E-commerce is one of the few sectors that has thrived during the COVID-19 pandemic. As a society, we’re spending more money on ecommerce purchases than at any other point in history. And this has prompted a series of significant developments, including a proliferation of online deals, super-fast home deliveries, increased spending on “stay-at-home hobbies” and more.
In light of this, a lot of people are asking a simple question: “Are these changes here to stay?” And the answer is most likely “yes”. In the majority of cases, the COVID-19 pandemic has accelerated trends that were already gaining pace, from the widespread adoption of digital technology like virtual conference software to remote working.
Understanding the Boom in Online Retail Sales
The majority of business sectors have been badly affected by the pandemic and this is particularly the case for industries like air travel and hospitality. Ecommerce, however, is one notable outlier. Web traffic has increased substantially, with visitor numbers higher than those seen during buyer holidays in previous years. And year-on-year sales figures have also surged, with disproportionately greater levels of growth compared to 2019.
But this picture isn’t as rosy as it might seem. It’s important to keep in mind that many well-known brands have taken significant hits to in-store sales and overall revenues are down. What’s more, individual spending has decreased. In general, people are more conscious of saving money and are worried about a serious economic downturn. Some categories, like “Fashion and Apparel” and “Jewellery and Luxury”, have actually seen lower online sales.
In this post, we’re going to look at four key shifts that have occurred in the ecommerce industry and explore what they mean for the future.
1. Prioritization of Value
While the number of people shopping online has increased, surveys show that consumers are paying much more attention to their spending habits. The global economic outlook is generally poor and many commentators are predicting a downturn that will match the Great Depression.
This pessimism is shared by consumers, with many looking for deals and opportunities to save money. And retailers are increasingly catering to this demand, with “basics” ranges, free delivery options and holiday promotions. Asos, for example, has launched a new line aimed at young people that are struggling financially.
Younger people (Gen X) and millennials are responsible for the biggest shifts. Baby boomers and older shoppers, on the other hand, are less likely to change their shopping habits, most probably due to the fact that they have savings and comparatively more disposable income. Because the negative economic ramifications of the pandemic are likely to continue well into the future, perhaps for several years, it’s expected that this trend will continue.
2. More Delivery and Click-and-Collect Options
Logistics networks have acted as the backbone of the ecommerce industry throughout the pandemic. And the increased demand for home deliveries has prompted retailers to expand their range of services, with several innovative options emerging.
The number of retailers offering “curbside pickup”, for example, a delivery method where an item is ordered online and then “picked up” outside the store, has increased significantly. In a similar vein, it’s now more common to see stores, especially supermarkets and grocers, offering options like next-day delivery and in-person “click and collect”. Many have also implemented stringent safety measures, such as the disinfection of packages, maintenance of social distancing and removal of signatures for tracked items.
3. Increase in Spending on “Home Activity” Categories
It will come as no surprise that more people are purchasing items related to home activities. Categories like “Hobbies”, “Gardening” and “Toys and Games” have all benefited from increased demand. Hobbycraft, one of the leading online retailers in this space, has reported a 200% boost in online sales since the start of the pandemic, with soap-making kits among the best-sellers.
Two factors are responsible for this trend. On the one hand, government-enforced lockdowns have meant that people have been unable to attend group events. On the other, consumers are increasingly reluctant to engage in non-essential in-person activities, with 80% of respondents in one survey saying that they’re “concerned when they leave home”.
Whether or not this trend will lose steam as the pandemic eases remains to be seen. It may well be the case that many will continue with the hobbies they began during the various lockdowns.
4. Greater Consumption of Digital Media
Online subscription services, especially video streaming platforms, have seen phenomenal growth over the last several months. In the UK, for example, one in five homes signed up for a new subscription during the pandemic.
Netflix doubled its expected customer acquisition rate in the first quarter of the year, with the bulk of new subscribers coming from Europe. Other providers, including Disney+ and Apple Music, along with newspapers like The New York Times, have also experienced an unprecedented number of new sign-ups.
It will be interesting to see how this trend develops over the coming months and years. Content publishers were already transitioning to subscription-based models and COVID-19 has merely accelerated this shift. Challenges ahead for subscription services include continuing to engage new customers after the pandemic has passed, and differentiating products in an increasingly competitive marketplace.
Launch Your Career With EU Business School
We are currently living through a period of rapid and unprecedented change. Now more than at any other point in recent history, there is a need for talented, innovative business leaders.
If you are interested in pursuing a business career in the ecommerce or digital spaces, perhaps at the helm of your own startup or in a managerial role at a well-known company, then a degree from EU Business School will provide you with all the skills, experience and practical know-how you need to succeed.
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