2023 Trends to Track: The Painful Unwind of the Convenience Economy

SPECIAL EDITION ALERT!

I got the chance to sit down with fellow?Chief?and friend?Libby Rodney?and discuss the trends we can't stop talking about for 2023. What came from it were five great topics that will affect all business leaders in the coming year.??

Every day this week, I will release one trend that marketers and business leaders need to consider as we get closer to 2023.

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Trend #1: Less is More. Sustainability & The Climate Crisis

Trend #2: The Painful Unwind of the Convenience Economy?

We have spent the last few years training people to get products fast. We have conditioned consumers to expect free shipping, free returns, and every convenience you can imagine. However, we are at an inflection point. Inflation, gas prices, labor shortages, and various other factors make the convenience brands have offered us unsustainable. The prevalence of free returns has created a massive issue for the industry. According to?The Economist, online retailers are dealing with record return rates. The National Retail Federation claims that 21% of online orders were returned in 2021. The total value of those returns is $218 billion! And in the clothing and shoe markets, they stated returns percentages could reach levels around 40%. Let's not even go into the cost (monetary and environmental) of fast shipping. VC money is drying up, and brands are starting to realize the actual costs of convenience, leading many brands to refocus on profitability vs. growth in every aspect of their business. We will see more companies slow down ship times, start charging for returns and shipping and roll back the other conveniences they have trained us to expect. This will be painful.??

As more brands start charging for previously free conveniences, other brands will follow suit, and consumers will go back to being nickel and dimed. That, however, creates a poor consumer experience and does little to help the overly anxious and cost-conscious consumer.??

So instead, brands need to lead with transparency about why costs and policies are changing. We need to be able to pay a fair wage, or the cost of expedited shipping has a negative environmental effect.?

Tell the story of why.?

However, it must be authentic. If you say you care about the environment, but everything gets wrapped in plastic - it won't work. Create a story that is authentic to your brand and then live it.?REI?permanently canceled Black Friday, and instead of consumers being up in arms about it, they celebrated the decision because of the why behind the move. Align your new policies with your why and roll them out to consumers thoughtfully. If you are still worried about repercussions, consider offering something in return for the pullback of convenience - surprise and delight when someone clicks no rush shipping or donate a percentage of a return charge to offset carbon emissions. If done correctly, your rollback of convenience will be seen as a differentiator.

The other implication is that when we create less physical convenience for online shoppers, we will see an even more significant move back to the physical store. The US is already seeing a substantial return to stores, with both brands and consumers investing more time out in the real world. However, marketers must realize we are not in a place where it's in-store vs. online. They are not at odds; for consumers, they are one and should operate as such in a true omnichannel fashion. As we roll back convenience online, we will continue to see an expansion of ROPO (researching online and purchasing offline), which will only expand as retailers start charging for shipping and returns. Be wary of pulling back on media as consumers are still predominately discovering brands online, but instead of clicking to buy, they may go to the store. This makes attribution even more of a nightmare. Online and offline need to operate together to target the right customer and move them to purchase either online or in-store. This further convergence of online and offline will be great for any media company that can connect the two (Krogers, Walmart, etc.). Retail media will continue to innovate to provide in-store and online attribution and expect the physical store to be a new focus of the retail media revolution.??

Moving forward, it will be less about the physical convenience that online offers but the digital convenience online offers. If a consumer is on your website, allow them to quickly and seamlessly navigate, providing easy ways to research products and provide multiple payment options (including buy now, pay later). Outside your website, ensure you have a solid social commerce foundation. Do you allow consumers to buy without leaving a platform or force them to interrupt their journey and take them away from what they are doing? Make it easy to buy your product, whether it's online, in-store or through social commerce.?

Key Takeaway: Brands must create a new narrative around the rollback of physical convenience. Provide flexibility on how consumers interact and purchase to rally around this new idea of digital convenience.??

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Megan Conahan is a 17-year veteran of the digital marketing industry. Over the last 17 years, she’s consulted with fortune 1000 brands on how to best negotiate the ever-changing digital marketplace demands and create unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency.?

If you want to hear more trends from?Libby Rodney, please subscribe to her podcast?America This Week.