Opportunities and Challenges for E-commerce in a COVID-19 World

COVID-19 has pretty much been the defining moment of 2020. As cities are going into lockdown and non-essential businesses are closed, people are stuck at home and are looking to the internet and e-commerce businesses to fulfil their buying needs. Here are some facts about COVID-19 and e-commerce business:

• Online purchases are up 76.7%, while Global retail sales are expected to dip by 5.7% due to the coronavirus (Davis & Toney, 2020).

• Homemade goods being sold on Etsy’s marketplace has exploded by 146% (Davis & Toney, 2020).

• Online Grocery sales have increased by 9% from May-June (Davis & Toney, 2020).

So let’s have a look at the opportunities and challenges e-commerce businesses will face in a COVID-19 world.

Challenges

Supply Chain disruptions

China is the biggest manufacturer in the world and some estimates show that the manufacturing capacity of China has decreased by 40%! This is a big problem as most companies outsource suppliers and companies do not have the additional supplies to keep up with demand and are running out of stock. It can be incredibly frustrating as well, because if you move suppliers they could be just as affected by COVID-19. This is one of the many reasons a lot of products are out of stock and waiting times for items are double what they were pre-COVID.

Unexpected consumer demand

With most of the world in lockdown, consumer behaviours are abnormal and previous trends no longer apply. Many customers are over buying or placing orders but then cancelling them, which leads to uncertain stock demands and fluctuations. This makes it tough for e-commerce businesses to manage their inventory (Mage Plaza, 2020).

Consumer’s tight budget

With over a million people losing their jobs due to COVID-19 in Australia (Karp, 2020), more and more people cannot afford living expenses and are becoming extremely choosy on what to buy. Household essentials are more essential now than ever, with high in demand products like food, healthcare, and household maintenance products, etc. E-commerce businesses that do not cater to these essential products are struggling to find customers and are closing down (Mage Plaza, 2020).

Website Traffic

Websites are experiencing a large surge in traffic that is creating strain on the websites performance (Mage Plaza, 2020). Many e-commerce businesses are having to recalibrate and upgrade their websites so that it can handle the traffic (Prudencio, 2020). Examples of this are Facebook having to reduce their video quality to ease pressure as phone calls over Facebook have risen by over 100% (Mogg, 2020). Furthermore, YouTube had to decrease their default video quality to standard definition (480p) to keep up with the traffic (Fung, 2020).

Opportunities

Online delivery

Due to restaurants having to shut down, fast food places and restaurants have either upgraded or moved online to deliver their food to stay afloat. This has allowed for people to still eat from their favourite restaurant, but just in take-out version. Furthermore, moving to delivery is the reason some restaurants are not closing down.

Changing customer behaviour

COVID-19 has introduced e-commerce shopping to many consumers who has had little to no experience with online stores before. With a large number of brick and mortar shops closing, people are turning to online shopping to get their products and avoid physical contact (the ultimate social distancing). It is currently hard to tell if this growth in online shopping is just temporary or is the new norm, but e-commerce businesses should adapt anyway to accommodate the rise in online shopping, because eventually consumers will want the products you are selling and you want to be prepared for the new purchasing behaviours (Mage Plaza, 2020). An example of this is Walmart plans to launch Walmart+ a service that includes same day delivery and grocery delivery to not only keep up with the new trends in consumer behaviour, but compete with Amazon (Davis & Toney, 2020).

Higher revenue

As outlined above, online shopping has significantly increased and for those e-commerce businesses that can keep up, a higher revenue will be seen in their future. But the trick is to keep up. E-commerce businesses that supply essential items are already seeing these increased revenues, and predictions are showing that buying online is not slowing down any time soon (Davis & Toney, 2020). However, there are a multitude of e-commerce businesses that do not sell essential items and need to rethink their digital marketing strategies to show customers why they should be purchasing from their online store.

Celebrations

Due to being in lockdown, many people have had to celebrate birthdays, anniversaries, graduations, wedding, etc in a very different way… ONLINE! (Mage Plaza, 2020). Therefore, consumers are going online to buy presents and celebrate, and e-commerce businesses need to be ready for this trend. Not only by presenting themselves as an online store to go to for gifts, but providing the best services so consumers can celebrate in style the best they can when they are stuck at home (Mage Plaza, 2020).

There can be no argument that COVID-19 has changed the e-commerce environment forever, however over the next few months we will be able to see clearly what e-commerce businesses swam and what e-commerce businesses sank in these unprecedented times.

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References

Davis, S. & Toney, L. (2020, August 12). How Coronavirus (COVID-19) Is Impacting Ecommerce [August 2020]. ROI Revolution. https://www.roirevolution.com/blog/2020/08/coronavirus-and-ecommerce/

Fung, B. (2020, March 24). YouTube to reduce video quality worldwide to ease strain on internet networks during coronavirus pandemic. CNN. https://www.cnn.com/2020/03/24/tech/youtube-video-quality-coronavirus/index.html

Karp, P. (2020, June 18). Australia loses 227,000 more jobs, taking unemployment to 7.1%. The Guardian. https://www.theguardian.com/business/2020/jun/18/australia-loses-227000-more-jobs-taking-coronavirus-unemployment-to-71

Mageplaza. (2020). Infographic - COVID-19 and e-Commerce through statistics: Understand challenges & opportunities. https://www.mageplaza.com/blog/covid-19-e-commerce-challenges-opportunities.html

Mogg, T. (2020, March 25). Facebook Usage Is Soaring Due to Coronavirus Lockdowns. Digital Trends. https://www.digitaltrends.com/social-media/facebook-usage-is-soaring-due-to-coronavirus-lockdowns/

Prudencio, T. (2020, May 11). COVID-19 e-commerce trends and troubles: What they are, how to fix them. The Future of Customer Engagement and Experience. https://www.the-future-of-commerce.com/2020/05/11/covid-19-e-commerce-trends/