The Impact of Covid-19 on Ecommerce
Covid-19 has impacted the way we live and consume items. There is a clear line between what we want, what we need, what we should buy, and what we can buy. This pandemic has impacted eCommerce businesses and brick-and-mortar stores across the world.
Consumers are changing the way they spend on digital platforms. Many companies have recorded an evident surge in the use of online channels. Not stepping out and getting things delivered at home is becoming the new normal. In this new social distancing era, many eCommerce sites offering essential items are experiencing a surge in traffic and transactions.
The changes that businesses are experiencing are affecting their complete business management systems, from supply chain to eCommerce adoption or expansion. These businesses need to make informed decisions based on data to survive and hopefully thrive.
The pandemic is making shoppers buy online, have stocks of necessary food, grocery, and household items, safeguard themselves with social distancing, and maintain hygiene in all aspects of their lives.
According to the leading market research firm, Nielsen, “FMCG growth for Q1′ 20 stands at 6.3% against the Nielsen forecast of 8-9%, and this quarter is turning out to be the lowest first quarter in the past three years.” Nielsen also expects low spending in the following categories:
- Movies and restaurants visits
- Luxury brands
- Leisure travel
- Personal grooming
- Fashion
- Home decor
During the lockdown and after the situation gets better, consumers are expected to focus on the following categories:
- Health and hygiene products
- Medical requirements
- Healthy organic food
- Mediclaims
- Fitness
- Education
- Financial investments
Capgemini Research Institute surveyed more than 11,000 consumers across the world to understand the impact of coronavirus on consumers behaviours – short-term, and mid-term. They got in touch with consumers across the US, UK, Germany, France, Netherlands, Sweden, Norway, Italy, Spain, India, and China at the start of April 2020. Following were their key findings in terms of consumer trends for consumer products and retail (CPR):
- Convenience – Consumers will opt for online shopping and convenience. This trend will increase after the lockdown.
- Health and safety – Consumers have become more careful with their health and wellness. They will hope for safer in-store and last-mile practices from CPR companies in post-pandemic days.
- Focus on purpose – CPR organisations with excellent sustainability credentials and a sense of purpose will experience greater consumer engagement.
Here are some more findings from this survey:
- 48% of the global respondents are hopeful about recovering from the pandemic in the next six months. There was high optimism in respondents from China and India. When this survey was conducted (April 4-8), India had lower cases of Covid-19 than the other countries.
- 70% of the respondents are optimistic about recovering from the pandemic in the next 12 months.
- 77% of the consumers will pay more attention to cleanliness, health, and safety in the past-pandemic era.
- 62% will move to brands with higher levels of product safety.
- 54% will prefer local or regional items and not imported items as they are concerned about safety regarding the usage of foreign products.
- Brands will focus on personalised and innovative customer experience.
- The frictionless digital experience will become the objective of companies.
- Voice-based interfaces will increase.
- Brands will become partners with delivery platforms. E.g., Spencer’s retail has (brick-and-mortar store) partnered with the online marketplace Flipkart.
- Offline shopping – Before COVID-19, 59% of consumers had high interaction with brick-and-mortar stores. During the pandemic, it is 24%, and in the next 6-9 months, it is expected to rise to 39%.
- Online shopping – Before COVID-19, 30% of consumers were highly using online stores. During the pandemic, it is 37%, and in the next 6-9 months, it is expected to accelerate to 40%.
- Grocery purchasing is expected to rise in the next 6-9 months. Here are the country-wise details:
- India – 65%
- China – 56%
- The US – 42%
- Italy – 41%
Now let us take you through how eCommerce is transforming and what are the ongoing consumer trends during COVID-19:
1. A surge in online shopping for essential goods
Maintaining social distance, closure of brick-and-mortar stores, and unavailability of products at stores has led to high eCommerce sales for essential items. Though the government has not yet allowed the delivery of non-essential goods, many online platforms like BigBasket, DMart, Amazon Pantry, Licious, Dunzo, Grofers, and Flipkart have seen a surge in online orders for essential items.
Many of the consumers are stocking up on grocery and household items to avoid frequent shopping. They are using almost all the grocery delivery apps to get the products delivered at their doors. This solves their problem of not stepping out of the house, hence keeps them safe.
Amazon and BigBasket have reported an increase in sales during the pandemic.
2. Ecommerce delivery and supply chain issues
When the lockdown began, the increased demand led to supply issues. For many vendors, it became and still is challenging to meet the demands in the market. Supply chain disruptions are impacting the availability of inventory and delivering timings. Many companies are now getting control over this by ensuring that they are well-connected with their vendors, developing infrastructure capabilities, and building their supply chain and warehouse network.
3. A decline in sales of non-essential items
Leisure activities and sale of non-essential items have taken a deep hit. Due to the lockdown, online verticals like food delivery, movie tickets, flight and train bookings, cab bookings, hotel-tech, and events among others have been severely impacted.
Ecommerce sales of non-essential items cannot take place in the lockdown phase. This has impacted sales on high-profit items like smartphones, apparel, gadgets, and home appliances among others.
Jewellery consumption has hit a low because of the lockdown, which made the stores close during the wedding and festive season. “We have never seen such kind of demand destruction happening. Sales are zero during the lockdown.” N. Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council, told Reuters.
4. Increased demand in health and wellness products
As online business models are being preferred more than ever, consumers are showing a better response to marketing communication in the form of emails, SMS, and social media. They are browsing online more and buying online more frequently.
They are focusing on their health and are putting efforts to stay physically and mentally well during the COVID-19 phase. Since nutrition plays a vital role here, they are showing interest in health and wellness products.
5. Changing the way we communicate
This pandemic has forced organisations to use the Work From Home method to keep them up and running. This has increased engagement and traffic in the global video conferencing industry. Companies and government organisations are using video conferencing as a tool to connect with employees, customers, and remote workers. Many companies are also video conferences for their recruitment and onboarding processes.
Voice and video conferencing products like Facebook Messenger, WhatsApp, Zoom, and Google Duo are witnessing higher engagement levels from the consumers.
6. High TV and OTT usage
As people are staying home, many companies like Netflix, Amazon Prime, ZEE5 and Hotstar are noticing a rise in subscriptions leading to higher viewership. The spike is being observed in all categories in different languages. At the same time, TV viewership is also on the rise. The shutdown of entertainment avenues and multiplexes is also contributing to this.
Some OTT platforms are even offering an extended free trial period to increase subscriptions when people cannot step out for entertainment purposes. To avoid broadband congestions, these OTT companies have been advised to stream content at a lower quality.
7. High social media usage
Users are spending more time and consuming more content on famous social platforms like Facebook and Instagram. People are spending an average of four hours on social media compared to 1.5 hours they used to spend before the lockdown. This is an 87% increase in social media usage.
Online gaming is also booming with high consumer engagement.
These are times that were neither predicted nor foreseen by experts. The magnitude of how it affects us will be more evident in the next 6-9 months. We have mentioned all the trends that we are observing today. We need to smartly react to the changing information and situations presented to us to make the most out of this situation. Most importantly, we need to stay positive and focus on our well-being more than ever in this period.
Next plan for ecommerce business owners
Are you still stuck with no strategy in hand to survive your business, we can help you formulate a digital strategy for your ecommerce store.
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References:
https://www.bigcommerce.com/blog/ecommerce-coronavirus/#ecommerce-and-coronavirus-the-impact
https://qz.com/india/1844301/how-bigbasket-is-running-during-indias-coronavirus-lockdown/
https://qz.com/india/1846019/how-bigbasket-licious-id-fresh-food-beat-coronavirus-lockdown/
https://yourstory.com/2020/04/coronavirus-ott-online-gaming-surge-lockdown-box-office-media
