E-commerce fluctuations during global lockdowns
It’s all over the news: new COVID-19 cases and testing kits. Cases are rising all over the world and there have unfortunately been many deaths already. It’s all anyone can think about at the moment, as workers are being retrenched or moved to remote working if their company can handle the transition. Multiple stores are claiming that they can’t reopen their business after the lockdown periods end, but somehow, we’re still turning to online shopping or e-commerce to get our needs met. Amidst panic of getting ill by going grocery shopping, it seems that those who can shop online should do so to alleviate pressure and disease risk from brick-and-mortar stores. However, what are the main reasons that e-commerce is thriving during a global lockdown? This article will discuss some thoughts surrounding this boom at a time of panic.
Which e-commerce businesses are thriving during the COVID-19 pandemic and why
The COVID-19 outbreak happened in Wuhan, China in January 2020. When this went down, shoppers were locked down and stuck at home, inadvertently allowing e-commerce to thrive.
For instance, fresh food sales on JD.com in China (part owned by Tencent) jumped over 200% to reach 15,000 tonnes during a 10-day period ending on 2 February 2020.
This outbreak has further led to a spike in e-commerce sales for provisional supplies, as shoppers are concerned about the wellbeing of themselves and their families. Popular products include immune boosters, disinfectants, soap, face masks, personal care products and household cleaning supplies.
We can see that e-commerce companies are facing overwhelming customer demand. In South Africa, there are continual orders for dry foods and household items being placed every day. It’s exactly as suggested earlier- people are becoming scared to go out in public, or most shops are closed due to panic over coronavirus, with only a few essential services still in operation. However, there are also travel and mobility restrictions in place in a lot of the world right now, so it may be physically difficult for many to actually access a physical grocery store. This is something that ultimately works in the favour of e-commerce stores, who are seeing new customers despite the circumstances.
Amazon, one of the biggest e-commerce companies in the world, has announced that they plan to hire another 100 000 staff to work at their fulfillment centres and delivery networks in order to help with this increased demand. This is happening at a time where staff in other industries are being laid off or furloughed – which certainly highlights the popularity that e-commerce is facing.
One of the main challenges that e-commerce stores will face is supply chain disruptions and order fulfillment, as travel restrictions will delay shipping times or stock from coming in.
E-commerce companies that focus on transporting essential goods – groceries, household items and medication – are also experiencing massive growth due to increased demand. Some businesses in this sector have reported a 53% increase in order volume for the month of March when compared to February’s order levels.
Additionally, e-commerce brands that focus on Saas (software as a service) are experiencing a boom – especially those who enable video-conferencing and real-time communication, as most workplaces push to go remote if their infrastructure allows it. Some examples include WeChat, Slack, Zoom, Google Hangouts and Skype, who will surely see a rise in their customer base as physical premises for nonessential workers close down around the world. It’s pretty clear that if your business can help another business operate remotely, while still working digitally and efficiently, then you’re going to see a boom in new clients.
However, the spike in online orders has also come with mounted pressure on businesses to fulfill orders. In some instances, this pressure is too much to handle and becomes threatening to their operations. The coronavirus outbreak prevents employees from processing and shipping orders, warned Alibaba, who expect to see a dip in their core e-commerce services. However, there may be ways to work around this, including delivering at later stages and offering various sales on items that are not in high demand.
Adapting to e-commerce
Retailers that have been forced to close their doors have to adapt or face permanent consequences. In China, we can see that such businesses have taken action to move toward e-commerce. Lin Qingxuan, a Chinese cosmetics company, moved all of their beauty advisors to work online as influencers after they were forced to close 40% of their stores during outbreak surges. In doing this, they achieved 200% growth compared to the prior financial year. Fashion stores who can afford the resources are creating virtual showrooms that are integrated with Augmented Reality / Virtual Reality options, so that customers can try on clothes from the comfort of their own homes – a truly contemporary concept. Insurance companies are pushing to add coronavirus-related coverage, and increasing online marketing to encourage customers to buy insurance online. Healthcare is even moving digitally, with many doctors offering video calls instead of in-person visits, as well as new online tools to help chronic patients manage their medication supplies. Alibaba in China started a B2B platform that is aimed at matching sellers with hospitals and municipalities, as well as committing to deliver products to hospitals in need, no matter their location.
The impact on advertising
While some clients have decided to pause their campaigns or suspend them entirely depending on industry, platforms like WeChat have seen significant advertising usage in China, as an example. Mercedes Benz ran a campaign on WeChat that lets individuals see a 360-degree view of the interior of its GLB SUV. Other suppliers are rushing to launch services that allow customers to purchase online and get items delivered to their homes, even for large purchases such as cars. The face of digital marketing may change – so this opens up opportunities for e-commerce platforms or brands who work in a B2B capacity. WhatsApp marketing could become a thing.
This has happened before
Chinese giants JD.com and Alibaba grew massively during the outbreak of the SARS virus in 2002-2003. This was at a time where e-commerce was relatively new. Disruptions to supply chain operations meant that few brick-and-mortar stores could continue selling as usual, so online platforms that were still opened became increasingly popular.
COVID-19 isn’t the first time that these sorts of circumstances have affected retailers and customers alike. Hopefully, national lockdowns will pass sooner than later, and businesses can return to their operations. However, it’s extremely likely that there will be long-term economic impacts as we’re already facing a period of recession where the market is tough. This is something to consider in your recovery planning.
Planning for a post-coronavirus future
As we can see by the examples set by Chinese e-commerce stores, it’s vital to start looking at post-recovery planning after you’ve set an immediate response to the crisis. Digitization on a large scale should certainly be the main prospect of such plans, regardless of industry.
Omnichannel and multichannel marketing could see growth, as there is increased demand for click-and-collect and delivery to be offered by e-commerce brands. It’s simple – people are avoiding crowds as much as possible. Due to this, it’s predictable that digital arms of businesses will grow faster than previously thought – if businesses can handle the increased pressures that they’re facing. This is ultimately positive, and helps an ailing global economy, as our society becomes transformed to fully integrate digital technology in business operations.
You might also consider offering more promotions/discounts than you had previously planned, as e-commerce stores will be fighting for a large portion of customers that move to do most of their shopping online. You’ll need to keep a competitive edge – and this is a simple way of doing so. It’s alright to delay your shipping as long as you’re transparent and communicate openly with your customers.
For opportunists in the e-commerce industry, there are many things you might consider. The demand for pajamas/loungewear, self-care items, and equipment to set up work-from-home spaces will increase, so this might be something to stock soon. Additionally, you don’t want to be spouting out items that are not relevant right now, so it might be more effective to cancel orders that were placed with pre-virus projections in mind.
Conclusion
While we’ve faced outbreaks in the past, they’ve usually been more geographically-contained than COVID-19. What this means for businesses is that they can expect similar opportunities for massive e-commerce growth, despite increased pressure on fulfillment and shipping workers.
If you’re able to, you should sell products that are in high demand from consumers, including medical products, disinfectants, medical masks and more. For the future-planners amongst us, look towards offering products or services that can ease the transition towards working from home. Grocery stores are experiencing the biggest boom, including e-commerce variants. All in all, e-commerce sales are helping the economy despite their growth boom arising out of panic and fear of illness. We’ve seen a similar outbreak in 2002 with the SARS virus, so hopefully, we’ll just need to keep ourselves occupied until international lockdowns finally end.
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