The largest generation is coming into maturity. Is your online store & marketing strategy ready for Gen Z?
The growth of online retail sales in the UK overtook that of the US by 27% last year, with 66% of UK commerce sales taking place online. This exponential growth was largely driven by the continued threat from the Coronavirus pandemic, which kept the majority of the population confined to their homes. According to a new report by the Centre for Retail Research (CRR) and VoucherCodes, that figure is set to inflate further still, as a total £120.48bn is forecasted to be spent online in 2021 – up by £10bn from 2020.
Opportunity often presents hand-in-hand with challenges, though. Any concern for the future of eCommerce surrounds the ability to obtain first-party data to gain an intimate understanding of shoppers to help fuel more relevant and personalised commerce experiences – and doing all of this in a brave new cookieless world.
Surprisingly, though, the biggest impact on the future of eCommerce is unlikely to be driven by technology. According to speakers at the ECE & TFM Global eCommerce Expo that took place virtually earlier this week, the shape of the future of eCommerce will be influenced the most by young people; specifically Gen Z.
Who is Gen Z?
The demographic of online shoppers across the globe skews young, with the greater share of young shoppers being born between 1998 and 2016. In 2020, Gen Z constituted 32% of the global population and already collectively possesses a spending power of 143bn US dollars. Gen Z dominates online spending more than any other generation and now they are becoming adults.
As a true digital native, the average Gen Z individual spends around 3 hours per day on their smartphone and twice as much time on social media. They are stereotyped as ‘tech addicts’ as a result, as well as being thought of as social justice warriors. According to Peter Sheldon, Senior Director of Commerce Strategy at Adobe Systems, 98% of Gen Z (born between 1998 and 2016) own a smartphone and 71% have a Netflix subscription within their household. Gen Z will constitute 30% of the global workforce by 2030.
Gen Z has grown up experiencing events that have rocked the world, such as global recession, acts of terrorism, issues around racial and gender equality and, most recently, the Coronavirus pandemic. These experiences have influenced them and have actively shaped their views on the world.
Not only are Gen Z the most racially and ethnically diverse group, but they are also presenting as the most educated; with much more liberal views than previous generations and an ever-increasing openness to emerging social trends.
What does this mean for eRetailers?
Here are some key considerations that online sellers need to take into account when preparing their eCommerce stores for Gen Z customers:
1. How they pay
The majority of Gen Z are under 23 years of age and are unbanked, whilst under 18s are being actively encouraged to bank and shop independently from their parents.
- Specific FinTech brands, such as GoHenry, Starling Bank and Monzo, are coming to market with pre-paid cards and apps complete with unique parental controls, giving young people the ability to spend whilst their parents can keep a close eye on what they are buying.
- Buy Now, Pay Later (BNPL) schemes, such as Klarna, afford Gen Z with the ability to purchase items that wouldn’t normally fit into their budget. eMarketer estimates that 44% of Gen Z digital buyers will have used BNPL services at least once by the end of 2022, as opposed to 37.2% of millennials.
- The US has seen a rise in small businesses accepting cryptocurrencies like Bitcoin, Ethereum and Venmo as a means of payment. Indeed, PayPal forecasts $1bn will be spent in Venmo eCommerce transactions in 2021 – a figure that only looks set to rise as Gen Z buyers come into their spending prime.
Alternate methods of paying for goods online must be offered by eRetailers in order to drive conversions from Gen Z customers.
2. How they feel
As a result of conditioning from their socio-economic surroundings, Gen Z believes that they can bring about social change from their actions and they want to feel like the brands they buy from support the same causes.
As a result, brands are being held to a much higher standard of social responsibility, where transparency is key.
In a recent Forrester survey, 51% of 18-23-year-old Gen Z respondents agreed that they would always research a brand’s corporate social responsibility prior to making a purchase.
Presenting at the same virtual eCommerce Expo, the Global Chief Digital Officer of VMLY&R Commerce, Debbie Ellison commented:
“It isn’t just about words on a product description page. If I look under the bonnet, I am going to want to see changes to the supply chain. I want to see that you are treating your workers correctly. I want to see that there is equity in pay. Those are all the things that we need to be looking at and that will be exposed and we have to be transparent about that.”
Brands taking genuine action will be key to earning and building Gen Z customers’ trust through authentic programmes supporting issues such as sustainability and gender & racial equality.
3. How they engage
Social media, primarily Instagram and TikTok, is driving the trends in how customers engage not only with the brands they love but also with each other.
Gen Z is marketed to more than any other generation and, as a result, they have developed sophisticated filters. Once a brand passes the social responsibility sniff test, it is important for them to get creative when hoping to convert a Gen Z sale.
For instance, fully interactive live shopping events hosted by influencers (as held on TikTok by fashion footwear and accessories retailer, Aldo) offer a fresh new take on TV shopping and attract tens of thousands of viewers.
Influencers are a vital source of trusted online content and are the new source of word-of-mouth promotion. The rise of nano influencers and micro influencers has been largely due to Gen Z’s quest for authenticity and trust in a brand prior to making a purchase.
This is also good news for retailers as, according to the Influencer Marketing Hub, 72% of respondents to their survey believe that the quality of customers from influencer marketing campaigns is better than other marketing types.
Preparing for the Future Shopper
What does this mean for brands and retailers?
It is important for sellers to reflect on what Gen Z values and how it is possible to connect these values to your brand and commerce channels. By exploring what a brand means to Gen Z, it is possible for sellers to glean what influences a Gen Z decision whether or not to make a purchase.
Lastly, as digitally native Gen Z was swiping before they could walk, frictionless and seamlessly connected commerce experiences will be essential to cater for the needs of the future shopper.
Expandly is an eCommerce SaaS platform that makes selling online easier.
Connect your sales channels, shipping carriers, warehouse, and accounting software into one initiative and simple-to-manage dashboard.