The COVID-19 Pandemic has had an unprecedented impact right across the globe. In the early days when word first got out about a new disease spreading from China, very few people realized just what an impact it would have on society. As it spread around the world it began to become apparent just how serious an effect it would have.
Countries in different parts of the world made their plans to tackle the pandemic and introduced various measures to combat COVID. A common form of precaution taken was the “lockdown” where again different in each country, bricks and mortar stores were closed, people were restricted to their homes, gatherings could not take place, and travel restrictions were imposed.
In the initial period, as lockdowns were being introduced, panic buying took place in many countries, and certain key products disappeared from the shelves of stores. This caused a spike in Covid 19 Ecommerce during the week of 3rd March 2020, as people tried to buy the items, no longer available in stores, online.
After that spike e-commerce subsided for a short while, although still at higher than normal levels. In some countries where online grocery stores were already operational, there was such demand that delivery slots became impossible to get. The companies did not have the capacity for enough deliveries. It took about a month before the larger companies had purchased more trucks and hired more drivers, but once this happened, the growth of online grocery deliveries was rapid.
The growth of Covid 19 Ecommerce in 2020 was due to three main factors:
New Companies entering the market
Some companies that previously did not have an online shopping presence, and who found their Bricks & Mortar Stores unable to operate quickly set up new E-Commerce sites so they could continue trading. One we noticed was painting contractors Chicago who never had a website, but now do and are using E-commerce to sell their services.
New Demographics
E-Commerce had been growing for some time and certain demographics were used to buying online, mostly for luxuries, but now new age-groups were realizing the potential and overcoming mistrust of the Internet.
Gen Z and Millenials
Gen Z and Millenials had grown up in the age of the Internet and are accustomed to enjoying both convenience and speed. Where fast delivery is available these groups will automatically shop online and have no difficulty doing so.
Baby Boomers
Baby boomers have typically been historically more hesitant to use E-Commerce but have been forced to adapt to technology when the Pandemic hit. This new group, often with higher disposable incomes, has taken to shopping online with gusto, once barriers were broken and together with the greater number of Gen Z and Millenials, have accounted for the vast increase in Covid 19 Ecommerce.
New Markets
In the past, only a small range of products was typically ordered online, but with lockdown businesses from a wide variety of industries have begun to experiment and implement E-Commerce. Some companies have seen it as a temporary stopgap until they can resume their previous modes of trading, but others who have had to close down because of the pandemic have repositioned themselves as online retailers.
There has been a noticeable switch from luxury goods to necessities during the pandemic.
Not all countries have the same financial infrastructure as the USA and Europe and they have had to adapt E-Commerce models accordingly – for example, COD terms.
[Source – OECD Policy Response to Corona Virus]
The COVID-19 crisis is likely to have long-lasting effects on e-commerce
While some shifts from bricks and mortar retailers to online will undoubtedly be temporary, during the pandemic, it is believed that some demographics will remain with their newfound shopping habits even after normality resumes. Statistics show that the pandemic has accelerated the existing growth of E-Commerce by five years.
In May 2020 during the first round of lockdowns Covid 19 Ecommerce rapidly and the share of total retail sales done online reached a massive 33.8% in the UK. When the first lockdowns ended and stores began to open up again, it was expected that this would drop considerably, near to the figures reached before the lockdown, but retailers discovered that the fall was only some 6%, with the total online share of all retail sales remaining at 27.6% in September 2020. This indicates that many people who had been forced to go online have found the experience rewarding and intend to stick with online sales.
In the USA 21% of people admitted having ordered groceries online as a response to the pandemic. When asked the same question 19% of the over 65s made the same admission. Since convenience is traditionally one of the key drivers for Covid 19 Ecommerce it is likely that once they have experienced it, that a high proportion of them will continue with online purchasing as they have in the UK.
From the retailer’s point of view, many of which were forced to completely shut-down during lockdowns, many of them are considering whether E-Commerce is a potentially critical complementary activity or even an alternative business model.
[Source – OECD Policy Response to Corona Virus]
Some supermarkets who have had branches that were not doing so well before the lockdowns took the opportunity to close them completely during the first wave of lockdowns, and convert them to “Dark Stores” where the public do not enter, but instead staff uses them to assemble online orders.
In fact, even before the Pandemic, the retail world was going through substantial changes. Department stores carrying a variety of goods have suffered in particular and many household names that were once flagship stores of malls in the USA, UK, EU, and Japan have been closing their doors forever. Their previous customers have moved online.
This has a further knock-on effect as people no longer visit the High Streets or malls and the smaller stores that once were viable increasingly struggle. Switching online can be a viable alternative business model.
It seems that the effects of the Pandemic will result in some significant changes in the way we live in the future. Many people, for example, are saying that they intend to travel more locally in the future and that international travel may not recover to the levels experienced before the pandemic.
The United Nations Conference on Trade and Development survey suggests that internationally many of the respondents will continue shopping online after the pandemic, especially in Turkey and The People’s Republic of China.
[Source The United Nations Conference on Trade and Development Survey]
Consumers Pandemic Behaviors Continue into 2021
For most people in 2020, there was an expectation that early in 2021 a vaccine would appear and people had a vague idea that this would solve everything. They did not consider how long it would take to vaccinate large parts of the community. The magnitude of this task is only now becoming apparent and many people are slowly coming around to the fact that normal life may still be some way away.
The New Year has also seen new strains of the COVID-19 appear and there is an expectation that some of the new strains may not be responsive to the vaccines that we have finally started to receive. There is an acceptance that there may be new waves of the pandemic soon. This has made people see the fragility of our current way of life and serious thought is being given to building a “New Normal.”
The strength of E-Commerce will continue into 2021 and beyond. There will not be the same growth in 2021, simply because the growth last year was so sensational. Worldwide E-Commerce sales are around $5 Trillion, and the growth in 2021 is expected to be 14.3%, compared to 32.4% in 2020. This growth is taking place in a background of a 3% decline in total retail sales worldwide.
As we move into 2021 surveys show that 75% of buyers and sellers prefer digital options over the face to face options. The reasons given were safety compared to face to face, and convenience.
Statistics for 2020 E-Commerce
We can see from the following statistics that it was a remarkable year for E-Commerce with a large number of people experiencing aspects of E-Commerce for the first time.
1. 56% of consumers have tried a new retailer during the Pandemic.
2. 18% of consumers have tried curbside pickup for the very first time.
3. 36% of consumers, unfortunately, experienced delays in shipping because of COVID-19
4. E-commerce Sales in 20202 to show 32.4% increase
5. Bricks AND Mortar sales expected to show a 3.2% decline
6. Best Buy experienced the highest year on year E-Commerce growth with 104.5%
7. Target Experienced 103.5% E-Commerce growth.
8. Kroger experienced 79.2% E-Commerce growth
9. Amazon experience 39.1% year on year E-Commerce growth.
Indirect Connections Between E-Commerce and the Pandemic
So far we have only explored the direct connection between E-Commerce and COVID-19. That is less availability of Bricks & Mortar retailing equals an increase in E-Commerce. We must also consider the indirect connections as well.
There are some “experts” who are predicting that we may not see a full resumption of life as it once was until the end of this decade, COVID-19 would by then have played a role in our lives for ten years. After the passing of ten years, many aspects of our everyday life will have changed. We will have become adjusted to avoiding busy malls, restaurants, and sports venues. We will, for some of us, become used to working from home, being educated at home. For example, many private school buildings in the Philippines have been put up for sale, as the entire school has switched to online education. Selling a building does not suggest that the management see home education as being a temporary situation.
Where people no longer make a long daily commute into the city to work and are based in their homes instead, the thousands of people employed in the cities to support that massive influx of commuters will no longer be needed. Coffee shops, food stores, transport facilities will no longer be required in such large numbers.
One Possible Future
If this were to be the “New Normal” why would anyone pay premium prices to live in an overcrowded commuter belt? If working from home they can live wherever they want and can move to parts of the country that are less crowded and certainly cheaper. Where people are no longer living in crowded areas in the commuter belt and no longer live near large shopping facilities, where are they going to shop? They will of course shop online. They will work, shop, be educated, and be entertained online.
There are already houses where there are several PCs and laptops, being used for working at home, and education purposes. Homes where couriers call several times a week with deliveries from online retailers, and food stores. Instead of going out to eat takeaway food deliveries arrive from local kitchens.
Of course, not everyone can work from home, but if this move to working from home were to take place, the already shaky Bricks & Mortar Retail Sector would not survive and those people who do have to travel to work would still need to shop online
In the USA, when the first wave of business closures took place 140,104 establishments marked themselves as “Temporarily Closed.” By August only 65,769 were still marked as “Temporarily Closed.” This sounds like good news, but the sad reality is that many of those no longer showing as temporarily closed have shut down forever. More than 97,9666 businesses have shut permanently during the Pandemic.
[Source – Yelp.com’s Local Economic Impact Report.]
Many small businesses are still in trouble and experts agree that we have not seen the end of closures. Kevin Kuhlman, the vice president of federal government relations for the National Federation of Independent Business (NFIB) has stated that one in five businesses believe they will not make it to the end of the Pandemic.
Final Thoughts
The Internet is full of terrifying statistics about the impact of the pandemic on our world. It is clear that with so many businesses closing that for many of them the only option is to close down expensive retail premises and switch to online, working from home, a garage, or some cheap out-of-town building.
Whether we like it or not, we seem to be deading towards a world of E-Commerce and a digital economy.