COVID 19 & eCommerce – Where Are We Now?
Even for those that have embraced digital and have robust omnichannel operations, the issues around what to do right now, how to prepare for the coming months, and what do when the situation improves all pose their own distinct challenges
April 6th, 2020
Author: Elliott Jacobs
Since the impact of the coronavirus pandemic became a reality, many predicted that the enforced isolation measures would bring a long-term boost for those retailers that could continue trading online during an uncertain economic and operational period.
We know how important digital is for brands and retailers, from marketing and online shopping to warehouse automation and fulfilment operations. And never has digital been as important as it is today. This enforced disruption may have a huge impact on fast forwarding the trend by many multiples.
However, even for those that have embraced digital and have robust omnichannel operations, the issues around what to do right now, how to prepare for the coming months, and what do when the situation (hopefully) improves all pose their own distinct challenges.
- Retail Damage
- The Opportunity
- Online Challenges
- Consumer Confidence
- Supply Chain
- Workforce & Warehouse
- Omnichannel 2.0
- Digital Marketing
- Time to Change
For those that have failed to adapt, this could be highly damaging. Having recently heard several retailers announcing poor results post-Christmas, many will use this as an excuse for their longer-term structural failures.
Lots of businesses – particularly traditional High Street retailers – have struggled to adapt to recent consumer preferences in terms of shopping and fulfilment. For those that do survive this period, it should be a wake-up call, and a compelling reason to make big changes. Those brands and retailers that were yet to embrace digital at the core of their business will be forced to change.
For those that can shift to focus on digital products and experiences, there is hope. These businesses should continue to find ways to stay connected with their employees, customers and partners virtually. Those that do, will not only find themselves better equipped to rebound when things turn around, but will also find that they have strengthened bonds with existing customers and connected with new audiences.
For example, there is already a new wave of consumers buying grocery and household goods online for the first time, many of whom will likely be converted to long-term customers. Those who previously thought it necessary to select their fresh produce and groceries have now experienced a new, more convenient and repeatable way of shopping. The same may apply to meal kit services, online wellness and fitness initiatives, and digital streaming and gaming services.
Even for digital pure-plays, this period presents its own challenges. Despite some sectors experiencing unprecedented traffic – grocery and home essentials, plus home office, home fitness, technology and streaming services – other key eCommerce sectors might not see an immediate boost in sales, just because the High Street has temporarily closed.
Economic uncertainty, employment concerns and drastic lifestyle changes will have an impact not just in the way people shop, but actually what they choose to spend money on. At a time when consumer confidence is at its lowest, those non-essential items – think fashion, apparel, cosmetics – are often looked upon as exorbitant.
Many online retailers are already promoting sales events (see fitflop example below), free delivery, loyalty initiatives, and other online perks to compensate for lower sales during the Spring’s usual seasonal campaigns, and capitalize on the void left by shuttered brick-and-mortar stores. Many are also offering extended returns periods and safe, contactless delivery options to address concerns around the virus.
Even for those that are seeing demand, the effects of the pandemic on supply chains, warehousing and fulfilment logistics could provide other challenges. And this is not the time to be disappointing customers.
One problem many retailers face – particularly with areas of the Far East and Italy at the core of the early stages of the pandemic – is sourcing supplies to meet demand. The coronavirus is causing disruption to offshore manufacturing and shipping patterns that hasn’t been seen since World War II.
It has affected all sectors, from apparel, toys and cosmetics, to construction, healthcare and technology. This could see manufacturing operations shifted back to a more local approach in future, with the West’s overreliance on the East exposed.
Workforce & Warehouses
Despite governments encouraging consumers to continue shopping online to support the economy, many businesses are hamstrung by the strict social distancing regulations now enforced. The best-case scenario, since non-essential offices are closed, is that they can operate their digital channels as they normally would with a remote workforce.
The bigger issue lies in logistics operations for most brands. They must ensure their distribution centers – whether owned or outsourced – remain functional. Orders must be fulfilled to generate revenue and continue paying staff. Special measures must be taken.
The key to safety within the distribution center is to harden the defenses protecting them. This means banning non-essential personnel from entering the facility, maintaining industrial sanitation services, implementing social distancing within the warehouse, and adjusting estimated delivery dates communicated to customers to allow for some of the inherent inefficiencies of these safety protocols.
And even for those with the correct protocols and distancing measures in place, the external pressures to shut down operations remains an issue. Asos has been accused of “playing Russian roulette with people’s lives” by keeping its major distribution center open, while online luxury retailer Net-a-Porter was forced to close its only UK distribution center in London in a bid to protect its staff.
This is where investment in automation will reap its rewards. The likes of Boohoo and Ocado in the UK, for example, have embraced AI and robotics at the center of their warehouses, not only increasing picking and packing efficiencies, but minimizing human involvement.
In terms of shipping items to customers, the shift to digital shopping has provided almost a second peak period for delivery companies. Delivery firm DPD reported a 45% increase in deliveries of clothing; 85% in sports equipment; 45% in personal hygiene; 200% in electrical goods; and 100% in pet accessories and food. Although companies are reacting to the surge in demand, this is likely to impact delivery times, so communication and transparency with customers is vital.
Omnichannel Mark II
Before the pandemic, we spoke of the route to purchase being multi-channel, and how the traditionally linear route to purchase was extinct. With in-store and out-of-home advertising essentially removed as viable options, marketing and the concept of ‘omnichannel’ has been disrupted once again. Every part of this journey – discovery, research, transaction, customer care, retention, and advocacy – should be considered digitally.
Those brands and retailers with a digital ecosystem to support every touchpoint, whether internally or through partners, are the most likely to thrive during this difficult time.
The connection between search engines marketing, blogs, vlogs, YouTube channels, product pages, Instagram posts, and online promotions is as crucial as ever – it could be make-or-break for some businesses. Customers want to discover products on social media, watch a demo on YouTube and be able to then find the product on site, with real-time advice available from an advisor, virtual or human. Then they want to be able to easily purchase the product online via their preferred payment method, with next-day delivery, easy returns and some form of loyalty offer, whilst being kept up-to-date via email or SMS.
Some key questions in this space include: Are people moving back to shopping on desktop from mobile, now they’re working from home and spending less time out of the house? Are consumers spending more time on social media, and if so, how can they be targeted effectively? How can companies keep customers up-to-date with any changes in operations during this time? Is there anything the brand can do around the coronavirus efforts, and how can this be communicated? Which products are popular at this time, and how can we make these more prominent?
Digital marketing, merchandising and analytics teams will be busier than ever during this time. With consumer confidence likely to be low, conversion rates will become a key focus, and therefore it’s vital to keep a tight grip on how visitors are interacting with eCommerce sites. Budgeting will also be key, for many this may present itself as a kind of second peak period that they had not accounted for, so allocating advertising and development spend in the correct areas should be a priority.
Time to Change
Decision-makers can use the pandemic as a real reason to fully embrace eCommerce. This is the catalyst for change, to make structural business changes, with less friction from others within the business. Drastic actions such as closing shops now seems a necessity rather than an option, and it’s the chance for traditional brick-and mortar retailers to pivot and focus on digital experiences, supply chains and fulfilment efficiencies.
Now is the time to be bold.