One of the biggest fears caused by COVID-19 pandemic is the potential consequences on the global economy. However, there are two sides to every story, and the same global phenomenon that is seemingly destroying local businesses seems to benefit e-commerce enterprises all over the globe. The best example of this can be seen in the case of the world’s most successful e-commerce conglomerate, Amazon, which has seen a massive surge since the global outbreak. So, what exactly are the consequences of COVID-19 on e-commerce, and what can we expect in the future? Let’s find out!
This increase in demand for e-commerce services is all but accidental. You see, the very pragmatism behind this is crucial for this effect. Seeing as how people are either prohibited or advised against going to shops and supermarkets to buy. During the reign of a dangerous virus, having the ability to order items online and have them delivered to your doorstep is not just pragmatic but also life-saving. E-commerce businesses that follow proper protocols have become a valuable commodity.
The travel ban
The travel ban that a lot of countries are issuing is another major issue for e-commerce in 2020. Why? Well, a lot of people live to travel. The idea of that one holiday during the summer is what makes them make it through their long hours at work. Now that this seems to be out of the question, a lot of people are trying to make up for it by sampling local culture online (through target-destination-specific content) and by ordering items or beverages from their previous target destinations. For instance, a person who intended to visit the Balkans region or the Adriatic coastline this summer might decide to order Slivovitz plum brandy and, at least partially, make up for this missed opportunity.
At-home sports equipment is particularly popular.
Speaking of the items that are in particularly high demand, it seems that sporting and exercise equipment leads the way. For instance, if we decide to compare one week in June 2019 to the same week in June 2020, there were 4,963% more skipping ropes, 3,396% footballs, and 2,294% dartboards sold. People leading an active lifestyle simply cannot shift to a more sedentary way of living, even if it’s mandated by the state or cautioned by the WHO. This is why they are bound to look for an alternative. On the other hand, some are determined to dedicate themselves to self-improvement during the lockdown.
One-time vs. multiple purchases
A thing that a lot of people will notice in the last paragraph is that a lot of these items are considered to be one-time purchases. Workout equipment is the best example of this phenomenon. Skipping ropes and dartboards don’t need to be replaced regularly (in some cases, ever), which is why a single purchase doesn’t have the same value as a potential return customer. In other words, people who have already made the purchase are no longer as relevant to a retailer. Seeing as how about 8 percent of regular customers make about 40 percent of profit for the majority of retail businesses, this is something worth keeping in mind.
Another thing worth keeping in mind is the fact that not every country has the same increase in numbers when it comes to online shopping (whether it’s pure e-commerce or retail online). In Europe, for instance, Romania and Belarus seem to be leaders in pure e-commerce increase, while Belgium and Poland seem to be ahead when it comes to the number of online retail orders. In other words, when speaking about numbers, it’s essential to keep in mind the specific situation and location of the statistic in question.
Like with any industry, there’s a strong co-dependence between e-commerce and some related fields. For instance, due to higher revenues and greater competitiveness, the majority of e-commerce businesses are forced to invest more in digital marketing. This is particularly apparent in social media advertising, seeing as how up to 51% of people spend more time on social media (due to the lockdown). Even traditional retail conglomerates like Walmart are testing stores without cashiers. In other words, COVID-induced changes can be seen all across the industry.
Another thing worth noticing is that a lot of retail businesses that have previously operated on a brick and mortar model are now forced to switch to e-commerce. Even those who are still running traditional retail places are keener on accepting contactless payment (due to the fear of a disease). Nonetheless, both of these innovations are quite advantageous, which brings us to the following question. Once they can return to the previous way of things, will these businesses still feel inclined to do so?
Update on consumer interests
Previously, we’ve talked about workout equipment as a best-selling item group. Still, the same can be said about items like face masks, sewing machines, and baking materials. This is what has urged Google to start a Rising Retail Categories tool to help people catch up with all these changes in the world of e-commerce and retail in general. This insight is valuable both to retailers and marketers alike.
Finally, there’s one more topic worth covering, and it’s the average value of the transaction. Even though it’s more pragmatic to buy from home, it’s important to mention that people are currently losing their jobs or at least facing the uncertainty of whether they’ll still be employed in the nearest future. The problem is even more significant than it seems at first, seeing as how even people with steady income seem to be uncertain of their financial future. This makes them reluctant to overspend and more resilient towards impulse purchases. All in all, we live in an era of uncertainty that is best seen through e-commerce. Be that as it may, people still need to buy, and, at the moment, e-commerce seems like the optimal method.