2022 Ecommerce Predictions - Episode 221

INTERVIEW WITH RUSS DIERINGER

DESCRIPTION

In today’s podcast, we talked with Russ Dieringer about our ecommerce predictions for the new year. We discuss emerging trends, potential issues, and try our best to figure out what we can all expect in 2022. How will the supply chain problems end? How will aggregators influence the market?

Make sure you tune in to find out!

Russ Dieringer is the founder of Stratably, a company dedicated to elevating the digital IQ of leading consumer brands. Each week, Russ creates impactful, practical, and easy to digest research that speaks to all layers of an organization, helping them see further around the corner of what’s coming in retail.

“The last two years have been incredibly challenging from a forecasting, ordering and production perspective, that it’s much more likely that there’s going to be some form of correction rather than some type of soft, gradual easing of this.”

— Russ Dieringer

KEY TAKEAWAYS

Shippageddon will end in a giant sale - by mid to late 2022 much of the supply chain kinks will be worked through, and when all the inventory that the companies have been “panic-buying” arrive, there will be too much inventory. Amazon Prime Day is usually in summer, and this will be a huge event and opportunity for brands to offload overstock.
This may require a slowdown in consumer demand. If it remains very high, it could affect this prediction. Some form of correction is possible in 2022, but Q4 is very unpredictable
There will be a remaking of publicly-traded CPG boards with stronger digital experience. Nestle, Campbell’s, P&G, Colgate, etc. are all starting to disclose more digital metrics, just like retail customers have done over the last two years

Firm value is increasingly going to be driven by digital cash flows/positioning vs. competition, setting up underperformers for greater attention from activist investors
Strong technology experience is lacking on boards today; boards on average have 12 people, and on average only 1 out of 12 can be described as having a strong digital technology experience.
There are no standard digital metrics for the incumbent brands to be focused on, but the two most common ones are Digital penetration and YoY ecommerce growth.
Chinese sellers and manufacturers will be more sophisticated - Amazon suspended brands and banned merchants because of their promotion tactics. In 2020 and 2021 the growth trend of Chinese sellers has slowed down significantly, and 2022 will see a comeback. The sellers will see the benefit of using a more western playbook as consumer trust gets shaky and not just on Amazon.

Shein - using data to create fast fashion and linking their data to show what’s trending online and using that data to produce garments; cues coming from social media, creating at warp speed.
A lot that we Western world can learn about staying on the pulse. Not just social listening, but also planting seeds, short run of a piece of apparel, and seeing if it’s taking off or not, and then responding.
Rapid delivery expands to general merchandise categories - Nearly all innovation/activity/fundraising in this space has been centered around the grocery category, movement of delivering groceries in a short time period. Consumers definitely value faster speed, and it will expand beyond grocery. Profitability is an issue - pushed out a few years further.
Aggregators will put pressure on incumbent brands - 3 main ways:
- competition coming into your category, manufacturers going directly to consumer, aggregators using their scale and analytics ability and the talent they hired;
- aggregators are driving advertising cost up, they rely on advertising to grow their market share;
- talent - a huge number of jobs the aggregators need to fill and they try to lure the talent away to fill gaps.

Part of the aggregators’ strategy is to take those brands into stores and leverage other platforms as well - a less crowded space.
Emerging trend of separation of digital from physical businesses amongst omnichannel retailers - everyone said Saks was stupid for separating the digital and physical business, and they’ve laughed all the way to the bank after unlocking billions of dollars of value. Now Macy’s and Kohl’s are exploring it.
Multiple arbitrage between physical and digital cash flows combined with Saks’ success will lead activist investors to drive more specialty retail/flagging retail to do this.