The biggest ecommerce learning amidst Coronavirus disruption

Mar 23rd, 2020 11 min to read

For the first time, the entire human civilization is fighting against the common problem— The novel CoronaVirus (Covid-19).

That’s true in all sense except the fact that Corona is also playing with us— especially with our economy.

And e-Commerce has been one of the most unpredictable sectors of this massive economic and healthcare crisis.

The relationship between Corona and e-Commerce is quite a story of complication, considering there has been an enormous wave of fluctuation in demand and supply.

The early assumptions…

Since COVID-19 spreads ten times faster than other Flu Viruses— the digital marketers had made early assumptions that online sales will spike up due to social distancing and self-quarantine.

As millions of people spend more time on their computers and mobiles in the outbreak— it’s natural to think that e-commerce sales will cover the loss of brick and mortar businesses.

However, the pattern is more complicated than it seems.

The early observations regarding online sales went as expected.

The digital marketers were right on the money for the first few weeks of the outbreak.

The data analysis from one of the retail analytic giants of the industry— Quantum Metric— reveals that consumer behavior has changed drastically in the last four to six weeks amidst Virus flaring out in the States.

E-commerce companies in the United States observed a massive spike of 52% in their overall sales in the fifth to the eight weeks of 2020. It was the exact period when Virus got out of the Asian countries. [1]

It was a huge boost when compared to the same period last year in 2019. These stats are meant to stand right for the period Jan. 27 – Feb. 23, 2020.

Furthermore, the online conversion rates shot up almost by 9% during the same period while compared to 2019. [2]

These stats are the result of anonymous and aggregate analysis of 5.5 billion US-based online customers by Quantum Metric, which spans between Jan. 1, 2019 through Feb. 29, 2020.

While the overall sale of e-Commerce may seem inflated from the naked gross-number games— but when looked at from the high-resolution lens— you’d see a broader picture that Corona has benefited only specific industries. In contrast, the demands of most of the business backgrounds have plummeted.

Corona panic has fueled online sales of specific industries that mostly deal with healthcare and canned items.

The revenue sales of everyday stockpile items have spurted in a way that no e-Commerce (established or start-up) can set up as their business objectives. According to the online study of Bloomreach, the demands of:

  1. Masks increased by +849% 
  2. Hand sanitizers by 420% 
  3. Canned food by +191% 
  4. Clorox/Lysol wipes by 184% 
  5. Disinfectants by 178% 
  6. Bottled/packaged water by 78% 
  7. Hand soap by 33% 
  8. Toilet paper and paper towels by 26%

So far now— the demand for doctor’s sanitation and clothing has gone up to the sky. Blue Apron stock has also surged by 70%. [3]

The story so far has been pretty similar to eGrocery and food delivery set-ups. In fact, the food delivery industries saw a hike of 52% online sales in the United States of America. [4]

But as mentioned— the going is not all sunshine and roses for other industries except a few handfuls of sectors.

Here’s why e-Commerce can falter as we enter into the most critical period of Corona Outbreak.

The argument that footfall on the brick and mortar businesses will benefit the likes of Amazon and Target Corp may fall to its chin as we are anticipating a massive recession after this.

For the time being— the sales of specific industries may go up at least until the outbreak is controlled.

But post-pandemic— recession may intensify, and the sales of these specific industries will go down as well.

As of now— Corona wreaks havoc on the luxury and apparel industry, while it does no good to the online Chinese export industry too. [5]

Digital Commerce 360 thought that it was essential to reach retail communities to get a deeper insight into “what’s coming” in the e-Commerce economic structure.

Almost half of the respondents in the survey think that Corona will impact their sales, whereas 14% don’t expect any downside implications. [6]

Interestingly, 33% are waiting to give any conclusion and are on the “let’s see mode.”

The mixed outlook among the online retail communities depicts that the market is volatile than ever, and we have no substantial prediction of the future.

The massive sales figure is also a headache…

Well, if your business revolves around towering-demanded products such as masks and sanitizers, you may earn a brownie point for now— but it might leave a dreadful mark on your business in the long term.

If any of your products run out of stock on Amazon— the algorithm of the daddy e-Commerce will penalize you if you don’t replenish the stock in 30 days.

The time when we have supply-shortage— you’re likely to face the scarcity of the products, and if you fail to refill the stock— Amazon will delete the sales history.

In layman’s— your most searched keywords will be sent down to the ranking list, thereby affecting your organic reach.

The out of stock headache has compelled third-party merchants on Amazon to gouge prices that have resulted in the hullabaloo.

China’s export market is next to dead…

The sectors which are overdependent on Chinese imports have faced the real wrath of the epidemic.

The grim reality is hard to face by electronic, fabric, and home decor industries that rely on cheap Chinese labor.

The production capacity of China got down by 50% in mid-February, which later went to the complete lockdown by the end of February month. [8]

Amazon and many other e-commerce merchants rely on the supplies from China, and the complete factory shut-down has made them spend 6% less on advertisement this February as compared to the last year— same period. [9]

Despite all the widespread destruction, only positive China observed apart from “Corona positive” in the last month was more numbers of app downloads.

As people in the Republic of China are warned to lockdown— they are spending more time online, which has surged the app downloads by 40%. [10]

Delivery and supply chain concerns have boomed up…

When the entire work ecosystem has shifted to homes— the online purchasers are looking for more severe deliveries than ever.

It’s the time when they are expecting the best delivery services from Amazon, Walmart, Target, etc.

We can say that Coronavirus has tested even Amazon for its delivery limits as more and more users choose to work from home out of panic.

As expected— Amazon comes up with a prime-delivery solution that takes care of grocery orders in as little as 2 hours in a few cities of the United States. [11]

The solution is named as a one-day delivery solution whose objective is to travel the extra mile if needed to keep up with the brand reputation.

One-day delivery hasn’t quite paid for Amazon so far in terms of sales as shipping costs have gone high.

However, Amazon might be playing psychological games to help out its customers during such a massive outbreak so that it remains the undisputed champion of trust and credibility.

While this may test Amazon at all the stretch— other e-Commerce platforms will want to keep up with stock and meet expected deliverables to change the consumer perspective at hard times.

Logistic challenges have gone from bad to worse…

Apart from the stock supply, logistics have been the worst hit entity in the e-Commerce transaction.

The first and primary concern regarding logistics is whether the person carrying the deliveries is in good shape.

Countries that depend heavily on cash on deliveries are emphasizing on the online purchase because the exchange of denominations may carry the Virus— including the logistic person who’s delivering it.

The increase in demand is continuously pushing the e-Commerce industries to adopt new logistic measures so that consumers reap expected delivery.

Some food delivery companies have made these logistic challenges look like a dwarf through innovative logistic options such as contactless delivery options.

Since restaurants and bar gatherings have gone down significantly— the online food industries such as Zomato, Swiggy in India, and PostMash, DoorDash in America are subjected to the high influx in traffic.

As they have chipped-in with a new delivery solution— they will be remembered for their out-of-the-box ideas when it mattered the most.

If it’s e-Commerce, it has to be digital spending too..

Digital spending is one of the most critical aspects of e-Commerce. Online advertisement, social media marketing, content marketing, etc. keep up with the “online footfall.”

However, Corona seems to disrupt digital ad budgets due to concerns in the supply and demand chain.

As there’s no improvement in the supply chain and shortage of products are getting real day by day— companies anyway won’t need digital advertising on Google and Facebook.

There’s speculation that Google, Facebook, and Instagram will face the heat of lesser ad spending. [12]

But here’s the catch— not all are cutting their digital marketing budget.

The ones who never seemed to care about online businesses have seen the lowest footfall in their traditional stores.

That has made them mull about e-Commerce stores as an alternative— if not today— we might see a few more online competitors in the future.

The companies which get businesses through trade shows are bucking up the trend by allocating more marketing budget to digital marketing strategies like PPC and SMM.

Conferences, events, and meetings— they’ve been pulled off.

As countries make migration difficult to contain Corona at this point in time— especially the USA and Italy— many conferences and marketing events have been called off.

Adobe has canceled Annual Adobe summit and Magento Imagine; Facebook is done with its F8 conference this year, Apple’s most significant event— WWDC looks dicey, Google has pulled off its Cloud Next 2020 conference.

Many other companies such as Shopify, MI, Google I/O have either postponed or abandoned their programs.

The bad news is— most companies were willing to expand their event budget by 41%, which could have meant rigorous event marketing, workshops, and networking. [13]

More than 50% of the companies believe that events are useful for marketing their brands, networking with new people, engaging with new ideas, brain dating with experts in the fields. All these lead to higher brand recognition. [14]

From the stability perspective— the effect of Coronavirus may cripple the e-Commerce economy for the coming year.

It’s too early to expect a stable market. Therefore, e-Commerce retailers may have to be more cautious while planning such events and allocating marketing budgets in the future.

According to one of the reports by eMarketer— the canceled events will cumulatively cost over $500 million to these companies— that looks even more magnified when sales are expected to nosedive shortly. [15]

Not everything is lost.. eCommerce has gained a lot…

As events and conferences look distant dreams now, not everything seems to be lost.

The first thing the e-Commerce industry has learned is to manage situations in extreme conditions— it’s like a mock drill before another outbreak occurs.

Google has emphasized on conducting virtual conferences because that’s what IT industries are meant for, i.e., obliterating the physical borders— making every brick and mortar action into virtual action.

If you had to cancel out your event or trade-show— it’s the perfect time for you to launch virtual conferences to spread out your message.

It’s a new challenge that will test your virtual coordinating skills.

Moreover, you can also analyze the differences between virtual and in-person trade-shows. Find out what worked for you and what didn’t.

Make a note of all the pros and cos and try to implement them if the virtual meet-up worked for you.

It’s an opportunity for every e-Commerce company to think beyond their mundane work-culture and bring ideas that outdo the outcomes of Corona.

The biggest takeaway…

While it’s the responsibility of every store owner to analyze challenges and losses at this point— the biggest takeaway from the outbreak is that the older generation which didn’t seem to have cordial relationships with the online e-Commerce are finding it more comfortable to convert during purchases.

The life-crisis is teaching conservatives to adapt to the technically-liberal environment. In contrast, it is also pushing the chaotic liberals to develop patience, orderliness, and managerial endurance to cope up with remote working.

It may be a loss-loss situation at this particular point— but in the long run— Corona will change the way we do e-Commerce and business in a broader spectrum.

Hopefully, we will use the terms— Before Corona (B.C) and After Corona (A.C) in the e-Commerce industry because it has undoubtedly brought those trends in the picture which we wouldn’t have got otherwise.

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