Small Business News: 20 December 2023

This week’s SBN explores the TikTok era of e-commerce, and how online retailers are getting serious about product returns.

Looking to attract Gen Z through your online doors this holiday season (and beyond)? Then it may be time to consider adding TikTok to your marketing strategy…

Digital Commerce 360 recently analyzed the video platform’s impact on consumers’ purchasing decisions and found over half (53%) of US adults between 18- and 29-years old use it for product discovery¹. Clothing and beauty brands are particularly popular on the site, specifically “get ready with me” and “routine” videos which show an influencer using the products. Nearly a third of Gen Z TikTok-ers say they’ve bought a product due to one of these types of videos.

Not surprisingly, brands are beginning to adjust their marketing strategies accordingly. In a Digiday poll of online retailers, 78% said they allocated funds for TikTok marketing in Q3 2023, up from 54% in Q1 of the same year². Meanwhile, 35% of retailers said they’re purchasing ads on TikTok – an increase from 24% last year. 

New research forecasts online retail sales growth in the largest European markets will “rebound to pre-pandemic levels” in 2024 and beyond.

A recently published report from Forrester³ looked at growth trends for the top five economies in Western Europe – Germany, the UK, France, Italy and Spain – which together account for 70% of the region’s total GDP. The report noted, “though online retail sales growth returned to positive territory in 2023, it was much below the average growth during the pre-pandemic years from 2014 to 2019,” citing global supply chain issues, decades-high inflation and a weak economy for the slowdown.

Yet, there’s good news on the horizon – the “bounce back” across the five European economies will be a combined online retail sales growth from €372 billion in 2023 to €579 billion in 2028 – a five-year compound annual growth rate of 9.2%.

Google Pay has begun trialling Buy Now Pay Later services in response to rising consumer demand. The search giant has partnered with BNPL providers Affirm and Zip to pilot installment payment options through Google Pay for online checkout.

Shoppers paying via Google Pay will be served a promotional banner alerting them to the option of using BNPL. If they already have an account with Affirm or Zip, they can link it to the transaction, or onboard to get an account set up within Google Pay.

“This is a seamless and frictionless way to expand the distribution of these payment products, and we’re offering this in line with the Google Pay experience users are comfortable with today,” said Drew Olson, Google Pay’s Senior Director⁴. The pilot will begin at select apparel/accessories, theater and travel merchants in the United States, before rolling out further in Q2 2024.

Olson pointed out the “win-win-win” of the system; consumers get more choice, the BNPL providers expand their reach, and the merchants increase sales – those offering installment plans report 60% higher average order values versus other payment methods⁵.

It’s no secret that returns are a big headache for retailers to deal with. So, it’s unsurprising that recent research found that avoiding them is now a priority for many businesses.

Retail institute EHI⁶ surveyed e-commerce businesses across Germany, Austria and Switzerland about their attitudes towards shipping and returns management. 74% of those polled said avoiding returns is now their top priority. To achieve this, many are ensuring there is detailed product information on their online stores to help customers get a more accurate sense of what they’re buying, whilst 70% said they record the reasons for products returned to them. 43% mentioned safe packaging as an important measure, thus reducing the number of damaged items returned.

As for the tricky decision of whether or not to charge customers for returns, the majority (64%) of respondents cover all incurred shipping costs, with the hope it will build customer loyalty to their brand.

Did you know that 84% of consumers will not shop again with a retailer after a bad returns experience?⁷ Discover how to get your returns policy right with our dedicated guide. 

We hope the holiday season has been busy and prosperous for your business, and that you now have some time to recharge your batteries ready for all that next year has to offer!

Be sure to visit Discover in the new year, when we’ll be exploring all the logistics trends set to transform your business in 2024. Until then, from all of us at DHL, have a very merry Christmas!

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