13 e-commerce trends NZ retailers should watch out for in 2022

In 2021, New Zealand e-commerce retailers were running full speed ahead to recover from the 2020 pandemic and build stronger relationships with their customers through social media channels.

But now it’s a new year and the pandemic still lingers. People are working from home and many aren’t too keen on going into the shops. So, is this the year for online sales?

Looking towards 2022, here are 13 trends e-commerce merchants should keep an eye on.

1. Online shopping will be the increasing norm 

In positive news for online retailers, e-commerce activities have continued to increase in popularity in New Zealand over the past years.

In fact, it’s projected that around 83 percent of New Zealanders will shop online by 2026 (Statista).

2. 2021 was the biggest year ever for online sales

In the third quarter of 2021, online retail made $1.78 billion in sales – that’s about $200 million more than 2020. Then it got even bigger – Q4 2021 was the biggest three months for online sales ever recorded by NZ Post. Kiwis spent $2.5 billion, a 45% increase on the year prior (NZ Post), meaning a full third of the entire year’s spending was done in just that one quarter.

Given recent growth, expected growth, and the continuing pandemic situation, it is likely that 2022 will be even bigger than 2021, peaking at key holiday and sales events.

3. Mobile e-commerce expected to eclipse desktop

In 2021, 49.9% of New Zealanders made an online purchase via a mobile phone or tablet. Additionally, by 2024 a whopping 61% of online sales are expected to come from mobile commerce (Global Payments Report).

Retailers take note! If your website isn’t already optimised for mobile devices, consider getting started by improving your page load speeds, adding clear calls to action, and streamlining the checkout process.

4. Online shopping grows more popular with older shoppers

In 2020, we saw older age groups experiencing high levels of online retail growth, in terms of their frequency and size of spend.

Then in 2021, the 40-65 years group spent 20% more, and the 65+ age group was also up 14% (NZ Post).

Again, we can anticipate that these trends will continue throughout 2022. It goes to show that any assumptions about older shoppers disliking e-commerce are growing increasingly untrue. In order to appeal to this potentially quite vast group, Kiwi online retailers should be aware of whether their shopfront is optimised well for an older demographic as well as younger.

5. Consumers spend less, but shop more frequently 

NZ Post reported that online shoppers are spending less on average each time they go online, but are shopping with much greater frequency.

The average basket size in Q4 2021 was $103, down $7 from the same time in 2020. However, despite these smaller purchase sizes, Kiwis made 8.2 purchases on average by end of year 2021, compared to 6.3 in the same quarter the previous year.

If this trend continues in the same direction, it may start to skew some retailers’ analytics. Rather than judging VIP customers by basket size, it may pay to remember to also look at frequency of purchase.

6. Social commerce is a low-barrier entry to the market 

Social commerce is the process of selling your goods and services directly through social media channels.

In 2018, 71% of Kiwis were open to making purchases directly from their social feeds such as Facebook and Instagram. This trend has persisted through the pandemic, fuelled by prolonged closures of physical retail stores.

Social commerce is a relatively simple and affordable way for retailers to enter the market. Facebook, for instance, is starting to integrate shipping and payment gateways into Facebook Marketplace, making it a key social commerce channel for business-to-consumer (B2C) retailers.

7. Plastic, paywave and pay later dominate

Cards are still the payment method of choice for Kiwis shopping online, accounting for 55% of payments (JPMorgan). But Buy Now/Pay Later (BNPL) options such as Afterpay and Laybuy are growing steadily. BNPL accounted for 25% of all payment methods in 2020, driven by younger consumers and BNPL provider promotions.

By 2023, JPMorgan anticipates cash will account for just 1% of payment methods, digital wallets (like PayPal) will account for 20%, bank transfers (BNPL and direct transfers through POLi) 34%, and plastic to account for 46%.

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8. Evolving from cashless to contactless

Kiwis are familiar with cashless payments, but in the wake of COVID-19, many consumers (as well as businesses) are opting for contactless payments instead.

Contactless payments account for not just payWave transactions, but also mobile contactless options such as Apple Pay, Google Pay and smartwatch payments. The value and number of transactions made through these channels has consistently been on the rise in the past years and the pandemic has only catalysed the shift.

That said,  not all forms of electronic payments are created equally. It pays to do your research to see which options will suit your desired business outcomes, please your customers and complement your current processes.

9. Crypto gets a small boost among Kiwis

Kiwi consumers and businesses are warming up to the idea of cryptoassets. For example, one in five Kiwis plan to, or already have, invested in cryptocurrency (Financial Services Council).

From a legislative perspective, the Reserve Bank spent 2021 consulting on the future of payments and saving. This included discussions on how a Central Bank Digital Currency (CBDC) would work alongside cash as government-backed money, concerns around new electronic money forms including cryptoassets, and how the cash system may change to meet evolving needs.

We should note, however, that crypto is still a small business here in New Zealand and may not be right for all e-commerce retailers. You will need to clearly understand your customers and the technology behind digital currency before making any investments in that area.

10. Almost half of businesses investing in omnichannel

The stores of the future will blend physical and digital brand experiences. To that end, currently 46% of retail executives plan to invest in omnichannel retailing moving forward (BigCommerce).

If you already offer frictional payment methods and/or a strong social media presence, you’re already off to a good start. As we’ve discussed, both varied payment options and social commerce are key trends for 2022.

B2B business owners take note: Building an omnichannel experience isn’t limited to B2C. B2B e-commerce can also adopt an omnichannel strategy and may find quite a lot of success in the area. Forrester research, for instance, has shown promising conversation rates among B2B e-commerce retailers compared to B2C.

11. Leaning in to sustainability

In 2020, 13% of Kiwi consumers chose to shop locally to reduce their environmental impact. Meanwhile, 34% want retailers to focus more on sustainability (NZ Post The Full Download 2021). The demand is there, and it’s rising.

For online retailers, there are many available options for improving sustainability. Changes in supplier could cut fuel emissions or harmful practises, as well as partnering with on-shore instead of global brands. There is also an increasing variety of eco-friendly packaging options for products, as well as a growing number of case studies around retailers switching to experimental new business models – such as offering refillable products.

12. Returns process and policy setting brands apart

How well your business handles product returns could be a major differentiator in 2022.

Internet-savvy Kiwi shoppers have high expectations when it comes to shipping – 77% of online Black Friday and Cyber Monday shoppers expect retailers to cover the cost of shipping returned items (NZ Post). Additionally, 24% of consumers surveyed by NZ Post wanted retailers to focus on ease of returns.

There are several things online retailers can do to improve the returns process: make it easy to understand and initiate, streamline the process, optimise internal returns processing, and use integrated software to create visibility across the supply chain.

13. International trade agreements are on the horizon

Though Kiwi consumers have been throwing their support behind local retailers, said local retailers can also look forward to meeting international e-commerce demand.

An upcoming partnership between New Zealand, Chile and Singapore could help local businesses take advantage of opportunities from digital trade. The Digital Economy Partnership will mean that small to medium enterprises can access information about international regulations, have express shipments move through customs quickers, and connect with their international target market more easily.

In summary

In 2021, Kiwi retailers rose to the challenge of working hard to meet their audience online. This is laying good groundwork for the year ahead, as though we might not be out of the woods yet with regards to COVID-19, retailers will increasingly see e-commerce and physical stores intersect in 2022.

With plenty of opportunities to attract a social media savvy audience, how will your business greet e-commerce as consumer shopping and payment needs evolve?