As many countries begin taking steps toward re-opening economies and lifting restrictions, we wanted to take a third look at the state of ecommerce in the wake of the COVID-19 crisis.
Part One of this series, released in late March, focused on highlighting the dramatic shift in consumers’ online buying behavior during the first few weeks of enforced social distancing and stay-at-home orders. Part Two highlighted how the initial “panic buying” phase had settled down, but that quarantined consumers prioritize different purchases than they used to. Now, with businesses reopening, unemployment at an all-time high, and the future still uncertain, we’re going back to the data.
The “new normal” may be anything but
For companies coming out of crisis mode, a return to business as usual is highly unlikely.
What we know
While the data clearly shows online purchases normalizing in many respects — especially in comparison to the initial period of panic buying — it does not support a return to the pre-virus status quo.
For one thing, nearly all the basic metrics used to track general ecommerce trends indicate a plateau at a higher level than before. Many of our clients are seeing higher average traffic, new users, and conversion rates than before the crisis. And, most importantly, a net increase in average revenue from online sales.
These stats from our own sample of clients (161 days, 76 companies across 17 industries, $3.67 billion in revenue) jibe well with the conclusions reached by Wunderman Thompson Commerce, as released in their recent report, “Recovery? This is a Renaissance, which found that “consumers are flocking to ecommerce” as never before.
What we think
Conceivably, consumer buying behavior has been forever altered by the global pandemic. As highlighted by Randy Kohl in a recent post, the world is coming out of this situation with levels of online buying activity we probably would not have seen until 2030, had the crisis never occurred.
In many ways, this is fantastic for businesses. But, for those caught unprepared, it means even more effort and investment required to catch up in a world of accelerated change. The Wunderman Thompson report previously cited contains some excellent advice all businesses should take to heart:
“Maximize ecommerce readiness. Do not assume that what has worked up to now will work in the next 12-24 months.”
What we know
Certain product categories have been clear winners throughout the crisis, just as others have suffered great losses. Those trends may never return to where they were before.
For example, we’ve seen an ongoing increase in online consumer interest in gardening supplies and furniture. Search trends support this as well, with “online furniture” and “online furniture auctions” being among trending terms on Google. While our internal data doesn’t include online grocery suppliers and food delivery, the acceleration in that sector has been well documented, and it’s mind-blowing.
After a precipitous drop early on, automobiles and industrial categories are making a comeback. At the same time, we’ve seen interest in online purchases of apparel and office supplies drop off significantly.
What we think
With most of the population essentially stuck at home for more than two months, combined with economic uncertainty and job loss, people have had to quickly rethink their priorities. Many are asking themselves, ‘if this happens again in the future, will I and my family be ready?’
This could have a lasting impact on the excess consumerism many developed countries have become known for. When you realize how quickly things can change, it becomes easier to be satisfied with only ten pairs of jeans.
At the same time, fear of too much social contact has made consumers more comfortable with making purchases online that previously “required” an in-store experience, like furniture and groceries. Even big-ticket items like cars are likely to be purchased online far more going forward. In fact, Tesla launched a web-scheduled contactless test drive service in March as a direct result of concerns over being stuck in a car with a salesperson.
Office supplies is an interesting one: At the outset of the sudden surge in people working from home, there was a huge rise in the purchase of office supplies. However, orders have dropped off significantly in recent weeks. This could mean everyone bought what they needed, and we can expect another rise as replacements become necessary. Or, it could mean everyone is realizing that a paperless office really is possible.
Geography plays an important role
In the U.S., economic recovery is largely being administered at the state level. So, the process of reopening the national economy has been fraught with confusion and controversy. Conflicting messaging, protests, and fear of a resurgence of the virus has contributed to this.
What we know
As Americans have grown more frustrated with quarantine and many hard-hit businesses struggle to stay afloat, governments have had to wrestle with when and how to balance public safety with economic recovery.
In the chart above, the terms “bar” and “delivery” are tracked to show how much they were used together over the last several weeks, providing a good indication of peoples’ interest in going out versus staying inside. This illustrates the first crossover, which occurred around March 13, when a national state of emergency was declared and lockdown efforts began in earnest. The second crossover event is occurring right now as reopening efforts commence.
Search and traffic trends across the country clearly map to which states are taking a faster approach and which are holding back, as well as where protesting is potentially impacting those decisions:
The search trends around “protest” versus “social distancing” average out to a 50/50 split nationwide. But, it’s interesting to note that some of the hardest-hit areas of the country — New York being a prime example — are the most eager to leave quarantine and social distancing requirements behind.
What we think
This is a difficult situation for businesses, especially those who have not been able to maintain revenue through ecommerce, local takeout or delivery services, or other alternatives. And, with unemployment at an all-time high, people are desperate to get back to work and protect their finances.
However, experts at the CDC have been very clear about the likelihood of a resurgence of the virus in the wake of loosening restrictions too quickly. Some areas are already seeing spikes in new cases, just days into their recovery plans.
All we can do is urge caution and common sense as businesses navigate this difficult course. For the sake of employees and customers alike, maintain social distancing and hygienic standards for as long as necessary while re-establishing “business-as-usual” as best you can.
A summary of what we’ve learned
Throughout this entire situation, we’ve learned a lot about the role of ecommerce and digital business, especially as seen through the lens of business continuity and long-term growth. Here’s a quick summary of what we’ve covered in this series of articles:
- A robust, strategic digital plan is absolutely vital to every business’s ability to weather unexpected challenges. Even if you never thought an ecommerce option would work for your store, this situation has proven that anything that can be sold should be available to your customers online.
- Hybrid online-to-offline options like buy-online-pick-up-in-store (BOPIS), takeout, and local delivery are clearly what the public wants. The popularity of these options has been dramatically accelerated by the crisis, and likely won’t fall back to pre-crisis levels.
- Taking ownership of your digital properties, fulfillment capabilities, and supply chain will offer greater control and resilience than being completely at the mercy of a marketplace or single provider. Just ask any seller who was 100% dependent on Amazon, only to have Amazon label their products as “non-essential.”
- The average consumer is now far more comfortable with making online purchases, and they’re going to continue doing so more in the future than ever before. What they buy, when, and how remains to be seen, but where they buy has forever changed.
- Consumers’ expectations around both the online and offline experiences your business provides have increased, and they’re not going to move backward. Meeting those expectations will likely require ongoing investment and widespread changes in process and culture within your organization.
- While it’s always been important, a reputation for doing the right thing — putting what’s right ahead of what’s profitable — has been amplified even more. People won’t forget how your company responded to COVID-19, and your brand will absorb that sentiment.
Perhaps most importantly of all, we’ve all learned just how quickly anything and everything can change when situations arise that are bigger than our day-to-day activities. If you can see the need to be better prepared for whatever the next big challenge turns out to be, we’d like to help. Let’s get together and discuss how to make your business more resilient, and enhance your customer experience.
Get in touch at firstname.lastname@example.org.