How Is COVID-19 Changing E-commerce and Retail Businesses?
Retail businesses expect inventory shortages and production delays during the crisis, and with good reason.
The effects of the current COVID-19 crisis has forced customers to change their behaviors and daily routines. More people are now working from home, minimizing social interactions, and just not going anywhere due to government restrictions and quarantine rules. By now, people all over the world are getting the message: The COVID-19 global pandemic isn’t going away anytime soon, and even after it does, it will leave its mark.
A Nielsen study has categorized the changing customer behavior into six thresholds that signify spending patterns in retail businesses. As governments implement stricter distancing guidelines, customers are expected to go through these thresholds quickly, even skipping some in the process.
A Retail Catastrophe?
The COVID-19 pandemic has forced the Retail industry on its knees, with approximately 15,000 potential retail store closures within the year. These include big names in the industry including Apple, Adidas, Columbia Sportswear, Gap, H&M, and several others. This is an unprecedented turn of events after the number of stores have implemented reduced working hours. Retail workers are torn between losing their jobs and risking their health, some retail companies have made modifications to their employee benefit policies.
For customers, the pandemic has meant shopping has been limited mostly to the online variant, and businesses should likewise focus on developing their e-commerce channels across retail businesses.
Regardless of the perceived impact of the COVID-19 pandemic, the messaging needs to be clear. Advertising and promotion of your online stores is key despite limited budgets. Ad spend for e-commerce sites doubled from $4.8 million to $9.6 million in the week of 17 February to 9 March, indicating a shift for most retailers to an online-only model. Retailers are also beefing up efforts on Content Marketing, Social Media Marketing, PPC ads, and Email Marketing.
Changing Customer Behavior
Due to drastic changes brought about by the COVID-19 crisis, customer voices and habits changed drastically, and not always as expected. While some are going on an online shopping spree, other are limiting their spend to the bare essentials: food, groceries, health and wellness products, and the like.
With more time on their hands, businesses are finding that customers are leaving more product reviews on online review sites and even on company websites. Online engagement has also gone up, with customers being more responsive to marketing and promotional messages, including those from social media channels and email campaigns.
Businesses expect inventory shortages and production delays during the crisis, and with good reason. With governments imposing restrictions to avoid further spread of the virus, shipping and logistics will be an issue in some areas. customer confidence is also a concern as customers face an uncertain future for both themselves and the brands they patronize.
Even pure-play eCommerce websites are expecting a downturn in their revenue projections, with some even adjusting their financial guidance.
Disrupting the Supply Chain
With airports shutting down amid the global pandemic, shipping and logistics are becoming a challenge for most businesses. Shipments from China and Europe have dwindled significantly and logistics services companies are focusing on limiting the pandemic’s negative effects by trying to find the ideal mix of online and offline services. Previously unlisted items are slowly becoming available on online catalogs and warehouse managers are renewing their focus on efficiency and risk management.
One of the concerns in the shipping and logistics industry is the safety of warehouse workers. Since they can’t afford the benefit of working at home, careful package handling, employee hygiene, and wearing of personal protective equipment (PPE) are being emphasized.
However, due to governments imposing lockdowns and distancing rules, warehouses and trucking companies in some regions are finding no other option but to shut down. This is a problem not only for them but also for the areas they operate in and the clients they serve.
What’s Next for E-commerce?
With businesses around the world trying to react the best way they can to the global COVID-19 pandemic, some of them are spending less while some are doubling down. The strategy will need to adapt to the ongoing unpredictability of the situation, but there is still a silver lining to this crisis. E-commerce websites can capitalize on the situation, but only if their customers can find them.
A strong online presence is vital in this period of risk vs. opportunity, and businesses should invest in online marketing tactics, including Content Marketing, Social Media Marketing, and SEO.
Transforming threats into opportunities is possible; all you need is the right mindset and an agile approach that allows for some flexibility.