29 April 2020 Luke Goldsworthy

Coronavirus and eCommerce

Photo by Mick Haupt on Unsplash

The coronavirus pandemic currently forcing the world into shutdown will have legacies affecting nearly all aspects of life, including purchasing behaviour. As our lives shift online for the foreseeable future there has been an associated growth in eCommerce, which can be expected to continue after the crisis if retailers are able to use the opportunity to demonstrate the benefits of online purchasing.

In China, online retail sales of physical goods still grew by three per cent in the first two months of the year, at a time when overall sales fell 20.5 per cent. “The last two months of quarantine has reshaped consumers’ purchase and transactional behaviour to shift more towards online,” said William Chuang, Asia equity portfolio manager at AXA Investment Managers. “The biggest winner is likely to be online grocers where consumers can find the cheapest price and convenience.”

The source of the disease and the first country to start showing signs of moving past it, China provides an insight into what others can expect. S&P Global reports: “As the country shifted to what has been dubbed a stay-at-home economy, consumers ordered fewer restaurant takeouts and cooked more, bought more home cleaning and personal hygiene products, and ordered fewer fashion and discretionary items, according to an analysis of data released by the Chinese government and e-commerce companies. Sales of items such as yoga mats, pyjamas and kitchen utensils also surged.”

Consumers are avoiding high-priced discretionary spends and online grocery sales have skyrocketed. iiMedia Research reported in mid-March that it expects China’s online grocery sales to increase by 62.9 per cent this year, compared with 29.2 per cent growth in 2019.

An early-March study from Ipsos MORI, Tracking the Coronavirus: Results from a Multi-country Poll, confirmed these findings, with eCommerce replacing footfall in physical retail stores. It found that 50 per cent of Chinese respondents, and 31 per cent from Italy, said they were shopping online “more frequently” to purchase products they would have previously bought in store. In Australia, the response was 18 per cent, though that figure will likely increase following the implementation of nationwide shutdowns.

In the United States, demand at Amazon is so great that the world’s largest eCommerce firm has increased its overtime pay for staff as it struggles to keep up, while several retailers have turned to site-wide discounts and free shipping to boost online sales. For example, Nike has offered 25 per cent off everything on its site to offset the effects of store closures and the marketing downturn due to the suspension of the NBA season. 

“As the coronavirus continues to spread in the U.S.,” Shelley Kohan wrote in Forbes, “there have been signs of changing consumer behavior. Self-quarantines and emerging consumer worry about public places will provide opportunities for the e-commerce business to thrive over the next few months. As consumers turn to digital options as a means to circumvent physical shopping environments, the change in behavior may impact longer-term comportment. Consumer behavior is influenced by technological advancements, but also by environmental, economic and sociological factors, all three of which are evident with the current COVID-19.”

Ultimately, the coronavirus will provide long-term benefits to online retailers, so long as they can weather the storm of an economically challenging short-term. Restrictions forced upon consumers have seen them embrace eCommerce where they previously wouldn’t have, exposing them to its benefits. This has been particularly so with groceries, but as the crisis continues other retail sectors will also see growth. After all, even discretionary spends eventually become necessary.

You can check out real-time tracking of the Covid-19’s effect on the Australian economy here: https://www.alphabeta.com/illiontracking

Like all tragedy, this too shall pass. Now is the time to ensure that your eCommerce capabilities are ready to take advantage of increased online consumer purchasing. During the outbreak, low-cost essentials are the focus of growth, but as the world returns to normal so will discretionary spending – but this time it will be far more online.

Get in touch with our team and we can talk to you about this or any eCommerce questions you may have.