The effects of the COVID-19 pandemic on e-commerce are unprecedented, and many of them are present in day to day life. Before the pandemic, e-commerce sales growth was doing just fine, with $600 billion in online sales making up 56 percent of overall retail growth last year. After the pandemic, growth is still predicted to increase to $6.5 trillion by 2023.
At the same time, there is also unprecedented precarity as the impacts of the virus unfold. Demand for essential items has skyrocketed, overwhelming global supply chains. Companies like Amazon have had to halt orders for non-essential items for a period, only to begin shipping them again a few weeks later.
And of course, demand for these essential items and other quarantine products could drop suddenly as the pandemic subsides. This rapid fluctuation has meant surging success for some retailers and prompt catastrophe for others.
But while supply chains sort themselves out, e-commerce will continue to boom. Online U.S. retailers’ year-over-year (YoY) revenue growth is up 68 percent as of mid-April (from 49 percent in January), e-commerce YoY growth is up 129 percent and online shopping activity has increased to rates near Cyber Monday, according to Quantum Metric.
So the question is not whether there is growth, but how to cut losses and adapt to sustain new growth. Those who can stay current with consumer trends and acclimate quickly have a higher chance of coming out on top.
Growing With the New COVID-19 Consumer
While many stress over the short-term chaos, looking ahead to the long-term impacts of the virus could help companies plan ride the wave of e-commerce growth. The first thing to understand is a permanent reshaping of consumer spending that could become a way for companies to get ahead and stay ahead in the “post-COVID-19” economy.
In the current COVID-19 economy, consumers have created new categories of spending that did not exist before. While demand for essential items spiked, a demand for “new, essential items” appeared, including new interest in subscription boxes, activewear, hardware, office supplies, and telecommunications.
When social distancing measures reduce, much of this demand could decrease. However, experts predict some new consumer behaviors could stick around as new habits solidify.
New (and Lasting?) Consumer Behavior
Since COVID-19, consumers have moved much of their daily activity online, and this means they have formed shopping habits they may retain after the pandemic. Former Australian economic advisor Dr. Andrew Charlton notes, “People are getting used to doing things differently and some of the changes will be persistent.”
Charlton says before the pandemic, Australians were reluctant to shop online. Now, Australians who would never have created a website login have developed multiple pandemic-induced habits. Now that consumers have greater familiarity with shopping online, they can more easily continue shopping there after the pandemic.
New Content and Advertising Preferences
Beyond moving their shopping online, consumers have also changed their content consumption. An Unruly consumer survey released in April revealed COVID-19 consumers prefer news, entertainment, government and health content — as opposed to travel, auto and clothing content.
Comedies and dramas are currently the most viewed form of entertainment. It remains to be seen whether these preferences will remain as entertainment “habits” post-pandemic.
Advertising preferences are also changing, and not necessarily for the worse. Despite social media chatter about the immorality of pandemic advertising, Unruly found that less than 2 percent of consumers do not want to be advertised to during the pandemic. They just want to be advertised to in a different way.
Unruly explains some consumers want virus-related updates, while others want to ads to cheer them up or merely help them feel things are still business as usual:
“Twenty-two percent of respondents said they want brands to share information on how they are supporting their staff and customers during this time, and 21 percent want brand advertisements to include information about COVID-19. However, at the same time, 17 percent of consumers want ads to provide a sense of continuity and normalcy, while another 17 percent want ads to be funny/positive in an effort to distract from what’s going on.”
The length of the pandemic will decide how long these trends will remain relevant. Online retailers should remain up to date on how their particular consumers prefer companies advertise to them during this time.
The Length of the Impact
Simeon Siegel, BMO Capital Markets Managing Director, wonders if the consumer impacts of COVID-19 are not just influences but a generational event shaping a generational attitude. “It remains to be seen if this is one of them, he says, “but it’s not hard to imagine that it will be.”
Many people are familiar with the habits their grandparents developed during the Great Depression, such as avoiding waste and reusing and repairing household items. The modern American consumer has had a much more complex consumer history and with the advent of the internet, e-commerce will deal with new behaviors that we cannot look to the past to understand.
Growing With a Changed Generation
Before the virus, e-commerce was already looking to cater to generation Z preferences of authenticity and social media presence. Now, companies will have to adapt to new demands created by the virus in order to grow.
Now is a great time to cut out the middleman, and companies like Bookshop have taken advantage of pandemic trends to bring their brick-and-mortar products online. Now that we’re all online, it simply remains to be seen how businesses will adapt to this new and growing internet presence.