The Acceleration of E-Commerce

Line Art

Over the course of the COVID-19 pandemic, there has been a noticeable surge in the volume of e-commerce transactions. Worldwide searches for “online shopping,” “food delivery,” and “online doctor” have risen alongside the global spread of the virus. This growth in e-commerce is still ongoing, resulting in record business-to-consumer volumes throughout the United States.

Here are some reasons as to why this surge in e-commerce may be the “new normal.”

Brick-and-mortar stores are slowly reopening:

Over a period of a few weeks, retailers felt the unprecedented impact from the COVID-19 pandemic. Storefronts were closing across the country and anything that wasn’t deemed as an essential business was put on lockdown. This didn’t single out just a few stores, but yet all retailers were forced to close their doors. Almost overnight, e-commerce became one of the few channels to buy items. This has been the primary driver for this surge.

As shelter-in-place restrictions begin to lift and brick-and-mortar storefronts start to reopen, they will surely take back some share of retail from e-commerce; although, this transition will be slow. The lifting of restrictions across the country has been uneven, causing some stores to remain closed as others begin to reopen. There is also the possibility of infection rates increasing as more public places open, which could force locations back into another lockdown. One of the main factors is that shoppers will be more cautious when and where they shop, and this behavior could remain until a vaccine is available to the public.

This surge could also mark the last and final breathe of some brick-and-mortar stores with iconic retailers, like JC Penney and J.Crew, publicly announcing the closing of a majority, if not all, of their locations. Retailers were already struggling pre-COVID-19 and with the aftermath of the pandemic still yet to be seen, it has already caused many retailers to crack under pressure.

Consumer buying habits have changed:

Many consumers are still cautious when it comes to online channels, especially for certain categories. Many people still like being able to go into brick-and-mortar stores and be able to look at products in person. For some consumers, going to the store is a habit for specific purchases, such as grocery and apparel items. The COVID-19 pandemic has forced many consumers to shop outside of their comfort zone and try e-commerce while they are stuck inside their homes.

Also, in the fallout of the shutdown from this pandemic, the economy has taken a huge hit and unemployment levels are near record highs. This impacts consumer spending across all channels; however, the growth in e-commerce has grown so much that it will likely offset the overall decline of retail.

Brands are starting to reconsider their omnichannel mix:

As e-commerce has truly become the main channel during the COVID-19 pandemic, it has been a wakeup call for many organizations to re-evaluate their channel mix. Whether it is a small business being forced to open an online store for the first time, or a larger global organization that has been forced to accelerate their e-commerce capabilities, growth efforts in e-commerce will have a long-lasting impact.

Some organizations have felt the shock of this shift and their fight through this will be difficult, but they are likely to continue with increased efforts moving forward. Other organizations have actively made these changes some time ago and are paying dividends today. Here at Vanguard, some of our clients use our support for omnichannel optimization. A global leading sneaker company uses our Sales Forecasting for their omnichannel markets, and an outdoor retail company with a strong omnichannel presence uses our Sales & Operation Planning.

“Essential” items will remain strong

The COVID-19 pandemic has made us take a close look at some of the habits we have in our daily lives. While sanitation has always been important, since the outbreak we are all washing our hands, applying hand sanitizers, and wiping down surfaces more frequently than we were before. Volumes of sanitizers, wipes, and soaps have surged and these volumes are likely to stay strong or, at least, until there is a proven and broadly administered vaccine.

Another example is personal protective equipment (PPE). Before the outbreak, most companies wouldn’t have paid attention to a category such as PPE. Now, some organizations have shifted their operations to include new PPR products in their lineup. Consumers are going to be living with masks and disposable gloves for the foreseeable future.

While there may be some ongoing damage control for a while, this new normal is completely different than what it was just a few months ago. This major shift in retail is going to push the importance of e-commerce to new levels, accelerating the shift that has been slowly happening for over a decade.