The Coronavirus Effect is transforming consumer behavior everywhere. More than ever in the past, people are turning to e-commerce sellers to meet their everyday needs. Today we will look at two of the main “X” factors for e-commerce in 2020.
Online grocery sales are exploding. Online orders for beer, wine and liquor are experiencing sales volumes never seen before. Amazon has had to hire over 100,000 new workers. E-commerce sales are surging compared to brick and mortar stores, many of which have had to shut their doors. The ones who’ve stayed open are limiting store traffic, causing long lines.
At least so far, this has been good news for online retailers, except in some categories such as fashion and luxury goods.
There are a few challenges though. Shipping delays are also on the increase. Supply chain issues are becoming more of a problem, especially for products sourced from China. But by and large consumers know that everyone else is also now ordering online, and they understand that overwhelmed merchants may not be able to fulfill orders as quickly as before.
Still in shock themselves, consumers don’t know yet what their long-term preferences will be for shopping. They may find they like the convenience of online ordering and delivery. Or they may find themselves overwhelmed by a sea of empty cardboard boxes to deal with, paying more in fees for deliveries, and wishing for the old days.
The first “X” factor for e-commerce: how pandemic fears weigh on consumers and affect their buying habits.
How long the pandemic lasts–and whether we see a recurrence next winter– is an “X” factor in determining whether changing shopping behaviors will remain temporary or become permanent.
Preferences could change, depending on what’s seen as “convenient,” and how much fear of the virus continues to linger.
Depending on the circumstances, the type of product, and the immediacy of the need, it is hard to imagine that online purchasing will ever be a practical replacement for stores selling “essentials” like food, pharmacy, hardware, auto parts and farm supplies, nursery and garden centers.
What about when they are at home cooking, or in the midst of an outdoor project or a home repair, and realize they need something that’s not on hand to complete it? Will they prefer to halt what they’re doing, order what they need and resume work on it the next day? Not likely.
In many parts of the U.S. where people are still living under State-ordered commerce shutdowns, stores or businesses considered “essential” can remain open. Other kinds of stores are set to re-open soon.
Will the convenience of “running out to the store” for something they need right now ever be truly replaced with ordering online, unless they can get same-day delivery or pickup?
On the other hand, will same-day delivery become a new standard for every kind of merchant? With so many stores temporarily closed, many smaller merchants are managing to keep paying their rent by setting up mini, localized e-commerce operations based on the BOPIS model where the shopper buys online but picks up at the store. Sometimes they are adding a local delivery option as well.
This is a time-saving convenience that a lot of shoppers could easily get used to, even once their fears of exposure to the virus begin to subside.
What’s seen as “Essential” vs “Discretionary” could change over time as factors for e-commerce in 2020.
Selling essential items helps, but as time passes the demand for many categories of products will pick up or remain steady.
Big chain department store brands like Target, Costco, Walmart and Kroger that already had robust e-commerce sites and already sell essentials are in a better position than most. They can absorb losses in non-essential product categories while enjoying double-digit sales increases in the essentials.
But it’s not only the large brands or sellers of essential goods that are benefiting. Shoppingfeed’s own data reveal that even some non-essentials such as books and media, home improvement and furniture, and electronics are either holding steady or on the increase.
The other “X” factor for e-commerce in 2020
The other big “X” factor, of course, is the economy as a whole. The Bloomberg Economics Model confirms the recession is already here. Its severity is predicted to be as bad as, possibly even worse, than the Great Depression. With so many layoffs and business closures, no sector will go unaffected. Discretionary purchasing will inevitably go down as many consumers kick into basic survival mode.
However, the combination of both X factors – pandemic-related fears of shopping in stores, together with a rapidly shrinking economy, could still point to ways that e-commerce sellers can maintain strong sales. If people remain afraid to go into stores, they’ll still need to purchase things–even if they have less discretionary spending ability than they had before the crisis hit.
Be ready to pick up that business in every way you can. Shifting the product mix toward essential items, offering BOPIS, quick local delivery options, and offering free shipping for non-essentials are all strategies that can keep e-merchants and hybrid online/brick and mortar brands thriving in their business. The pie may be shrinking, but e-commerce will undoubtedly have a larger piece of it going forward.