For the last 10 years, e-commerce has been increasing worldwide by approximately 20 percent each year. While it’s too early to forecast e-commerce growth for 2020, with Covid-19 restrictions prohibiting brick-and-mortar retail, online shopping is experiencing significant growth and could be poised to exceed the 20 percent figure. In fact, retail platforms globally experienced a six percent increase in traffic between January and March alone.
According to Adobe’s Digital Economy Index (DEI), Covid-19 has inflated electronics prices for the first time in years, with sales up 58 percent online. With many consumers sheltering-in-place and setting up home offices and classrooms, electronics like computers, webcams and audio equipment have been in high demand.
Furthermore, history suggests a sustained uptick in e-commerce is likely. In the early 2000s, the SARS outbreak made e-commerce platforms such as Alibaba and JD.com household names – and neither platform has since forfeited their winning positions.
Many traditional retailers were struggling before the Covid-19 outbreak. The confluence of competition from online retailers, changing shopping behavior, and unpalatable operating costs such as rent and insurance, created a formidable marketplace. Throw an unforeseen pandemic into the equation, when retailers that rely on in-store sales can no longer sell their goods, and suddenly it seems inevitable that some retailers will disappear.
The pandemic has highlighted the importance of digital transformation. Retailers with a strong e-commerce strategy have more flexibility than their brick-and-mortar counterparts and are therefore more likely to survive a supply chain disruption; in fact, many are thriving in the current environment. For example, reports suggest consumers now spend approximately $11,000 per second on Amazon; and Amazon isn’t an outlier. Electronics retailer Best Buy’s online sales, which include both curbside pickup and delivery, have skyrocketed 155 percent since late March.
As Covid-19 outbreak restrictions ease, forward-thinking retailers will learn from these examples and embrace digitization, moving to an omnichannel model that includes e-commerce channels. Growing customer expectations, rising competition in the marketplace, and the increased prevalence of supply chain disruptions leave them no other choice. To successfully pivot to an omnichannel model, retailers will need to look beyond website and marketing technologies in their digital transformation and make investments in the right supply chain technology.
Covid-19 boosts buy online, pick up in store
The costs associated with both final mile delivery as well as returns can have a substantial impact on retail margins. Therefore, as e-commerce has increased, many retailers have encouraged customers to consider cheaper delivery options such as BOPIS to keep these costs in check. Adobe’s DEI also found BOPIS orders surged 208 percent year-over-year (YoY) in April – another sign of people trying to limit their exposure to the coronavirus, in this case, by limiting their time in the store. Under normal conditions, BOPIS increases store traffic, creates an opportunity for additional purchases, and allows customers to return the item while in-store.
During the Covid-19 outbreak, retailers such as Abt Electronics, Best Buy, GameStop and Lowes have leaned heavily on BOPIS, offering curbside pick-up to adhere to social distancing recommendations. In addition, many retailers have partnered with carriers to widen their pick-up location footprint. For example, Walmart customers can retrieve their online orders from a FedEx location, and retailer Michael’s has a partnership in place with UPS. As retail chains increasingly adopt BOPIS, it could easily become a fulfillment staple once the coronavirus curve flattens.
Pandemics may fade, but e-commerce will remain
The current situation will have lasting effects, one of which could be a persistent increase in e-commerce with many consumers hesitant to return to shopping in-store. Retailers can win in the long-term by looking at e-commerce as a key sales channel and identifying how they can make omnichannel order fulfillment better.
