If many retailers were in survival mode in 2020, 2021 represents a year of technological innovation.

Retailers are learning to keep up with the rapidly evolving digital shopper. Eager to capture consumers' attention, they are increasing their presence on social platforms, such as Snapchat and TikTok.
With these changes, massive investments have occurred. In the first three quarters of 2021, funding for retail tech startups in the U.S. reached $26.8 billion, according to CB Insights' October retail tech report. That's 35 percent more over 2021 than in 2020.

 

The explosion of "Buy Now Pay Later".

 

Staggered payment options may not be a new phenomenon, but the payment space is seeing widespread adoption of this system in the last year. BNPL allows buyers to pay for a product in a smaller amount within a certain time frame, often without applicable interest. Its momentum will likely continue into 2022.
BNPL offers can be very appealing, especially to younger consumers who may not have the funds to pay for expensive items up front. According to a NerdWallet survey, about 18 percent of consumers, or one in five, have used BNPL for Christmas shopping. Of those surveyed who used BNPL this holiday season, 36% are millennials, 22% are Gen Z, 18% are Gen X and 3% are baby boomers.
Retailers of all sizes have embraced the system in response to growing demand.
Last August, Amazon partnered with BNPL provider Affirm.
With inflation levels expected to rise, consumers may have even more reason to use BNPL services.

 

The crucial role of Social Commerce

 

Social media sites are accelerating their efforts to allow consumers to purchase products without leaving the platform. Instagram is doing just that with the launch of Shops on Instagram in May. As for Pinterest and Snapchart, they are investing in augmented reality tools and strengthening their partnerships with brands.
These platforms have good reason to invest in shopping capabilities. According to the NPD Group's June survey, just over half (51%) of consumers surveyed say the content posted on their Facebook and Instagram news feeds has influenced them on their purchases.
In a list of platforms where shoppers discover and learn about items, Facebook (41%), Instagram (35%) and Pinterest (21%) ranked highest.
The social commerce space has plenty of room to grow. The scale of the industry in China represents a reflection of what social commerce could be in the United States.

 

The standardization of augmented reality

 

When demo items were taken off the shelves and fewer people visited stores, retailers had to find a different way to get people to discover or try their products. For many, augmented reality became the answer.
The majority of early augmented reality initiatives are in the beauty sector. Brands are increasingly partnering with companies or platforms with AR capabilities like Snapchat and Pinterest.
While AR or AI has been gaining popularity in recent years, consumers are slow to adopt the technology into their shopping habits. According to Euromonitor data in 2020, only 20.1% of consumers reported using AR or VR to test makeup.
But with the number of brands launching AR tools and experiences, consumer adoption may soon catch up. Late last year, Snapchat partnered with six companies from different industries, including retailers like Walmart and Hollister, to create virtual stores in the app during Black Friday. Brands like Fendi and Dior are also starting AR shopping goals on Snapchat.

 

Livestreaming will live up to its potential

 

While the idea of showcasing a product's qualities on camera is not new, livestreaming is experiencing a revival in 2021. Coresight Research estimates that the livestreaming market will reach $6 billion in 2021 and by 2023, it could reach $25 billion.
Social commerce and livestreaming are somewhat related.
Retailers and social media platforms collaborate on multiple occasions to undertake livestreams that enable shopping. Walmart repeatedly uses popular influencers to host livestreams on TikTok. Similarly, Facebook is partnering with Anne Klein to launch the platform's live shopping feature.
Like social commerce, livestreaming is already a multi-billion dollar industry in China. In that country, the market is estimated to be worth $305 billion by 2021, according to KPMG and research firm AliResearch, cited by Coresight.

 

Faster and faster deliveries

 

Last year, retailers explored faster ways to deliver goods to consumers' doorsteps.
Walmart partnered with car company Ford and startup Cruise for self-driving deliveries and invested in drone services for deliveries. Target, meanwhile, has been testing faster shipping methods and adding new features to its same-day delivery services to make shopping smoother and faster.
The industry giants are setting customer expectations high, which could push other retailers to follow suit in the coming months...
The demand for fast delivery is also allowing non-retailer companies to diversify their revenue streams, such as ride-sharing company Uber. Uber works with retailers such as Hims & Hers, Bed Bath & Beyond and Costco to deliver goods.

 

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