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6 Consumer Trends to Watch in 2021

Consumer trends are constantly changing.

And most businesses would agree that knowing what people consume and how they consume is difficult to measure. But important to understand.

If you want to learn about important consumer trends to watch in 2021, read on.

1. Voice Commerce Becomes Starting Point for Purchases

There’s no question that convenience has become a top priority for many consumers.

In fact, a report by the National Retail Federation found that 83% of consumers value convenience when shopping more today than 5 years ago.

Nowhere has this sentiment been more clear than in the adoption of voice commerce. Devices like the Amazon Echo and the Google Assistant are often the starting point in modern retail transactions.

The voice commerce market is expected to be worth $40 billion by 2022. And companies like Amazon and Google are constantly finding more ways to make buying even easier.

Searches for “echo auto,” an Amazon product that allows the Alexa home smart hub to be added to the user’s car.

A recent study found that 62% of regular voice-activated speaker users were likely to buy something through their device in the next month. With 38.5% of the U.S. population expected to have used a voice assistant at least monthly in 2020, that number is likely grow larger in the future.

In fact, close to half (43%) of smart speaker owners used the technology to shop last year.

Digital assistants are also a form of lead generation. Another survey found that 58% of people have used voice search to find information about a local business.

The largest tech companies still own the market, with a few billion users and an installed base that is growing by the day.

Google leads the pack in voice search with 500 million monthly active users and an estimated install base that reaches more than 1 billion people.

Large retailers like Walmart have even partnered with Apple to add Siri-enabled voice shopping on any Apple device.

2. Consumers Demand Control of their Data

Consumers want to take back control of their own data.

In fact, a 2020 KPMG survey of more than 1,000 consumers found that 56% wished they had more control over their data.

This directly affects consumer behavior. According to McKinsey, 87% of North Americans said they would not do business with a company if they had concerns about its data practices.

More than half of consumers also trust a company more if it does not ask for information that is irrelevant to its product.

For many consumers, privacy can even take precedence over convenience.

In a recent study conducted by payment security company Paysafe, 82% of respondents felt there was an imbalance between security, convenience, and fraud protection. And 48% of American consumers said they were willing to accept tightening security protocols if they would eliminate fraud.

Searches for “data privacy” over the last five years.

After the adoption of the General Data Protection and Regulation Act (GDPR) by the European Union in 2018, legislative action has only increased. In 2019 alone, legislation related to consumer data was proposed in 25 U.S. states and Puerto Rico.

While most of the proposed bills have failed, California passed the California Consumer Privacy Act (CCPA) on January 1, 2020.

This Act gives California residents the right to ask businesses to disclose personal information they have collected on the resident. It also gives Californians the right to be notified before a business collects their personal information.

Searches for “California consumer privacy act” over the last 5 years.

The largest of companies are also taking action. Apple announced in 2019 that it would offer a way for consumers to sign into apps without giving data over to third parties.

Expect consumers to exert further pressure in 2021. 90% feel that governments and businesses have a responsibility to protect their data. However, 70% of consumers also say that they cannot trust those businesses to do so.

3. Digital Wallets and Biometric Payment Usage on the Rise

As online privacy concerns rise, the use of digital wallets and biometric payment is taking center stage.

What is a digital wallet?

It’s basically a digital version of someone's financial accounts. Platforms like Apple Pay, Paypal, Google Pay, or Venmo allow users to pay for online goods and services from their devices without having to enter debit card or bank information into third party websites or applications.

Financial information entered into digital wallets are encrypted. And can only be accessed by authorized third parties. Because of this, wallets can help alleviate certain consumer privacy and fraud concerns.

In fact, recent surveys indicate that roughly two-thirds of consumers feel more comfortable making online payments through a digital wallet rather than traditional methods.

According to Statista, 41.8% of all U.S. ecommerce transactions already take place through digital wallets. And interest is rising, as 27% of all U.S. consumers say they would like to pay with their smartphones all the time.

Searches for “digital wallet” have grown by 435% over the last five years.

A Juniper Research study predicts that nearly half the world population is expected to use digital wallets by 2024. The same study also claims that U.S. annual spend per digital wallet is expected to increase to $6,400 in 2024 from $3,350 in 2019.

In addition, future growth may be boosted by increasing adoption of proximity mobile payment (PMP) in the U.S.

PMP occurs when a consumer pays with their mobile device while checking out in a physical store.

In China 81% of mobile phone owners made a proximity payment in 2019, compared to just 29% in the U.S. Similar rates of adoption in the U.S. could lead to an explosion of digital wallet usage. The leading barrier to adoption in the U.S. is security concerns.

Although adoption of PMP has been slow in the U.S, 2020 has had a meaningful impact.

Apple Pay added 66 million new users worldwide over the last year, bringing its grand total to around 507 million. This means that 51% of all iPhone users have now activated Apple Pay, compared to 48% last year.

Searches for Apple Pay since 2017.

Venmo has also seen significant user growth. Consumers are increasingly finding it more convenient to pool their resources using a digital wallet rather than a physical one.

Venmo’s user base has grown from 10 million in 2017 to 52 million in 2020 (A CAGR of 73%). Its payment volume has also increased to over $100 billion in 2019 from $34 billion in 2017.

Searches for Venmo have grown at a rate of 300% over the last 5 years.

Square’s Cash App has also seen significant growth since its inception in 2013.

The payment company’s peer-to-peer money transfer app allows users to pay vendors through the app, transfer money to friends, trade stocks, and even buy bitcoin. Cash App also released its own debit card in 2017, the Cash Card, which seven million Cash App users now own.

After surpassing Venmo in total downloads back in 2019, Cash App has only continued to grow. The cashless payment app reported 90 million downloads in 2020 as well as 30 million monthly active users.

Interest in Square’s Cash App has increased significantly over the last 5 years, growing at a rate of 2966%.

Some of the largest U.S. banks have also gotten in on the action, developing their own mobile payment app called Zelle.

Zelle is a standalone app that allows peer-to-peer digital transfers, much like Venmo and Cash App.

The major difference, however, is that Zelle is integrated with many of the major banks’ own mobile banking apps and technology, allowing peer-to-peer transfers between consumers’ actual bank accounts.

Searches for Zelle have increased by 727% since 2017.

And Zelle has grown even faster than both Cash App and Venmo. $133 billion was transferred through Zelle just in the first half of 2020. This is compared to $187 billion in all of 2019.

Source: Business of Apps

Note: Square’s total payment volume includes its seller business as well as Cash App. If only Cash App was included, Venmo may have a larger volume.

While it may be processing the lowest total payment volume, it is worth noting that Cash App is generating the most consumer interest as of late.

Many of these digital wallets are secured by what is known as biometric authentication. In a world where contactless payment is becoming the norm, consumers are demanding an easier form of verification.

Biometric authentication allows this. Instead of memorizing a PIN, consumers are now able to pay with the tap of a thumb.

Even with the potential privacy concerns, it is clear that this is what consumers are demanding. A recent study found that 56% of consumers would prefer to use a biometric sensor on their payment card instead of a PIN.

This is doubly so for mobile phone payments, as 65% of consumers are already using biometric authentication on mobile devices. And this number is poised to grow. Over 75% of newly released mobile devices feature some form of biometric technology.

4. Consumers Want Local Shopping Options

Consumers are increasingly shopping locally. But doing it online.

This 1-2 punch satisfies a need for community as well as a desire for efficiency and convenience.

Hyperlocal delivery is basically delivery of goods from a close proximity. This typically involves a physical retailer that also offers delivery or omnichannel services to local consumers.

As more consumers are turning to digital-first shopping, there is a chance for retailers to satisfy the need for convenience. 41% of consumers say that they are willing to pay a charge to receive same-day shipping.

Annual on-demand consumer spending is about $57.6 billion, and it is only expected to grow. In fact, the food delivery market alone is expected to reach $161.74 billion by 2023.

A breakdown of annual on-demand consumer spending.

Obviously, the typical food delivery giants like Grubhub and Uber Eats are taking advantage of this. But there have also been other startups to emerge in previously untapped niches.

One of the most successful is goPuff. The Philadelphia-based startup operates as an online convenience store, delivering products like over-the-counter medicine, baby food, and alcohol.

goPuff picks the products up from a local drug store or convenience store and delivers them to the customer in 30 minutes or less. The service is already available in 500 cities throughout the U.S., and the company has raised $1.35 billion in total funding.

Search interest in goPuff has increased significantly

5. Buying Habits are Largely Based on Reviews

When it comes to consumer buying habits, online reviews are affecting decisions more than ever.

A 2020 study by Trustpilot found that 89% of consumers worldwide read reviews before purchasing a product. And over half of consumers also read at least 6 reviews before purchasing a product.

This trend has increased since the start of the pandemic, as reviews assist in verifying online purchases. Power Reviews found that by November of 2020, people who interact with online reviews were converting at a 25% higher rate than in 2019.

This isn’t just limited to pure ecommerce goods. Brightlocal, in its 2020 Consumer Review Survey, found that 87% of consumers read online reviews for local businesses in 2020. That’s up from 81% in 2019.

Reviews also help in discovery of local business. According to Podium’s 2020 State of Reviews study, 21% of consumers said that reviews played a big role in their discovery of local businesses.

As for where consumers find and write these reviews, Google is by far the leader. 72% of the respondents in Podium’s report said that they are most likely to turn to Google to see reviews.

Podium also found that 38% of users require at least a 4-star rating to even engage with a business. The average consumer has slightly lower standards, but still demands a rating of 3.6 out of 5 to consider parting with their money.

It’s hard to talk about reviews without addressing the proliferation of fakes. According to Brightlocal’s study, 81% of consumers believe they have read at least one fake review in the last year.

Google Chrome extensions like Fakespot can help in alleviating this, especially since the majority of reviews are written and viewed on Google.

Searches for Fakespot since 2017.

Even with the prevalence of fake reviews, they are still a significant factor in consumer buying decisions. As more people start their buying journey through a digital medium, expect the importance of online reviews to increase.

6. Augmented Reality Enhances the Consumer Experience

As the shift to digital-first shopping continues, consumers are increasingly looking for a way to enhance their experience.

Augmented reality and virtual “try-before-you-buy” features are meeting this need.

Industry leaders estimate that 35% of people say they would shop online more if they could virtually try a product before buying it. And according to a survey of more than 30,000 consumers, over half (51%) said the biggest drawback of online shopping was not being able to “touch, feel, and try a product.”

This has led many of the largest retailers to position themselves accordingly. Ulta’s virtual try-on-tool GLAMlab has seen engagements increase seven-fold since the beginning of the pandemic.

L’Oreal’s virtual makeup experience, launched in 2019, has doubled website engagement time and tripled conversion rates.

Kohl’s announced a partnership with Snapchat, which enables the retailer to offer a Virtual Closet experience through the popular app. This new feature is expected to expand the company’s market to the more than 75% of 13- to 34-year-olds that Snapchat reaches.

Snapchat claims that their daily active users engage with AR content nearly 30 times a day, making them an ideal match for a retailer looking to include these offerings.

Kohl’s Virtual Closet Tool in Snapchat.

Moreover, these tools are working. Shopify recently released data showing that products with interactive AR content displayed a 94% higher conversion rate than products without AR. And in March, the platform added built-in support for AR and 3D models.


That’s all for the top consumer trends for 2021.

As always consumer behavior is constantly changing. And in this last year of unprecedented change, it may have shifted faster than ever.

Some changes will last and some will not. One thing is for sure, though: we can expect interesting consumer trends in 2021.

Last Updated: 
January 20, 2021
Josh Howarth
Co-founder of Exploding Topics.

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