E-Commerce Is Better Than Ever: How The Pandemic Has Boosted The Online Industry
2020 is one of the toughest years for a lot of people in recent times. We experienced several tragic events such as the Australia wildfires, BLM protests, a world war threat, and the toughest of them being the Covid-19 pandemic. Several people were exposed to fatal health risks, many lost their jobs, and almost two million people have died from virus. This pandemic rendered most sectors useless, and overwhelmed the healthcare sector. However, one industry that breezed through the chaos and came out on top was the e-commerce industry.
In this article, we will highlight some of the ways the pandemic has boosted e-commerce, and show that this impact might be permanent.
E-commerce Grows By 5 Years
According to IBM, the pandemic caused a positive consumer shift towards e-commerce by five years. This means that e-commerce reached a height in 2020 that it was expected to reach in 2025. This is as a result of the increase in online shopping of grocery, alcohol, and home repair materials among other essential products. US retail e-commerce YoY growth in Q2 reached a whopping 44.5%. This increased consumer shift towards e-commerce shouldn’t surprise anyone. Due to the numerous lockdowns in different countries, several brick-and-mortar stores had to halt operations, and many shut down completely. As a result, buyers had to find an alternative, which was online shopping. Even as we are gradually reopening physical retail stores and easing the lockdowns, the cultural shift toward online shopping will be permanent. Let’s take China for example: during the 2003 SARS pandemic, many buyers had to make the switch to online shopping. This move caused many notable retail brands such as Alibaba to enter the e-commerce market.
Increased Support For Small Businesses in E-Commerce: Holiday Shopping, Cyber Monday and Small Business Saturday and Sunday
The predictions for 2020’s holiday spending is low because the consumer fear for their finances going into a new year uncertain of what to expect. Will the vaccines work? Will everything go back to normal so that they can start earning enough again? However, the e-commerce sector still recorded huge gains during Black Friday, Cyber Monday and Small Business Saturday and Sunday. Cyber Monday recorded a 15.1% increase in online sales with buyers spending $10.8 billion. Even though the total spending increased, 2019 Cyber Monday gains were more significant because it increased by 19.7% from the previous year. Interestingly, consumers supported small businesses more causing Small Business Saturday and Sunday to gain YoY growth of 30.2% and 23.7% respectively. This shows that consumers have grown more appreciative and supportive of small businesses. Although, Black Friday sales weren’t notable, independent and DTC brands recorded $2.4 billion. This is another positive impact of the pandemic on small businesses in e-commerce. According to Amazon, vendors on Amazon recorded 60% YoY increase on Black Friday sales making over $4.8 billion worldwide.
B2B E-commerce Gains
The pandemic also caused the B2B e-commerce sector to record $1.3 trillion in sales, which is an increase from 2019 sales of $1.1 trillion. 57% of buying managers are making more B2B purchase in e-commerce marketplaces, and 89% of them are spending just as much as they would for offline B2B purchases, or even significantly more. This is exactly like the reaction to the 2003 SARS pandemic in China, Alibaba’s B2B establishment Taobao became the alternative for B2B purchasing managers.
Direct-To-Consumer (DTC) E-Commerce Gain
At least 52% of DTC businesses have experienced an increase in demands. DTC brands particularly in markets such as home, electronics, food, fashion, beauty, and more. So, while on one side, 80% of traditional brick-and-mortar stores are experiencing a decline in sales, only 22% of DTC businesses experienced a decline in sales. This also confirms the consumer shift towards small businesses.
Increase In Weekly Online Shopping
According to Digital Commerce 360, 32% of consumers have made weekly online purchases since the coronavirus pandemic started. This is a 28% increase from the pre-pandemic consumer behavior. We are wondering whether this consumer behavior will remain post-pandemic. Well, the survey suggests that 28% of consumers will continue to do most of their shopping online, and 39% say that they will make their purchases both in-store, and online. 79% of the consumers surveyed claim that contactless pickup option is an important feature, while 64% say that they want contactless in-store and mobile pickup options. Since the pandemic, 85% of buyers now use the curbside option pickup more significantly. 90% of shoppers also claim that they prefer home delivery to in-store shopping. We can see that consumer behavior has changed immensely, and now leans towards e-commerce more than ever before. According to the survey, only 28% of shoppers plan to increase their in-store shopping between now and February 2021.
Buy Online, Pick up In-Store (BOPIS) Gains
Besides the fact that several stores stopped operations during the lockdowns, the pandemic also caused several shoppers to be wary of visiting physical stores for their shopping. Even after many countries lifted their national lockdown, many shoppers are still not choosing to visit physical stores. They avoid exposing themselves to several people and touching things that may not be sanitized, thereby reducing the risks of getting infected with the virus. However, some are willing to pick up their orders in stores after making their purchase online which is causing BOPIS to record a huge increase in sales — such as the 259% YoY surge in August.
2020 has come to an end and there is a glimpse of hope that 2021 will be better, particularly because different countries have announced that they a vaccine for the virus. Moderna and Pfizer seem to be the most popular of the vaccines. We are also hoping that the world will start experiencing some normalcy in 2021, but we all have to accept the fact that the e-commerce dominance of the retail industry is permanent.