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The Guide to Adapting Ecommerce During the Coronavirus Outbreak

Jon Cogan
May 13, 2020

In this time of crisis caused by the COVID-19 disruption, people are required to stay in isolation and practice social distancing.

The coronavirus pandemic has drastically changed the world, forcing the travel industry to a standstill and causing establishments that experience a lot of foot traffic to close. The current situation is changing customer behavior because the masses are prohibited from going out unless it is to buy household staples, medical products, food, and other essentials. Because public health is at risk with each potentially infected person leaving their house, many people have chosen to stay indoors and rely on companies selling online and offering home delivery.

Since many brick-and-mortar stores have shuttered, consumers have turned to online shopping, and it may appear that eCommerce is in a pretty good situation right now as there is an increased demand for online shops. However, things are not that simple. The impact on physical and online retail sales, a shift away from many of the activities people enjoy (like travel), and stock performance vary widely by business and vertical. Many patterns have emerged in response to the news of economic uncertainty and will be imperative for businesses to learn from those scenarios. It will help them protect their eCommerce business and sustain growth – even with coronavirus impacting people’s lives and habits.

The spread of the virus has caused market and supply chain disruption that is reflected in increased market fluidity and decreased valuations. But while many business areas are struggling, coronavirus is impacting eCommerce sales differently. eCommerce retailers must recognize the opportunities to flourish and solidify their position in the market during the pandemic and into the foreseeable future. As more retailers turn to eCommerce in turbulent times, many hope that eCommerce will limit the pandemic’s adverse impact on the global economy.

Coronavirus and the Blow to Product Supply/Demand and Advertising

Since the pandemic took a swing, businesses have experienced lowered demand and struggled to generate cash flow, which escalated dramatically in the period of only two weeks.

In the first survey, 35% of businesses with global revenues larger than $61.4 million said that they saw lowered demand for their products. Since then, the number of businesses experiencing this has jumped to 64% (according to Econsultancy). Furthermore, disruptions have severely affected marketing budgets and campaigns. On March 31st, only 12% of businesses surveyed said that their advertising campaigns are going as planned, which is a 30% drop compared to data published on March 16th. There was also a significant drop in claims that marketing budget commitments have remained unchanged (from 36% to 13%). The areas that have also been adversely affected include infrastructure and technology spending, product/service launches, new hires, and digital transformation.

Now, more than ever before, focusing on digital transformation is crucial because the usage of products/services is shifting to the digital world. Many companies are now forced to find new ways to set up and optimize their digital infrastructure to be able to deliver their offerings digitally. But investing in marketing also plays an essential role in the ability of eCommerce businesses to communicate with their consumers in these difficult times. The low cost of online advertising, as well as the need to focus solely on online operations should free up marketing budget and creative resources intended for traditional, offline methods.

The Impact of Coronavirus on eCommerce

In the days of shuttered brick-and-mortar retailers and social distancing, eCommerce has proven itself essential. As the virus continues to spread, there have been signs of changing consumer behavior that all businesses have noticed, and they came as a result of self-quarantines and increased worry about public places. That has brought some eCommerce businesses the opportunities to thrive over the next few months because consumers are turning to online shopping as their only means to avoid time spent outdoors where they may come into contact with an infected individual. Certain consumer demographics (such as senior citizens) are experiencing online shopping for the first time and developing new shopping habits. It is believed that if these customer experiences are good, shopping online will become a long-term habit.

Unfortunately, COVID-19’s impact includes some consumers finding themselves with no work or less workload. It is difficult to predict what will be the full impact of COVID-19 on online businesses. The situation will largely depend on changing consumer behavior, niche, and how much longer the population will need to practice social distancing. We have compiled several trends that have been affecting eCommerce growth so far.

    Surge in online shopping

According to research conducted by Quantum Metrics, the eCommerce sector has experienced an increase in average growth in weekly revenue of 52% (compared to April 2019). Consumers have been turning to online retailers to purchase essential and nonessential items because they are practicing social distancing to prevent the spread of the virus.

However, not all online retailers see a rise in online orders. Large online marketplaces, such as Amazon, have even suspended the intake of nonessential goods (other than household items and medical supplies) to their warehouses to be able to deal with increased workloads. The halting of fulfillment and distribution of nonessential items have further complicated the situation for some online retailers (e.g., Reformation and Victoria’s Secret).

    Lower cost of advertising

Since many companies have decided to stop investing in online advertising, there is less competition in the digital realm. Since fewer companies are engaging in online ad auctions, the price of online advertising is going down. According to SocialBakers, there has been a decrease in CPM across all industries (more than 50% compared to November 2019). Expedia typically spends about $5 billion on advertising, but this year they will spend around $1 billion (probably not even that much), which is a major emptying out of the auction. This behavior is being seen from other major online advertisers in other severely impacted industries such as airlines, cruise lines, hospitality. From a cost perspective, CPMs are a three-year low. Lower CPMs and increased online spending are a great combination. On Friday, our advertising department saw a 4xROAS (return on advertising spend) across all our clients.

Those who are in the online advertising ecosystem are in a huge advantage because people are staying inside, which means that they must consume online ads. Now is a tremendous opportunity to work on improving your website’s functionality and reorganizing your online ad campaigns. It’s about weathering the storm and coming out stronger when everything is over.

    Online grocery shopping will experience the biggest long-term impact

According to a recent survey, one-third of those surveyed said they had used online pickup, food delivery, or delivery services for groceries in the past week, while 41% said they had used those services for the first time. Downloads of Shipt, Walmart’s grocery app, and Instacart increased by 124%, 160%, and 218%, respectively. The huge increase in online grocery sales occurs mostly because of new customers trying the services for the first time, and it’s expected that these consumers will continue using them permanently (which will move a lot of volume from physical to online grocery stores).

    Supply chain issues

While many companies are seeing a decrease in demand, it seems that those receiving more orders than ever are in a better position and do not face serious problems. However, many eCommerce businesses are concerned that their supply chain won’t meet the growing needs of their consumers. The disruptions in the supply chain began in China in the first days of the virus outbreak. Since China saw thousands of manufacturing closures, and most companies around the world are supplied from China’s manufacturers, this has affected their inventory availability and caused severe delays in delivery. Customers buying from Amazon have reported that some of their shipments are delayed for as much as a month. Such increased delivery windows from such large retailers have created opportunities for smaller direct-to-consumer online sellers who are more flexible and agile in adapting their supply chain processes to meet consumer needs.

Businesses in China are now in a recovery stage, which means that businesses might be able to return to normal in a month or two. However, fulfillment is another issue that eCommerce businesses need to deal with. Until now, large retailers have managed to provide products at lower prices thanks to lower overseas manufacturing and shipping costs. In the US and Europe, there has been the biggest factory closing since WWII.

Since manufacturing is now disrupted, the disruption created a ripple effect in the entire supply chain, forcing retailers to increase their prices or halt production. However, smaller brands now have a chance to provide a cheaper and quicker solution for online goods than some of the large names in the market.

Ways to Adapt Your eCommerce Store during Coronavirus Outbreak

One thing is for sure – the current global crisis underscores how adaptive we humans are. In response to a complex, uncertain, ambiguous, and volatile situation, individuals and businesses are adopting innovative approaches and embracing digital transformation. In case the pandemic has decreased your sales or negatively affected your operations in any way, just know that life will eventually return to normal.

Since many things have changed, many new opportunities have emerged when it comes to eCommerce brands and marketing activities. Let’s take a look at what you can do to navigate your eCommerce business to stay afloat and even sustain growth.

    Evaluate your customers’ needs

What is the primary impact on consumers that you cater to? How are your ideal customer groups dealing with this crisis? Are they laid off, serving as essential workers, or working from home? What are their concerns and needs right now?

To be able to adapt your eCommerce business, you first need to understand the changing needs of your target audience and assess the ways to meet them. You should have a people focus and data mindset. Being able to recognize and meet the needs of a specific subset of customers is one of the biggest keys to a successful business. That fact remains the same, especially in the face of today’s crisis. Our globally-connected society offers a myriad of opportunities to collect data, so be sure to use it to observe the difference in consumer behavior. Focus on meeting their needs as they are right now, and you will be better prepared to avoid the issues brought to us by the economic uncertainty.

    Contact your manufacturers and diversify your supply chain

You may or may not see a spike in demand on your online store, but either way, not adjusting your supply chain processes could become a serious issue. Reach out to your manufacturers and talk to them about how the production of goods is going and how they think the pandemic will impact their business. Many factors are in play here, and you should do your best to be as informed as possible to get a clearer picture of what steps to take to make your supply chain more resilient.

COVID-19 is the model example of all the potential risks of relying on a sole supplier. It’s a clear signal that you should begin looking for other suppliers to limit your dependence. This may cause extra relationship management and overhead, but may result in higher quality and/or lower costs as your leverage increases. Find ways to localize your supply chain in order to become closely tied to your final markets. When you use multiple suppliers for raw materials and finished products, you’ll increase the likelihood that one or several of them will have uninterrupted operations.

Also, communicate any delays and be transparent when it comes to product shortages because consumers appreciate honesty. You may also create a waiting list for your most popular products.

    Update your product pages

If any of your services will be changing, you want to make sure to communicate everything with your customers. The supply chain issues you are experiencing could only be on a per-product basis, so it’s essential to keep your product pages updated so your buyers know what they should expect. Also, the last thing you want is an angry customer who placed items in their shopping cart that is not available or accessible at the moment because of the lockdown. You will have more satisfied customers when you manage their expectations, even if the service is slower than usual.

    Embrace a multichannel sales approach

So far, through the crisis, a diversified multichannel marketing and sales strategy has proven to be the most successful. It is the right moment for eCommerce retailers to double-down on their digital marketing and online presence. Sellers who embrace a multichannel approach want to be everywhere their ideal customers go shopping, especially social media. They value diversification and want to maximize their sales, and besides their main eCommerce website, no single channel dominates their revenue stream. To become a multichannel merchant, you should consider investing in AI-based technology that automates key processes. The technology includes apps that are better suited to the creation and storage of your primary business processes and data. Consider reinvesting in a more robust data integration solution or investing in an Enterprise Resource Planning (ERP) technology to handle a potential increase in your online sales.

    Leverage low-cost advertising

With more people staying at home, it comes as no surprise that Google searches have also spiked. More people are searching for products they would have otherwise bought in a store. However, some verticals have been experiencing a decrease in site traffic. Therefore, it makes sense to introduce more paid advertising and paid search to your marketing campaign, especially if you are selling essential items that people are looking to buy while in self-isolation. Make sure to watch your data and adapt your bidding strategy if necessary. If you see your conversion rates lower during certain times of day, reduce your bids for those periods to save money. The key is to get quality traffic to your eCommerce store, so look out for other advertising opportunities to drive high-quality traffic. For example, tablet and mobile device targeting and programmatic buying are expected to increase, while Google and Facebook are giving out ad grants and credits for ad buyers and small businesses. The effects of coronavirus are a bigger concern for larger players, having them reduce their spends, which brought down the overall cost of advertising. The CPM (Cost per Mille) has largely decreased and many ad agencies are seeing an increased return on advertising spend of their clients’ campaigns.

    Retain your store’s organic visibility

SEO has and always will be the most important long-term marketing strategy that brings organic traffic to your website. It cannot be turned on and off like paid advertising. However, you should adjust your SEO strategy because Google is tweaking its algorithms now more than ever to make sure that people get the most accurate information. Ignore the basics and you risk reducing your organic visibility in the long run. People will always be searching (more now than ever before), which makes organic search one of the most viable marketing channels in any scenario. As an eCommerce business, you are in a better position than bricks-and-mortar retailers to maintain your revenue during these challenging and vulnerable times.

    Make special offers

Price sensitivity in some shoppers might be increased due to lost jobs, layoffs, and economic uncertainty. Find opportunities to make special offers, such as discounts, small gifts, free shipping, across your entire online store, or only on items with higher demand. If you are experiencing decreased demand and lower consumer spending, giving a discount could bring your shoppers back.

    Offer installment options for payment

Conversion rates are down for many industries, and offering installment options for payment is one of the solutions that can boost your conversion rate. If you’re selling products or services online, consider offering payment plans through services such as AfterPay. It’s a digital service that allows customers to buy now and pay for the items in four equal payments every two weeks (without any interest). Add AfterPay to your checkout process and let your customers select it at checkout (completing the signup using their payment information). The merchant gets the full sale value upfront, while AfterPay assumes the risk of collecting the installments, making this a no brainer offering.

Your customers are facing a financial burden in the short run, and offering a payment plan will reduce it. It is an easy way to boost conversion rates in a time where most people are trying to reduce their spend.

Supplies are running low around the world – from toilet paper and masks to hand sanitizers and other essential products. We are seeing marketers purchasing these products and reselling them for 10-50 times the price. This is not marketing, and this is not entrepreneurship. We are asking everyone in the eCommerce business not to exploit a global health crisis just to make a quick buck. This is very short-sighted and morally and ethically reprehensible. There are ways to look at this situation and recognize how what’s happening will impact eCommerce positively.

No one can accurately predict how all this will turn out, which is why we don’t have a choice to be proactive. Everyone is reacting in real-time to changing situations and information. Now is the right time to adapt your online stores in response to the changes in consumer behavior and needs while preparing for a return to normal (even if it means to a “new” normal). Think strategically and stay positive.

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