It’s about TIME for 2021: Digital Trends Transforming How We Shop, Live and Work
A month into 2021 is a perfect opportunity to take stock of the trends that will shape the rest of the year. Covid accelerated and intensified certain trends, but the macro underlying trend is not revolutionary: increased utilization. Utilization comes in two main buckets:
1. Optimizing personal time and enjoyment, focused on tools to save time thereby increasing bandwidth and/or enhancing experiences.
2. Optimizing the value of a resource for the purpose of efficient use/sustainability and/or cost savings.
How does this macro trend play out when it comes to investing in 2021? Covid-19 accelerated the acceptance of digital as an enabler of increased utilization and the rapid pace of innovation it demanded from startups and corporate giants alike. I’ve broken down how I believe this macro trend will impact business success and investing in 2021 into three key buckets: How we shop, how we live, and how we work.
How we SHOP
1. Omnichannel and online grocery: If there was ever a question, omnichannel shopping is essential. Having omnichannel capabilities enabled companies to best respond to the global pandemic, but also are the best way to optimize consumer shopping time and backend logistics. Stores increasingly serve as mini warehouses, allowing products to most quickly and cost effectively reach consumers. Flexibility of servicing customers how and when they want (by online, pick up in store, delivery or in store shopping) have quickly become table stakes. Use of omnichannel will particularly continue to drive the food category. In the US, e-commerce’s percent of US grocery sales more than doubled to 10.2% of grocery sales in 2020, and it will continue along this new trendline. 10% movement in the grocery market is $100B per year in the US alone.
Business to watch: Dumpling.
2. Last mile logistics: Related to the above, opportunities remain to optimize last mile logistics, batching of orders, SKU focus by area will be enhanced by better data and machine learning for predictive resource allocation.
Business to watch: Mlkmn.
3. Social shopping tools: Shopping is naturally social in nature — we are inspired by others’ purchases, seek product validation from others, and it’s simply more fun to have an experience when shopping (thereby optimizing utilization of our time). Leveraging video as a shopping tool (think QVC) has exploded in a digital format in Asia (in China alone this $66B market more than doubled in the past year with tailwinds of Coronavirus), and is now taking hold in the US.
4. Shift in forms of marketing: With the ease of launching a new business these days, traditional digital marketing platforms are more expensive, crowded and untrusted than ever. This was exacerbated during Covid as large players looked for quick wins and their learnings pushed the cost of customer acquisition (CAC) higher. As CAC becomes more expensive, businesses will increasingly look to leverage organic marketing, brand ambassadors as sales reps, and referral programs.
5. Hyper-personalization: Personalization continues to be a trend because it adds to the efficiency of our shopping experiences, especially in a world where the internet has created a paradox of choice with so many options at our fingertips. Businesses will push further down the path of one-to-one personalization leveraging increasingly precise data models to do so. Saving-specific SKUs, sizes, and unique product recommendations will add efficiency and efficacy to our shopping experiences. Hyper-personalization will also enable us to take our “chore” shopping (for our basic everyday essentials) into a more programmatic format where key items are replenished behind the scenes without effort.
6. Unbundling: The ease of launching a digital brand combined with additional tools enabling streamlined checkout and consumer preference to connect directly with mission-oriented brands has paved the way for DTC brands. This applies to not only brands, but also methods of entertainment, social media platforms, fitness options and more that have all been quickly disaggregated. Unbundling can build trust, community and efficiency of finding relevant products or content by focusing deeply on a specific category (think boutique fitness vs. gyms or Supergreat vs. Instagram). As businesses are unbundled, we will rely more on platforms that keep our personalized preferences stored and enable easy checkout across sites.
7. Backlash of digital: Digital evolution has added greater efficiency to our lives, but also has resulted in hidden taxes that drain time. From the transactional nature of most e-commerce, the multitude of options to consider, research and reviews to weigh, pricing comparisons, the hassle of returns, size triangulations, and clutter of boxes — consumers are ready for more enjoyable and seamless shopping solutions.
8. Mission driven brands: Voting with your wallet and spending money on brands that align with causes that we believe in became more popular with the rise of social media. That combined with real data and press around climate change has put social responsibility front and center and given brands a real voice in setting standards for responsible business operations. Brands increasingly need to rely on an emotional edge as industry giants like Amazon continue to win on cost and speed.
Businesses to watch: Blueland.
9. Re-commerce: Re-using or sharing physical items is an effective way to lower impact on our environment and wallets. Poshmark’s entry into the public markets and the increase in donations and purchases on platforms like Thredup and The RealReal during Covid relate to the drive towards minimalism and smart spending. At its core these models are optimizing utilization of a given product which enables us to embrace sustainability while still enjoying consumption habits.
How we LIVE
1. The Executive Athlete: Perhaps the best way to optimize our utilization is to focus on self-care with an eye towards maximizing daily output and lifespan. We will continue to rely on tools like Oura Ring on a daily basis to better focus on life choices that make us our best selves. Along these lines, fitness and healthy food consumption will continue to be a focus. The easy access and more affordable options in the home fitness and healthy eating options are here to stay and will continue to grow.
2. Telemedicine: The rapid normalization of telemedicine has increased comfort and made it clear that this is an effective and efficient option. Watching this category evolve into all verticals and in more mass formats, such as dermatology for skincare recommendations, also means that the products connected to these services — vitamins, skincare rituals and medications — will be a growing category as well.
3. Happiness and hobbies: Self-improvement — from taking time for meditation, reflection, pets, self-awareness, self-help and our hobbies — is a greater priority as the mentality around work has shifted. Covid has been a reminder for us all to prioritize health and family — additional time working from home has recentered the family unit as the cornerstone of our communities.
4. Home improvement: With people spending greater portions of time in their home, between working, entertaining and home schooling, home décor and home improvement are and will continue to be bigger categories — investing in the spaces where we spend our time to drive greater joy and comfort. Everything from introducing new cookware sets to your routine, adding plants, holiday décor, and lighting matter in terms of optimizing the utilization and enjoyment of where you are spending most of your time.
5. Plant based/clean living: As we live healthier and care about minimizing our ecological footprint, plant-based eating and skincare options will continue to increase in market share.
How we WORK
1. Flexible working options: Increased remote work will make digital collaboration tools and online communities ever-more important. B2B support products and digital collaboration tools (often powered by network effects) for more streamlined collaboration will evolve.
2. Everyone as an Entrepreneur: As we are more focused on spending time on work that drives us, have tools of launching businesses at our fingertips (through low-tech resources like Shopify and Instagram), have new business opportunities with Covid’s digital acceleration, are less restricted by location with remote work, and with increased unemployment, more will pursue careers as entrepreneurs. Whether launching a business, as an influencer or businesses leveraging ambassador-affiliate models, this influx of entrepreneurs and reliance on resources like Shopify will put greater demand on no/low code B2B resources to evolve. B2B tools targeting early-stage companies will also increase.
3. Kids and tech: With remote schooling, children’s use of technology accelerated overnight, offering access to tech devices, building an innate savviness of how to use them, and forcing increased comfort from parents. We have seen the effectiveness of certain schooling and activities over video and naturally become more open minded to these platforms in the future. As such, digital will be a part of kids’ lives at earlier stages across various categories of learning and community.
4. Women at work: Kids popping in and out of the Zoom screen is the new normal, blurring the lines of work and home and making it increasingly feasible and normal to be a working parent. I suspect that new corporate policies and support, flexible work options, shared weight of parenting and home care responsibilities will lead to an increase of women in the workforce, and with it diversification of ideas.