiate sellers? And how can online retailers use technology to build customer loyalty on the faceless web?
Trust is a competitive advantage
Trusting a brand is crucial for buyers when shopping online, and its significance is on the rise. In a recent survey, 70 percent of people said that trusting a brand is more important today than in the past.
The relationship between trust and revenue is not to be underestimated. Buyers surveyed said that trust is the second most important factor (22 percent) when purchasing from a new brand on a marketplace, outranked only by price (61 percent).
And trust isn’t just a nebulous concept that buyers are demanding without taking action of their own. For example, 84 percent of survey respondents stated that they research a seller’s credibility before purchase. This manual process interrupts the buyer journey, creating hurdles in an otherwise optimized purchase experience. But such steps are necessary to most buyers, displaying their current lack of trust in eCommerce platforms and marketplaces.
The third important factor for those surveyed, following price and trust, is delivery and returns (17 percent). Interestingly, an investment in trust is so far unmatched by the investment in delivery operations across the sector. Amazon alone spent 61.1 billion U.S. dollars on delivery in 2020, up from 37.9 billion the previous year. This mismatch to consumer needs leaves a vast opportunity wide-open for online sellers and marketplaces to invest in consumer confidence.
Technology and mistrust: The e-commerce growth challenge
At a consumer level, technology and trust don’t often go hand in hand. There is a general sense of mistrust in technology companies, driven in part by giants leveraging our personal data to their advantage and our manipulation.
Social media algorithms are unpublished. Data collection is shrouded in unreadable lengthy terms and conditions. We’ve all been convinced that our smartphones are listening to us when tailored adverts surface following lengthy catch-ups with friends.
The sector has a long road ahead to rebuild consumer confidence. Even reviews, technology built to tackle this problem in eCommerce, have faced their shortcomings. While incredibly useful for consumers, misleading practices have undermined their credibility. Since 2015, the Competition and Markets Authority (CMA) has been investigating fake reviews and endorsements.
In April this year, Facebook took down 16,000 groups trading fake reviews following an intervention by the CMA. It is unsurprising then that 60 percent of survey respondents said their trust in online reviews had fallen compared to three years ago. It is clear that brands must look beyond reviews as a method of improving trust.
So with consumer confidence in reviews shaky, combined with a baseline skepticism in technology giants, how can online sellers rebuild trust? How can sellers foster loyal relationships with buyers on the impersonal internet?
Using technology to build trust
Whilst technology has been used to undermine consumer trust, it also holds the key to the very thing that can help rebuild it - data transparency.
Building trust online requires transparency. 88 percent of people surveyed think that brands are not doing a good enough job in being transparent about how their data is being used. And that works in reverse: greater transparency of sellers’ data increases buyer trust, which in turn increases sales.
Surfacing the right information to buyers at the right time when buying online is critical. Key data points that reassure consumers include the date of incorporation, location of registration and status. This data allows buyers to perform instant due diligence and trust that online businesses are active and stable.
This is essential company information that even verified reviews can’t offer and adds a layer of certainty for the buyer, knowing that the business can manage any product faults, returns and consumer rights down the line.
There is a big difference between the trust we have in a furniture company based in Milton Keynes that has been trading for fifteen years versus one trading offshore that was set up just three months ago. Transparency will distinguish reputable sellers from those with dodgy business practices and poor trading histories.
Taking advantage of the trust opportunity
It is clear that trust is the untapped differentiator in eCommerce. Buyers are demanding it, yet neither sellers nor marketplaces are offering the level of transparency available to bridge the gap and meet the customer need.
Of the consumers surveyed, almost 40 percent said that their trust in brands had declined over the past three years. This compared to less than 10 percent who said it had improved, with the remaining 54 percent unchanged since 2018.
Yet, the importance of trust has not diminished. Brands that prioritize forming relationships based on trust and transparency with consumers will likely gain market share over the next few years, especially when while underpinned by great technology.
Additionally, this investment will allow online sellers to effectively compete with the next generation of hybrid online/offline retailers who will undoubtedly use offline methods and pop-up stores to create exceptional brand experiences and loyalty.
In a faceless, online world, sellers must seek new ways to reassure their customers and build loyalty for their business to flourish, long after the impact of the pandemic has worn off.
Liam Chennells, founder and CEO, detected