It’s no secret that the COVID-19 global pandemic created a crisis that strain industries across the world. The e-commerce industry has been particularly impacted. With countries worldwide implementing strict confinement measures and contact restrictions, consumers have turned to online shopping, and purchasing habits have shifted. Online shopping offers access to the products they need at their convenience from the safety of their home.
On the other hand, retail brands have had to rapidly adapt their strategies and be flexible to survive and navigate the new marketplace. The COVID-19 crisis has accelerated the shift in consumer spending habits and triggered changes in the e-commerce landscape, expanding its scope through product categories, consumer segments, and digital marketing strategies.
Some brands are feeling the strain as circumstances continue to change each day. Here are five ways COVID-19 has impacted the e-commerce industry and how brands can determine the right choices.
Accelerated Shift Towards Online Shopping
Data from IBM’s U.S. Retail Index shows that the COVID-19 crisis accelerated the shift away from brick-and-mortar stores to online shopping by about five years. Another survey shows that 62% of consumers around the world shop for products online more now than before the coronavirus pandemic.
With millions of people being forced to isolate and stay at home to contain the virus, consumers have turned to e-commerce platforms to purchase essential items. For retailers that had to adopt or ramp up online purchasing, payment processing solutions quickly became a must-have in their business infrastructure.
Retailers have had to embrace omnichannel fulfillment and quickly adjust their strategies in order to survive in the new business environment. According to Angelo Mendola, President and Chief Operating Officer of Priority Payment Systems Local, a new shift in the online sales space has been within the restaurant industry.
“Due to the restaurant industry being one of the industries that has been hit the hardest, restauranters have had to get creative. Since they can’t fill all their seats, some are now moving toward selling products online such as wine and meal delivery kits, as they should be,” he said. “Prior to COVID-19, very few restaurants embraced this opportunity but now, more and more are willing to do whatever it takes to keep their doors open,” Mendola added.
Supply Chain and Shipping Interruptions
For decades, firms have relied on global supply chains to reduce their costs, ensure business growth, and facilitate entry into new markets. However, the unprecedented disruptions caused by the COVID-19 pandemic have revealed significant vulnerabilities of supply networks across the world. According to research, the COVID-19 crisis caused supply chain and logistic disruptions for about 75% of all U.S companies. As a result, brands had to deal with frustrated customers, limited inventory, longer delivery times, and canceled orders.
It’s important for e-commerce businesses to keep track of their inventory and maintain transparency with customers during this time. You need to make sure the products you’re selling online are available and effectively plan your customers’ experiences (both online and offline).
Consumer Purchasing and Spending Patterns
Not only did purchasing behavior shift from offline stores to online platforms, but it also shifted the product categories consumers are buying. There has been an increase in demand for consumer electronics, digital entertainment, personal fitness items, food and beverages, and hygiene products during the pandemic. Ecommerce platforms specializing in these items have witnessed huge traffic and unprecedented growth.
Consumers have postponed larger, non-essential expenditures and are focusing more on lower-cost, essential products. The financial uncertainty caused by the pandemic has forced customers to stay away from more exclusive and pricey product options and opt for store-brand items. This has been beneficial to home-grown retail companies. High-value brands, on the other hand, have had to offer discounts and other incentives in the short-term to remain competitive and retain their customer base. More people are also focusing on at-home hobby activities.
Accelerated Digital Payments in E-commerce
Following the COVID-19 crisis, consumers around the world have gone by necessity from waiting in line and wandering aisles at departmental stores to navigating e-commerce platforms. Ecommerce sales for health products, groceries, and other essential products have increased since the pandemic began.
According to PYMNTS’s recent research, consumers are embracing online shopping and digital payment methods as they are easy to use and safe during this period. While this may have begun out of necessity, the research shows that consumers are now using digital payments by choice. And this trend is likely to continue and persist long after the coronavirus pandemic.
Before the virus, some countries were ahead of others when it comes to using digital payments. For instance, consumers in the U.S had been conducting 23% of online transactions via digital wallets, compared to 56% in China. However, the pandemic has led to an increase in the demand for such digital payment methods in almost every region across the world.
Customers have heightened expectations for pain-free, seamless shopping experiences. They may never return to using traditional cash and card payments as they seem committed to maintaining a digital-first lifestyle. As such, merchants must adjust their business models to better suit their customer’s online shopping, and payment needs in the new marketplace. Those that are providing customers with their preferred payment methods are already seeing exponential growth.
Disclaimer: This content does not necessarily represent the views of IWB.