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Optimizing 2020; Trends, Models, Winning Products and Markets

icon-calendar 2020-12-23 | icon-microphone 24m 1s Listening Time | icon-user Joseph Ianni

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It's safe to say, no one saw 2020 coming. Starting from a curiosity to type in Ecommerce categories, Joseph discovers a number of 2020 revelations including trends and ecommerce specific business models.

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Tags: #EcommerceCategories #2020EcommerceTrends #EcommerceModelsIn2020 #WinningProducts #2020EcommerceMarkets #Ecommerce #E-commerce


Good to have you here. If you were to look for ecommerce categories, you would find a number of results for that query; what business models e commerce falls under, what product categories have been doing well lately, what products have been doing well in specific and what are important trends in relation to the industry. Of course, you don’t need to search for it because I’ve gone and done that for you today. 

The first category I want to cover are business models in relation to ecommerce. This is from numinix.com, In an effort not to overlap with the previous episode about business models (Business Models #15) I checked that list to see if the ones listed here come up, and there’s a few that don't! So let’s get into these here. The first two listed are Business to Business and Business to Consumer, which we’ve talked about before. The remaining ones are new to the information we’ve spread out over the course of this journey. 1. Consumer to Consumer. This is where both ends of the business are conducted by the customer, and there’s a platform acting as an intermediary. You have businesses like paypal which give other consumers and businesses the ability to pay one another, with paypal getting it’s cut. You have subscription businesses like Patreon or Subscribestar which give creators a way to receive funding directly from fans in exchange for exclusive benefits, which by the way are optional, also referenced in the article are Facebook market and Craigslist. I would also put Bunz on this list too. 2. Consumer to business, this one surprised me, never seen it before, and frankly I’m not sure I agree with it but I’ll describe it as is and you can make up your own mind; C2B is where a consumer makes products/services available for companies to purchase, as the article says. The examples they cite include a graphic designer customizing a company logo or a photographer taking photos for an e-commerce website. My point of contention with this is that I don’t know if I’d consider the producers of content as consumers when they’re the ones creating content. So I looked in to it a bit more, and seopressor.com goes in to it more at length, and they cite Upwork as an example in that in this model breakdown, the customer is someone offering something, typically freelancers, the intermediary is the platform, and the business is the one picking up the service. Now, being from the position that I am, I don’t agree with the definition of this model, it’s backwards. The freelancer is the asset/resource that the business values, so I’m puzzled that of all the parties involved, it’s the one paying the money that’s not considered the customer. At least within a work for hire platform, the businesses are the ones purchasing services, with the platform getting a cut. For that reason it should be BAC, business as customer. We’ll see if this changes as the gig economy, remote work and freelancing continue to evolve, by the way if you disagree with this and can make a case as to why it should be consumer to business I’m all ears, contact podcast@debutify.com. The third and fourth distinct ones are business to administration and consumer to administration. If you’re on the business side, you’re basically treating the government like a customer. Chances are, due to the official nature of working with governments, businesses tend to be built solely around government contracts. It is a little more accurate to say Administration to Business. Consumer to administration though checks out, consumers pay taxes to the government as an example of a relationship, but exinent.com also points to academic fees, distance learning, e-health or e-voting. I suspect government work isn't your wheelhouse if you’re listening to us on Ecomonics, a debutify podcast, but if you are we’d like to hear about your experience. podcast@debutify.com

So, I’m glad I got to go over that, as I said it wasn’t the plan originally. What was the plan was to go through the most prominent ecommerce categories, and a good place to make sure we’re seeing the most relevant information is a 2020 article from oberlo. The top five online shopping categories are now fashion, toys/hobby/DIY, Electronics/Media, Food & Personal Care, Furniture & Appliances, which are also the top 5 in the US but that’s largely because the US is the biggest influencer in terms of total sales. Now, let’s look back to the report we did earlier (9) in The top 5 based on an earlier data set were Apparel and accessories, computer and consumer electronics, auto and parts, books/music/video and furniture and home furnishings. It wasn’t a complete reversal or anything but some changes did occur. So what happened? Well, you know as well as I do what happened. People were locked into their homes. So auto and parts gets knocked off the list, people aren’t using their vehicles as much and are working a lot more remotely. I would want to point out, there is an uptick in delivery drivers, but the ratio of people driving to people served would overall account for a net drop in drivers. Toys, hobby and DIY appearing on the list now makes sense as more people are finding more free time, as well as need to take more independence. Electronics and media check out, though the category was condensed, before you had a difference between electronics, the devices, and media the content on the devices. Food and personal care are a burgeoning aspect to this, as more people are testing the waters of getting their groceries online, including myself just this week. In terms of raw numbers, Fashion is 596 billion, THDIY is 504 billion, EandM is 481 billion, food and personal care 413 billion, furniture and appliances 312 billion. The biggest gap between them is between FnP and FnA, of 99 billion. The total growth is 13 percent year-over-year but is less than 18 to 19s 21.9 percent, so while covid19 has impacted what people are buying, it’s also had a significant impact on people’s ability to buy at all. To supplement these changes in trends, I’ve also found a second article to support this from eshipper.com, in addition to what categories we’ve established for far, they also added face masks which are popular enough at the moment to warrant a whole category, the next contribution to the list is gym equipment which is one of the highest ordered products on ebay. The other unique contribution to the list is Home and Garden, but keep in mind this is largely due to the combination of being home during the summer, as the Westeren Hemisphere transitions to fall, you may notice a slight irritability in the tenor of my voice, but other than that it’s going to be difficult to make huge gains at least until next summer.

Now here’s my next list, we’re going to get more specific, we’re going to get in to what products in particular trended upwards and which ones trended downwards as of the end of Q3 according to visualcapitalist.com; So the way this will work is I'm going to say the product, and the percentage of how much it’s increased between March 2019 and March 2020: Pain relievers like advil 99, dog food 159, vitamins 166, fitness goods 170, toilet paper 190, dish washing supplies 275, milk and cream 279, weights 307, fruit cups 326, packaged foods 377, rice and dried grains 386, soups 397, cough medicine 535, bread machines 652, disposable gloves 670. This is march, so we can understand why alot of these items became hot sellers in that time, emergency preparedness kits evidently, not so much. Honestly, what’s it going to take people?! Who am I kidding I didn’t get one either but honestly people let’s stop being silly here and get a package. A two week bin just to hold things together until you figure out which of your parents you’re going to, yours or your partner’s. Anyways, on the downtick were a number of items that all check out based on the circumstances, but the disparity down is not as pronounced as the upticks; luggage 77, briefcases 77, cameras 64, mens swimwear 64, bridal wear 63, mens formal wear 62, womens swimwear 59, rash guards 59, boys athletic shoes 59, gym backs 57, party and event supplies 55, store fixtures and displays 50, drones 50, golf clubs 33 and coolers 30. So that we’re all understanding this correctly, this means the higher the number, the steeper the decline and increase respectively. Again what do we know from this? We know travelling was ground to a halt, we know big events were cancelled or drastically reduced in scope, golf courses kind of surprising, pretty distanced pastime if you ask me. So based on what we’ve understood so far, what's your takeaway? Mine is, now that we’re moving in to a more pronounced, long term situation regarding this pandemic, people are starting to adjust to this lifestyle because it’s not clear when it’ll go away, if ever, warnings of a second wave have been coming through the nexus for some time now, and the west has a winter ahead of it. Depending on when you listen to it, the upcoming trends will change but the purpose of this exercise is to analyze the data and draw conclusions, making it easier to do that in the future. I’ll tell you my takeaway, even if we get the all clear tomorrow, there have been some significant changes to people’s lifestyle. Remote work is proven, so the next major DIY innovation could be yours. Fashion will always reign supreme because the profit margins are too good. But to keep looking forward with fashion is to continue having your finger on the pulse, understanding the way people live will help you understand what they need to wear to express themselves. And not just to others, to themselves as well. People are going to be at home more often, which means they’ll be looking at themselves in the mirror at home more often. Are you going to sell them clothing intended for when they’re at parties they can’t go to, or are you going to sell them clothing they can stand to see themselves in day after day? We can see with toys, hobbies and DIY that more people are finding time to do something they enjoy, the worst case scenario might be someone who just can’t quite get themselves able to do what they need to do, and are turning to pastimes to give themselves something. On the more preferable scenario, you have people who no longer need to commute, realising they’ve saved about 10 hours a week on travel, oh and travel’s not free. Selling electronics and media is hard for me to advise, it’s something we’ve talked about before regarding liability. So if it were me, I’d focus on sourcing one good quality product and forging a site around it. Food and personal care are 4th on the list and a lot of that, I suspect has to do with the ability for dropshippers and ecom sellers to be willing or able to sell consumable product that we eat or rub on our faces, same goes for furniture and appliances, one of my mantras on the show is buy cheap to test, then invest, so when I see ecommerce centered appliance markets, I usually see small countertop ones such as single room air conditioning or a dehumidifier. Now would be a good time to tell you about first touch personalization. I found a great article by searchenginejournal.com which also provides some 2020 insights that highlight what we’ve been building on here, the dramatic and pronounced shift towards online life. Searchenginejournal.com points to a few ecommerce specific facts here, which includes the growth rate within ecommerce, a 77% increase in online sales. They go on to say of the people purchasing, 74% of shoppers will be people who don’t normally buy online, of the 7.4 million people who are doing an online checkout for the first time, 75% are boomers or older. And also of these people, 80% of them say that if their online shopping experience is catered to their specific needs, they’ll be back. This new wave of ecom customers for now are spending on necessities, the article says, which is backed up by the facts listed above. For us this is good news all around, these shoppers are not tech savvy, or less tech savvy than average, and so what’s essential to servicing them is an experience that’s fast, simple and most importantly, relevant to what they need. This is where first-touch personalization comes in. The example they cite is as follows, one goes to a physical store looking for hair care, they know they’re in the right store most of the time, and rely on assistance to narrow down the options to what they need in specific. Whereas when customers arrive at an ecommerce store equivalent, where things didn’t go well for the business is when there was only one product on the landing page, customers were immediately dismayed by the lack of options. Once first-touch personalization was implemented, instead of one product there were several, with each one tagged to be relevant to the customers needs. The article goes on to make the case that without adhering to the digital transformation we're facing, your business will fall behind.

The last category I can share with you today are what trends have been, and will continue to, shape the remainder of 2020 and beyond. This is a read from econsultancy.com. 

  1. Data and AI. The first important point expressed in the article is that a lot of what we used as resources for data has changed, customers suppliers and competitors have all needed to adapt to a drastic change in the world as we know it. So even as we evolve the show, we have to recalibrate the data we’ve accumulated, although we’ll eventually get the all clear, people have grown accustomed to this shift in lifestyle and may elect to stay this way out of preference or out of a concern that we might get hit by another pandemic in our lifetime. The article points out that big companies like Amazon and Alibaba are based on the principles of data driven merchandising, product recommendations, aka matching customers with the products they’re most likely to buy. The AI side of it is a little less clear, since data is based on collecting information that’s there, AI is based on optimizing processes for the future, making decisions, also referred to as machine learning. Here’s what it’s done for you and you may not have realised. AI is what decides what display ads appear as you browse the web. This is true for Google’s ad engine, which is their primary source of revenue. On social media, meaning Twitter, Facebook and the like, they use machine learning to determine what you as a reader will see. Amazon as well has gotten in on it, in 2019 their ads business has generated 4.8 billion in revenue. They go on to talk about what machine learning does for task management; they can instantaneously select among 10 000 SKUs what a customer might like, rank your category pages to maximise your likely gross margin return, sort out customer requests so your CS agents can work through them more easily and guess what inclinations customers have in terms of their spending habits. 

Number 2 are digital skills, which make up almost all my portfolio. Econsultancy points out that among the ten richest people in the world, 4 did so due to digital technology; Bezos, Gates, Ellison and Zuckerberg, and the remainder depend on it to keep their business flourishing. Some facts to back this up include Inditex, the parent company of Zara, announcing they’re closing 16% of stores and focusing that effort and cash on ecommerce. A logistics company DPD announced they’re recruiting 6k+ people to provide digital support, and the UK government made an announcement that they need to upgrade their digital strategy, which econsultancy speculates means trying to train people more digitally. 

Their third one is personalization, but we touched on that already. Number 4 is competing with Amazon. It’s something anyone not Amazon has to think about, but one interesting angle to keep in mind is that let’s say you want to sell through Amazon, as their 5 billion dollar ad program continues to gain traction, sellers aren’t just competing externally but internally as well, as they’re forced to spend ad money within Amazon to have their product displayed. On the one hand, compared to spending ad money on Facebook where users might not be in a buying mood, the ad money spent on Amazon is to present your product to customers looking to spend. The other side, you’re neck and neck with other products, including in many cases, Amazon’s own in house products. How to deal with this is broken down into 7 subsections. Section A which is a brand, while Amazon pushes certain products the hardest, customers, including myself, have some built in loyalty to companies that we know and trust. While it can take years to create a brand that will have household power, you can advertise the best parts in a few hours to get the ball rolling. Section B is mission, Amazon is a market, but if you remember back to my episode on Ecommerce stores, brands like Partake and Lastobject contribute to the net good, and customers are more inclined to buy, knowing their money goes towards a noble cause. Section C is content, again Amazon is bare bones in terms of a creative voice, so as people begin to spend more of their time on the net, filling it with valuable information ties in to the mission statement as well. D is customer experience, the writer of the piece had asked someone high ranking at Amazon why people buy from them, the answers were ‘logistics, customer support and price/selection” they set the standard for all three, and while selection is subjective to your operation, logistics and customer support are non negotiable. Sec. E is Habit. The case is, many of us are defaulting to Amazon for our shopping habits, personally the reason why I do is because of liability, I can say with utter certainty that buying from various ecommerce sites have been a mixed bag, including ones where the product never arrived or I was falsely informed. But assuming I trust a brand, why would I be compelled to check in on their site habitually? The example they cite is Boohoo and ASOS, they would have new products available regularly, which encourages customers to come check them out. My browsing habits are based on dopamine, I hate to admit it and I’m trying to resist it, but I can easily lose hours a day going through social media as there’s always something new to check out. I’ve never gone to Amazon because something is new, I expect new things to arrive there every day, I’ve always gone because there’s something I’ve got to buy. Sec. F is product exclusivity. It’s good to sell some things on Amazon, but you can also funnel shoppers to your site by promoting site exclusive items. And if you intend to have 1 to 1 parity, you can have a product launch on your site, and then release it later on Amazon. Sec G. Convenience and locality, convenience we’ve considered already, but Amazon is a store, and you don’t see them putting their store in other physical stores, which are still around I might add, but you can get your product into those stores and help support that business and community in doing so. 

Number 5, responding to changing customer behaviour. These changes are short term and long term, which we’ve been thinking about already, but here are the subsections we can get into detail on: There’s category shift, which we’ve talked about above. An openness to new brands, which is the result of people going online and seeing products and brands they’d normally not see going to a store. Next is ecommerce by default, which is simply ordering something online now vs going to that same company’s physical location that’s 20 minutes away. And last on this subsection is price and return sensitivity. Where brick and mortar has an advantage is the ease of returns, going to the store to bring something back opens the customer up to trying other products incase an exchange is the better option. Customers are reluctant to go to the post office, says the article, and I am in agreement. In addition to the long wait time which I experienced, I also had to pay shipping, which cost me 15 dollars. If I buy something at a store and have to return it, I can mitigate my loss by doing other stuff while I’m in the area so to speak, and at least I don't need to pay to return. As for price sensitivity, there is uncertainty on both sides, companies don’t know if their product, which for some time was well in demand, such as the list I referred to earlier. So the more you can predict and prepare for how your product will be effective in the market the better. 

The next factor is protecting from recession. The advantages of ecommerce in surviving an incoming recession is that for one, without a physical location, ebrands have to take the initiative and stay engaged with customers. The second is that if you notice a sudden change in buyer behaviour, you can easily respond to it since it’d all be done on your computer, or tablet even. Third is that you can check the efficacy of ad campaigns, a tv campaign could be a whole quarter before you see results, but you can sense how things are going online over 24 hours. Fourth is that stock is being held in one or a few central locations, and not spread out over dozens or hundreds of stores. I can tell you from experience, at one of my watch jobs, when one of the other stores was calling, we were reluctant to pick up because it meant having to transfer a product of ours to them. The final factor is in summation, to understand the implications of your overall customer experience strategy, which encapsulates all of what we talked about today; that includes the increased demand in the online space, increased expectations for quality customer service, a sense that brands are out to make a difference and have a mission, and that digital skills are in short supply. So that’s that for today, refine your strategy and get yourself ready for 2021, we all thought we knew how 2020 would look going in, and if we make that mistake again, this time we’ll be ready for it.


Written by

Joseph Ianni

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