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How the Covid-19 pandemic changed eCommerce & consumer behavior

REACH eCommerce Consulting, Established in 2022

What is the "new normal"?

It has been just over two years since the COVID-19 pandemic started and it is now time to take a step back and assess how the eCommerce landscape and consumer behavior has changed. What most people thought would be a short-lived experience at first, turned into a two-year long period of drastic changes to people's lives. All of a sudden, most people turned their spare bedroom or even their shed into a makeshift office while their living rooms turned into home gyms and breakout areas. It's probably fair to say that the novelty did not last very long before people started feeling lonely due to social distancing and overworked due to the lack of work-life-balance boundaries. In this day and age, however, we can consider ourselves blessed for technology. Working from home has proven so successful that many businesses chose to adopt and keep the model for the future. Although it is not quite the same, a family quiz night over Zoom can be almost as much fun as in person. Working out in your own living room or doing a virtual gym class at home does not only eliminate the major hurdle of journeying to the gym, but also enables you to enjoy a less judgmental environment. And thanks to modern technology, near enough anything you want or need is only a mouse click or finger tap away. Especially while shops were closed, people had no choice but to order online. From weekly grocery shop and monthly pet food supplies to skincare and other personal care products, online sales skyrocketed and accelerated the predicted eCommerce growth by a good few years.

Online Shopping Cart reflecting the digital transformation of eCommerce

What happens to eCommerce now?

Although many experts expected online sales to drop off a cliff when "normality" returned, recent months have shown that consumers continue to favor the convenience and variety online shopping offers. The US recorded the biggest growth in eCommerce, which now accounts for 17% of total retail sales, compared to only 11% pre-pandemic.

Chart of eCommerce sales as share of total retail across various countries

Several studies across various markets have come to the conclusion that this 'eCommerce boom' is going to continue into the post-Covid world. But what makes experts so convinced? One major aspect repeatedly highlighted by market analysts is that those who traditionally preferred to shop in physical stores pre-Covid were forced to switch to online shopping during the pandemic. And for whatever reason they may have preferred to shop in stores pre-Covid, they were bound to acknowledge and appreciate the benefits of eCommerce once they experienced them first hand, as highlighted in a study by Deloitte.

Findings at the United Nations Conference on Trade and Development (UNCTAD) also confirmed that the consumer behavior changes triggered throughout the COVID-19 pandemic will have lasting effects. “The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover,” Secretary-General Mukhisa Kituyi explained. As if the online landscape hasn't become competitive enough yet, more and more industries who traditionally favored physical stores may jump on this massive opportunity for online expansion. Yomi Kastro, CEO and founder of Inveon, highlighted that the fast moving consumer goods and pharmaceuticals industries have been some of the first to seize this opportunity, as they have seen some of the strongest eCommerce growth during Covid.

This long-term shift towards a more digital economy was further backed by data published in March 2022 by Digital Commerce 360 and Adobe. Their estimates of an additional $218 billion in eCommerce bottom line sales over the past two years paints a clear picture of a rapidly changing eCommerce landscape. When consumers cut back on spending money on travel and restaurants during the pandemic, the reallocation of their spending drove a massive shift in online spending. With an increase of 103% in online sales in 2020, the grocery industry has lead this shift with consumers now spending an average of $6.7 billion online each month vs $3.1 billion pre-pandemic.

How can businesses overcome increased competition?

With a new online store launching practically every minute, today's consumers are spoilt for choice. Such a sharp increase in competition within the eCommerce landscape may seem daunting but here are three key ways in which you can gain an advantage.

1. User Experience

Although it is not yet time to reinvent the wheel and throw all common eCommerce principles out of the window, analysts at McKinsey found that the user journey has become an increasingly important consideration for online shoppers. This is not to say that the importance of a strong brand identity and product quality has decreased. A best-in-class user journey has become a crucial part of a consumer's decision-making process, besides the common factors of brand, price and quality. Whilst it may seem as though some tech giants may have the upper hand in this area, there is a vast variety of user journey enhancement tools out there which we will discuss in more detail in the future.

2. Speed and Convenience

Categories like groceries and home improvement, which are much less known for discounting than electronics and apparel, have lead the way in reshaping the online economy, as pointed out in a press release by Patrick Brown, vice president of growth marketing and insights at Adobe. He further explained that this "highlights a shift in the digital economy, where speed and convenience are becoming just as important as cost savings.” Finding ways to get goods delivered to consumers quicker and more efficiently should be part of every modern business strategy.

3. Innovation and Omnichannel Shopping

Over the last few months we have all seen the harsh reality of hundreds of shops and restaurants closing, which does not come as a surprise as Rumble Romagnoli, director and CEO at Relevance points out. Businesses that still solely rely on physical stores and lack a comprehensive digital experience must now adapt or they will become obsolete. The simple fact that leading "brick and mortar" businesses like Primark have launched their first online store proves that it is crucial to adapt now before it is too late. A great example of how to combine physical shopping with a digital experience is JD Sports. While stores were shut, JD Sports temporarily utilized them as mini distribution centers and launched their 'ship from store' approach to cope with the surge in online demand. Now that stores have re-opened, there are many digital touchpoints that allow you to request your size via a QR code or browse an extended product range via a digital kiosk. These examples stress the importance of a solid digital strategy, while omnichannel approaches like retail partnerships have become more common amongst more traditional "brick and mortar" brands.

What are the key takeaways?

The last two years have certainly been a challenging time for most of us and they have brought some irreversible changes too. The eCommerce space has seen some incredible growth, which resulted in a more competitive digital economy. Although online sales are no longer at the level they were during the height of Covid, eCommerce sales are still trading much stronger than pre-Covid and there are no signs of this slowing down.

Increased competition means that customers may be even harder to acquire than pre-Covid. While strong brand values, price and quality are still very important among consumers, a smooth user journey, speedy deliveries and overall convenience have become increasingly important factors for online shoppers. The big shift towards online does not necessarily mean that all physical stores will become obsolete, but store closures are no longer a rarity these days. To avoid falling behind, businesses will have to start combining their online and offline experience.

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