The “new normal” is not just a phrase thrown around in conversations; it’s a real phenomenon and one that is very apparent in the realm of eCommerce. Marketing has always been wrought with changes, but the change brought about by the global pandemic is markedly significant, more so than in previous years. Its significance is further emphasized by how radical and unexpected these changes are compared to previous years, so much so, that there has been a renewed focus on predicting consumer behavior. Barely after a month since COVID-19 hit, eCommerce order volume increased by 50% compared to 2019, but it also coincided with shipping delays of up to 1.5 days due to the restrictions and new policies enforced because of the pandemic. Delays were worse with larger products; what was usually shipped within 32 hours took 68 hours because of delays with suppliers and in manufacturing.
It could be argued that eCommerce might be the most feasible and profitable marketing channel today, but there’s no argument when it comes to how fast it has grown through the years, especially because of COVID-19. In the UK especially, consumers are more likely to shop online, with 82% of people in 2017 aged 15 and older using the internet for shopping. December 2020 saw an outpour of support for small businesses, as consumers became aware of how these ventures are being affected by COVID-19. Online consumer spending during Small Business Saturday and Sunday in the US boasted a year-on-year growth of 30.2% and 23.7%, respectively.
What are the Key Changes Brought About by COVID-19?
Due to the lockdown and quarantine policies in place around the globe, people have been forced to stay and work at home for a significant period. This has led to a rise in time spent online, and therefore, more opportunities for eCommerce websites to encourage customers to buy more. In China alone, which is considered ground zero for the COVID-19 coronavirus, time spent online is up by 20%. It’s the same scenario globally, as consumers are confined to their homes and forced to find alternative means to shopping in physical stores.
Shopping behaviors have also changed due to the pandemic. The younger generations have expressed concern due to the pandemic, with 96% of the millennial and Gen Z demographic worrying about its effects on the economy. Out of all generations, they have also shown the most dramatic change in shopping behavior, specifically, stocking up on items, spending less on experiences, and cutting back on overall spending. Men and women have also shown different reactions to the crisis. Surprisingly, more men shopped online and were more inclined to avoid going to physical stores than women. Data shows that women were more likely to be concerned about how COVID-19 could affect the way people live in the foreseeable future, but it also showed that one-third of men, compared to only 25% of women, stated that the pandemic affects how much they spend on different products.
There has also been a significant change in what consumers buy; in the second week of March 2020 alone, there was a surge in online purchases of groceries and other household items. Data from a J.P.Morgan study shows that during the COVID-19 lockdown, consumers mostly bought household cleaners and soaps, vitamins and supplements, coffee, and hair color products. On the other hand, there were double-digit declines in purchases of sun care products and cosmetics. Digital streaming services like Netflix and Amazon Prime have also seen a rise in subscribers as more people look for entertainment alternatives while confined to their homes.
Who are the COVID-19 Winners and Losers?
As can be expected in a crisis, there have been some winners or losers in the eCommerce field, and they are very telling of the industries most affected by COVID-19. This isn’t due to any missteps or miscalculations on the part of the organizations but more because of the unpredictable and drastic changes brought about by the pandemic, which has affected global economies.
Winners
- Reckitt Benckiser
The owner of the Dettol and Lysol brands saw a drastic surge in the purchase of cleaners and sanitizers. In the first six months of 2020, 12% of those sales were from eCommerce. There was also an overall growth of 60% and a strong showing across digital channels.
- Nestlé
The company saw a growth of 49% in eCommerce sales during the first six months of 2020, reaching 12.4% of sales compared to 2019’s 8.5%. Also, the Nespresso brand was up in the same period despite the closure of Nespresso boutiques, offset by surging eCommerce sales.
- L’Oréal
Despite a decline in sales of cosmetics and beauty products, L’Oréal reached 25% of its total sales during the first six months of the year. Online surges also reached 65% in the same period. The company pointed to eCommerce as the key driving factor behind its market growth.
Losers
- United Airlines Holdings
As travel bans and flight cancellations rose due to COVID-19, United Airlines stock plummeted a whopping 43% year-to-date in the first quarter of 2020. The company also had to contend with its debt load, which is quite high with a debt-to-equity ratio of 1.29.
- Yum China Holdings
The owner of several fast-food chains, including KFC, Pizza Hut, and Taco Bell, saw a decline of about 10% year-to-date in 2020, sharing the fate of other restaurant chains around the world. With 30% of their stores shut down, forecasted revenue remains uncertain.
- Nike
Even retail giant Nike has been significantly affected by COVID-19. The company has temporarily closed half of its stores in China, with ones that remained open operating under reduced hours. No timetable has been set for the closures and reduced operating hours. At the tail end of the first quarter of 2020, the company also temporarily closed its global headquarters in Beaverton, Oregon, and its European headquarters in the Netherlands. First, as a precautionary measure, but subsequently because an employee came down with COVID-19.
eCommerce Post-COVID-19
US eCommerce has experienced five years of growth in six months, but because the industry is in a state of flux, not all businesses have benefited from this growth. Still, there are some strategies businesses can consider so they can thrive during and after COVID-19, such as making significant investments in digital marketing channels, enhancing and strengthening the customer experience, upgrading your supply chain and fulfillment, focusing on your technological platforms, and elevating eCommerce to the executive agenda of your business. Regardless of which strategy you choose, the key is accepting change so that you can plan for them accordingly.
