How COVID-19 made ecommerce skyrocket
2020 was, by all accounts, an unusual year on many fronts. COVID-19 not only affected our physical health, but the lockdown also put the business world at risk. However, when one door closes another usually opens. This was certainly true in terms of ecommerce. With physical shop doors forced shut, a window of opportunity opened for merchants to bring their business online to a much broader audience.
European Ecommerce Specialist Pieter Lauryssen confirms that the digital transformation, which was already set in motion prior to the COVID-outbreak, took a serious leap over the past year, making it a very interesting year in terms of ecommerce. The colossal overnight changes massively impacted consumer behavior, altering not only what they bought, but also when and how.
Not ‘all gain no pain’
Before applauding the positive developments in the field of ecommerce, it’s also worth mentioning the challenges the market has had to overcome. “It’s safe to say that the virus and resulting safety measures impacted the world of trade as a whole, from back-end to front.”
The first lockdown in March 2020 caused a lot of uncertainty. The whole world went into a frenzy which resulted in panic buying, specifically in terms of essential products. Customers started buying items online which they would have otherwise purchased in person. In addition to groceries, other essentials such as medicine, household supplies, and personal-care products – remember the toilet paper panic – suddenly flew over the digital counters.
The sudden change in online spending behavior did lead to some initial hick-ups, as Lauryssen explains. “During the first couple of months of the pandemic, the world of ecommerce exploded. Between March and May, the industry almost quadrupled in size. No industry can grow that fast without encountering some bumps along the way.”
From China, the virus rapidly found its way to the rest of the world. As is the case with globalism, it’s not possible to welcome international business but at the same time avoid a global pandemic. One country after the next started adopting safety measures, forcing people, factories and countries into lockdown. The once-bustling production facilities, known for the industrial drone of machines, the sea of laborers and the rhythmic pace of assembly lines, now produced little more than dust.
Increased demand leads to new innovations
“The main challenges in ecommerce were caused by the combination of disrupted supply chains and increased product demand”, says Lauryssen. “Bear in mind that a product needs to travel a long way and pass through many suppliers before it arrives at the customer’s doorstep. Ecommerce relies on a long chain of activities ranging from production, stock management, inventory, transport, delivery, packing, selling, shipping, warehousing and delivery. We saw cramps on the various levels.” But the sector has also learned and adapted quickly and efficiently, which has led to innovative solutions. One of the first curveballs to be thrown our way were the closed borders. All of a sudden, frontier workers were prohibited to cross and return to their home countries, leaving facilities and carriers understaffed. And stringent border controls led to tremendous delays.
These geographical complications were added to the issues of increased demand coupled with delayed supply. The acute rise in demand and out of proportion volumes intensified the pressure on the supply chain of online retailers. This led to issues relating to stock breaks, inventory, order processing, packing, warehousing and deliveries. In addition, the massive influx of parcels left carriers ill-equipped to deal with all the orders. As a result, the number of parcels kept increasing and workers were not able to process them at the required speed. In some cases carriers even had the managerial staff assist on the floor in an attempt to process the backlog.
“Needless to say, the delays or returns left customers unsatisfied. The increased number of customer requests or complaints, in turn, put pressure on customer service and IT. However, Lauryssen feels that generally speaking, customers have been very understanding, patient and lenient, especially during the first lockdown.
Evolved ecommerce: the new normal
Globally speaking, the situation had more or less ‘normalized’ by summer 2020, resulting in a smoother operational and logistical flow. When the second lockdown was put into effect, the pace picked up again, but the supply chain was better prepared than the first time around, resulting in fewer issues.
Taking all the ups and downs into consideration, Lauryssen is pleased about the rapid evolution in ecommerce. “The market evolved a lot. By now most companies have become attuned to the new normal.” The smaller-scale companies and start-ups were the first to respond. In response to the pandemic, they quickly took their business online. Most of them set up their own webshop and payment channels, they leveraged social media marketing and implemented solutions such as shoppable Instagram. The more mature companies followed suit.
And now more than before, companies invest in the digital aspects of the business world. Lauryssen adds that “resellers have responded by adjusting their assortment, investing in new ecommerce software and by focusing more on online marketing channels and a visual marketing platform.”
Even when measures were slightly lifted, and customers rediscovered their way to supermarkets and brick-and-mortar retailers, online sales remained higher than before the pandemic. Compared to March 2020, online purchases have returned to previous spending patterns with necessities being bought in stores rather than online. “We do still notice a decreased online spending on fast-moving consumer goods (FCMG), which is probably attributed to the lack of social activities. People are currently discouraged to purchase items like attire, but his trend will most likely be reversed once the lockdown is lifted, and life returns to normal."
The future of ecommerce
Lauryssen believes that customers will continue to buy online post-covid. They now fully appreciate the benefits of ecommerce and now all generations realize how easy and accessible online shopping can be.
He also states that “online shopping need not be at the expense of the high-street.” He believes the true success will lie in creating an omnichannel experience for the customers. Cross-selling will offer future-proof solutions and make it possible to link both off- and online channels. Webshops can function as an online catalog showcasing the items that can also be found in-store or offer customers the opportunity to order items that are out of stock.
There is the belief that offline and online stores can coexist and even mutually strengthen each other. However, the biggest challenge for business owners will be to hold on to their market share. Ecommerce not only opens the door to B2B competition but also offers numerous opportunities for P2C selling (producer to consumer), which lowers the threshold for brands and producers to sell directly to consumers instead of through retailers. Lauryssen advises resellers to negotiate trade deals with their suppliers or to offer products from multiple brands. Resellers could also consider setting up their own brand or product line.
He also cautions against strong online competition. “If you want your brand to stand out in the multitude of sales platforms, you have to be visible, but not too visible”, he says. You have to keep your target audience and the different possible channels in mind and optimize your marketing budgets. It’s like a puzzle that you have to skillfully put together. If your brand or product is overexposed, it can lead to anti-advertising. Therefore, it’s better to subtly influence your target audience rather than overloading them; for example, by opting for social-proof promotions, authentic campaigns based on user generated content and influencer marketing.
In conclusion, ecommerce has aptly responded to COVID-19, applying Winston Churchill’s acclaimed advice to never let a crisis go to waste. With the learning curve behind us, there is still plenty of room for companies to explore the world of online sales.
Interesting in learning more about how to boost your ecommerce channels and run more engaging campaigns? Book a free Flowbox demo today!
Cecilia Rehn, Digital Marketing Manager