How Covid-19 is affecting customers online shopping behaviour
The Coronavirus pandemic has changed our daily lives in so many ways, both personally and professionally, and as the crisis continues, we're seeing shifts in the ecommerce landscape too.
The ecommerce market
In order to be able to understand how customers online behaviour is changing, we first need to look at the ecommerce market itself, and how it is being impacted by the covid-19 pandemic.
Firstly, and perhaps most obviously, online orders are scaling up globally. Physical selling is limited, and people are spending more time at home, meaning there is a surge in people ordering online. In the USA, Instacart is seeing a 10x online sales uplift, with Amazon and Walmart seeing the same, and in the UK Parcelforce is predicting ecommerce penetration to reach 40% of all retail sales (currently ecommerce currently only accounts for around 20%). At a category level we can also see this reflected by online supermarket delivery slots becoming increasingly difficult to get, with retailers now telling customers they must shop in store.
This surge in demand is forcing businesses to re-evaluate their strategies, and is also causing issues in the shipping and supply chain for ecommerce companies . With increased demand, companies are struggling to keep up with deliveries, as the below graph taken from a recent study conducted by Klaviyo shows.
With supply chains, factories are closing, and some suppliers are temporarily pausing production due to reduced staffing, meaning that there is a mismatch between this increasing demand and what product is actually available.
This surge in online orders is however not being equally distributed. ‘Non-essentials' are seeing a decline, whereas other product categories are seeing growth. For example, fashion and footwear have seen significant decline in sales, however food and household goods sales are increasing. The following graph demonstrates a week by week comparison of sales taken from a recent Nielsen survey, showing that children’s medicine grew by 228% for the week ending 14th March versus the week before that, and long-life milk increasing sales by 181%.
That said, the data is not that straightforward, as there is also a change in what is being viewed as an essential purchase. Sales of electricals and DIY products are up 42% and 14% respectively, and Dixons Carphone, which also owns Currys, has reported that online sales jumped 72% over the last three weeks thanks to bumper sales of computers and printers as well as TVs, games consoles and household appliances like freezers. John Lewis also reported that jigsaw puzzles are having a moment. They reported that, since UK lockdown, demand for puzzles has been higher than at Christmas, and more than half of the retailer’s puzzle stock (including all the 1,000-piece ones) has already been sold.
All of this information clearly shows a constantly evolving ecommerce landscape, and we're seeing constantly evolving customer behaviour as a result.
Changing customer behaviour
So, how is this changing landscape actually affecting customer behaviour?
I have one word for you - Stockpiling. As we’ve heard in the news, stockpiling has been a global issue in the supermarkets throughout this pandemic, and this behaviour has been reflected online too. Numerous studies have shown that customers are purchasing higher quantities of products, at less frequency, which is resulting in lumpy sales charts for a lot of ecommerce businesses. Even when the rate of stockpiling slows, studies still show that FOMO is still contributing to spikes in sales for some product categories (for example fitness / home workout equipment purchase surges following the popularity of Joe Wicks P.E workouts.)
Availability has also become a key decider in customer purchases. Certain product categories are being affected by this more than others, but in general, brand loyalty is less important than product availability right now. Although there are challenges for businesses in the ecommerce market, such as those mentioned above, customers still have high expectations and demands, meaning that those who were previously brand loyal are changing their behaviour to try alternatives, giving new and less established businesses a chance to get a slice of the market.
Finally, we are consistently seeing that browsing is up, however conversions are down. People are spending more time online, therefore ecommerce has seen higher traffic rates across almost all product categories, however studies into conversion rates show that not all that traffic is converting to sales, as customers remain cautious about spending (other than on necessities). Purchases for big ticket items are also being postponed until there is more certainty in the economic market. We can see this supported by looking at comparisons of abandoned cart rates from March 2019 / March 2020, which shows higher rates for 2020 across all product categories.
Adapt to thrive
Information and data is great, but it's how you use it that counts. So how can a business ‘adapt to thrive’ in the current landscape?
Well, the clue is in the title, businesses must adapt. The ecommerce market has changed, along with customers behaviour, so the data bank that you had on customers and the strategies you had in place are now irrelevant to the current landscape. Businesses need to consider how they can optimize customer experiences and their ecommerce strategies based on how customers are behaving now, and if they do that, then there is real potential for not only stability, but growth.
Here are a few key takeaways that I think will help businesses to adapt to the current climate:
Even if you are an offline business, try and offer digital experiences. Just having a presence online could bring you an advantage. There are obvious routes to do this for those selling physical products, such as setting up an online store or sales channel such as Amazon, but other traditionally offline businesses can offer digital experiences too. Restaurants are moving to takeaway services and offering contactless delivery to enable them to keep sales up, virtual reality is being used to provide museum tours even though doors are currently closed, and China is using online broadcasting in the automotive industry to compensate for reduced footfall in showrooms to drive sales. Think creatively about your online touchpoints!
Ensure your customer communication is clear, and realistic. As we've seen, there are issues for ecommerce businesses right now with supply chains and delivery timelines, and any new online business would also experience teething issues. However, if you have clear communication with your customers, it can mitigate those problems. Set expectations throughout the whole customer journey, and make sure you meet them (ideally exceed!) Also, make sure you are using social media as a communication channel. Facebook, Instagram, Twitter, LinkedIn etc are all seeing increased traffic at the moment, so use these platforms to communicate with your audience and generate conversations.
Take advantage of a forced market by focusing on retention for long term growth. Short term, ecommerce gains may be easier to capitalise on in the current environment, however if a business wants that growth to last long term, there needs to be a focus on customer retention. For example, a customer who has never considered buying food online before might think about purchasing an online 'meal kit' at the moment, to ease convenience whilst we are on lockdown in the UK. Once they have tried it, that customer might then think ‘That’s a much better experience than I would have thought, and I waste less’, so they are then more likely to purchase again in the future. In short, the 'forced market' purchase has driven long term brand loyalty. Providing businesses can retain these customers, and continue meeting their needs, purchases that are made right now could therefore turn in to highly valuable long term customers.
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