Many bricks-and-mortar shops have been forced to close due to the coronavirus (COVID-19) pandemic, causing consumers to change the way they shop. What’s happened in the wake of this crisis is the rise of the eCommerce business. Consumer behavior has dramatically changed as they avoid going out and potentially exposing themselves to the virus. Instead, they look for online retailers that can supply them with their needs. From hand sanitizer and household staples to games, puzzles, and even gym equipment, people are looking for eCommerce brands to help them make it through the quarantine period.
So while COVID-19 disruption has impacted many sectors, particularly the travel industry and stock market, it has promoted eCommerce growth. We have yet to see the full coronavirus effect on the economy, but we know that it has pushed consumers to change the way they shop.
Therefore, eCommerce business owners should find out everything they can about their consumers. Find out what they are buying, what they are not buying, and how they are buying it. Are they turning to social media to find what others are having delivered or are they getting recommendations from their local community? What app downloads are trending? How is the coronavirus impacting their purchase choices?
Before we proceed with talking about the impact of coronavirus, we should mention that eCommerce has been affected by a similar situation before. In 2002 and 2003, the East faced the SARS crisis during which JD.com and Alibaba experienced a rise in sales in online sales and grew significantly. That epidemic disrupted the economy, travel, and work of millions, and everyone was afraid to go outside. Alibaba and JD.com saw it as a perfect storm for their eCommerce operations to change Chinese consumption habits forever.
Due to the coronavirus, the majority of people are very concerned about the news surrounding the pandemic, believing that the crisis will last more than a few months. Also, most consumers are no longer considering purchasing trips, cars, real estate, luxury goods, homes, and other big-ticket items over the next three months. Instead, they are focusing on consumable products, such as:
Furthermore, where people are purchasing their products has also changed – they are buying less at big box and wholesale retailers, while online shopping has increased by about 30% (Amazon alone is planning to hire 100,000 employees to be able to handle the increase in the number of orders). These numbers show us how important it is to listen to your customers.
More people are gradually moving to online shopping, even demographics that didn’t typically make purchases online. Generations such as Millennials and Gen Zers are already used to buying online. Still, we are now seeing the older generations turning to their computers and smartphones to order the things they need to survive this time period of forced isolation or social distancing. As more consumers now discover the convenience and safety of shopping online, it can be expected that these new habits will carry into the foreseeable future, even when the COVID-19 pandemic is over.
Millennial and Gen Z consumers never needed to stock up in advance because they could get everything they wanted on demand. They came of age with online shopping and were accustomed to getting whatever they needed to be delivered to their doors within a few days. Now, coronavirus fears have forced all generations of shoppers to buy in bulk and stock up via online shopping.
Almost 90% of shopping journeys now start online. With citywide lockdowns and social distancing likely to be short-lived, as well as current delivery capacity under strain, there is a tremendous opportunity for both physical and eCommerce retailers to optimize their online relationships. These efforts can reduce the shipping cost from a store/warehouse and regional distribution infrastructure while delighting customers with cheaper and faster delivery options.
The biggest long-term impact could occur in grocery sales. Grocery delivery platforms, such as Shipt, Walmart Grocery, and Instacart, are seeing huge spikes in sales, mostly due to new customers trying online grocery shopping for the first time. There is a high probability that these first-time online grocery shoppers will convert to this way of shopping permanently. When these consumers see that they can load up items in a virtual grocery bag and have it delivered to them, they will likely come back to order those items again. That shift in consumer behavior will move a lot of volume from physical to online stores.
According to Amazon, up to $30 million of their annual retail sales in North America is attributed to shoppers who first tried to buy an item in a physical store, but their retailer was out of stock. That would account for about 24% of their sales stemming from retail challenges in inventory management.
Like consumers, the retail industry was also used to getting the inventory they need on-demand from their manufacturers. They have grown accustomed to keeping less inventory in stock, which had manufacturers produce goods on an as-needed schedule (because they were afraid of ending up with warehouses full of excess inventory). The coronavirus crisis highlights the need for both manufacturers and retailers to improve their supply chain to balance the desire for lean inventories with the need to be ready for bursts in demand.
After the pandemic is over, consumers will definitely return to malls, stores, and other social gathering places. However, retailers will need to find more ways to deliver better virtual experiences and interact with consumers online to drive eCommerce sales and focus on that instead of drawing people to their bricks-and-mortar stores. Even if the pandemic ends more quickly than expected, businesses are going to recognize the need to be ready for the next big disruption. More of them will invest in virtual experiences, such as virtual salespeople who can engage with customers or in-store demonstrations that can be viewed on their websites.
To adapt to changing consumer behavior, retailers need to engage with their desires and needs. The opportunity to do this online is creative, data-driven, and measurable, offering greater opportunity than any other challenge. Key metrics paramount to the success of any eCommerce store include customer retention, loyalty, and improving the digital experience.
Today, consumers have less credit available and are forced to save more, which leads to reduced consumer spending. Furthermore, without the chance to visit bricks-and-mortar stores, customers are deterred from impulse buying, which puts impulse buying out of the context. Online shoppers now take their time to research the best deals online. The ability to research products online makes consumers feel more confident about their purchases.
In 2003, the SARS crisis changed consumer behavior and spurred the growth of eCommerce. Likewise, the coronavirus outbreak will encourage the movement to retail through omnichannel. In a time of crisis, digitalization empowers the individual who can control what and when to buy as well as how it will be delivered to them, which eliminates many variables. Thanks to online shopping, consumers can get a comprehensive set of information related to specific products or services that are not always available with the in-store experience.
With markets becoming more competitive and challenging, the Internet and digital marketing allow businesses to retain their existing share, but also break into new markets. To stay competitive, retailers will begin to collect and analyze data to get actionable insights to anticipated changes in customer traffic patterns, determine optimal inventory levels and distribution routes, and for intelligent inventory predictions to tailor their assortments at the store level. Today’s AI-based technology will also help improve customer experience and improve unit economics. By achieving this level of intelligence, eCommerce owners will develop a better insight into demand forecasting and attribute trends to be able to meet changing consumer habits and needs better.
Since its emergence, the coronavirus has affected businesses across the globe, regardless of their size. Thanks to the increased connectivity, supply chains have extended across continents. However, they now feel the negative consequences of the pandemic (even if the outbreak is not so harsh in the country a business is based in). Therefore, it is crucial to focus on key things that have separated good business for decades – adaptability, flexibility, and ingenuity.
In China, we get a clearer picture of the coronavirus fallout as their economy reopens. Many companies there have moved to post-recovery planning. At the forefront of many those plans is full-scale digitization. Better eCommerce solutions can help improve the world of the future, and while many believe it was only a bold statement, the current situation has proved to be true.
Currently, eCommerce is solving a great number of problems. The digital side of the retail business is expected to grow at a fast pace. It will adapt to the growing number of online shoppers because the coronavirus pandemic will bring long-term changes to consumer behavior. Being robust enough to answer the big questions, eCommerce should motivate businesses to find the answers to the current issues and plan for a better future.
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