During the coronavirus period, it is necessary to adapt to new living conditions and rules of the online market. But is it so bad? Let us tell you about the impact of COVID-19 on e-commerce and online sales and what the future holds for this sphere.
We live in a glorious period when people can buy any goods or services from the comfort of their homes. The global e-commerce market is developing through online stores and marketplaces. Their development and increasing availability allow people to buy and sell products worldwide.
If you couldn’t find the product you’re looking for, it’s no problem, because now you can quickly turn to online shops that offer delivery not only domestically but all over the world.
For example, according to Statista, e-commerce sales will reach $4.2 trillion by the end of 2020. Although total sales reached only $1.3 trillion in 2014.
However, e-commerce is not only about online trading, but it is also about electronic money transfers, supply chain management, online marketing, online transaction processing, and more. So, let’s figure out what e-commerce is and how it changed in the COVID – 19 era.
What is e-commerce?
I’d like to start by telling you what e-commerce is. E-commerce (or internet commerce) is a business activity where goods and services are distributed, advertised, and promoted through the Internet. You don’t need a lot of capital; you don’t need to spend a lot of money every month on non-productive expenses and renting a warehouse. In short, e-commerce is the purchase/sale of goods and services online.
In technical terms, e-commerce is based on a server, database, and delivery system of goods or services to the buyer. E-commerce refers to e-trade, e-cash, e-marketing, e-banking, Electroniс Data Interchange (EDI), Electronic Funds Transfer (EFT), and e-insurance.
A few words about B2B and B2C. However, there are a huge number of other types of commerce as well. But these are the most common:
B2B (Business-to-Business) – “relations between commercial organizations”. A company or division of a company sells its goods/services to corporate clients (other companies). Here the main aim is to benefit from the provision of services, the sale of goods not to private end consumers, and other companies that consume these goods and services only to carry out their own business.
B2C (Business-to-Consumer) – “the relationship between the commercial organization and consumers”. This is a commercial relationship between an organization (Business) and the “end” consumer (Consumer). The consumer buys goods to meet individual needs. The object of the interaction is the goods or services, and the subjects: the company selling the goods (providing the service), on the one hand, and the private buyer, on the other.
Benefits and drawbacks
E-commerce, of course, has both pros and cons. Among the advantages, the following can be noted:
Constant expansion of the audience. Through the Internet, you can sell your goods and services around the world;
Direct cooperation with the manufacturer;
More accurate analysis of sales, promotion, business growth, and tracking vital information on KPI. Different analytics systems help to analyze the situation and take appropriate measures;
Reducing costs, as there is no need to rent space and hire sales staff.
Fast product launch, constant availability, and personalization.
Among the drawbacks, the following can be noted:
Lack of legal regulation of e-commerce and, as a result, difficulties in concluding transactions;
Some customers still do not trust the services that are provided on the Internet;
Not all regions have free access to high-speed Internet;
Copyright law. Books, movies, courses, etc. are being merged into free access, and this is becoming a big challenge for e-commerce around the world;
Safety. To deal with fraud, authorizations, certifications, and so on are constantly being implemented.
E-commerce in the era of COVID – 19 and beyond
The pandemic has affected all spheres of human life. Everyone gradually adapted to the situation in which we found ourselves. Many people avoid crowded places, make purchases, and order home delivery of goods now. The number of orders through the Internet is increasing every day, and during the period of self-isolation you could buy goods straight from home. More and more often the search started to meet not only requests for the purchase of basic necessities such as food shopping, but also inquiries about various activities online.
Thus, during the pandemic, online sales of hygiene products, clothing and other goods increased. Demand for food delivery from a restaurant in the USA increased by 31%, in the UK by 19%, and in Germany by 16%.
Sellers see increased demand for certain product lines, adapt to the situation, find different ways to reach a new audience, and attract more and more customers. Large chains and marketplaces are adapting to current conditions, moving to online delivery, and solving logistical problems. People are looking for new ways to obtain necessities and simply commodities to meet their needs through e-commerce. This will lead to a change in consumer behavior. But to what extent – it is not known until the changes in the economy as a whole are visible and how long measures to overcome social exclusion will remain. However, for retailers that provide good e-commerce, it is already easy to sell more goods and attract more and more customers for a long time.
Buyers choose products more carefully now: they look for reviews online and read about product features, contact online consultants, and choose the most advantageous and convenient way to buy. And this concerns not only electronics but also beauty products, clothes, and other goods.
What should companies do?
First of all, it is desirable to convince customers that the safety of clients and your employees is a priority for you. Stay connected to your customers. Clients are more likely to adopt new habits after the pandemic is over. Your businesses must work transparently and be user-friendly. Online communication with suppliers and business automation, in general, will be a top priority soon.
Also, correct your KPIs and only take into account online metrics. Do not use physical marketing modes, new customers will search for you online to buy your product from home.
Keep an eye on your competitors and how they adapt to the situation. Explore customer sites and find out how easy it is for consumers to find the information they need.
The pandemic has also accelerated the transition to digital payments. Customers can use contactless cards or smartphones to pay for goods or services now. They prefer innovations, and as customers use technology, they are increasingly willing to use contactless payments and digital wallets. Thus, the Visa company has concluded a partnership agreement on the transition to 100% contactless payments.
Entrepreneurs try not only to take care of their employees and stick to their business vision but also to adapt quickly to the new environment. Organizations have the opportunity to constantly experiment and implement new technologies and improve production and trade. Those businesses that digitally connect with consumers through convenience and shared values can build trust with customers, retain their loyalty, and thrive in a new environment. Entrepreneurs have an excellent opportunity to restructure their business and adjust their operating model to become better and stronger after exposure to COVID-19. This chart shows the forecast for growth in global retail sales from 2018 to 2022. According to Statista, global retail sales will drop by 5.7% as a result of the Covid-19 pandemic. And by 2022, global retail sales will be about $26.7 trillion, according to Statista. This compares to an estimated $24.8 trillion in global retail sales by 2022.
COVID-19 is changing what people buy – and having drastic impacts on supply. E-commerce after COVID-19 will reflect these changes, making agility and ecosystems a priority to meet market needs quickly. Rapidly changing constraints and needs have led to changes in demand, creating a platform for business to respond quickly or miss out.
People are trying to adapt more and more to constantly arising problems and changing terms while changing their behavior. On the other hand, business owners are trying to support both their needs and those of their customers by offering them better conditions.
Sellers know their customers better than anyone else. Delivering what customers need right now, and setting up for success in the future – is not scaling your own range. Organizations adopt an ecosystem approach to trade by strengthening their relationships with buyers, working with sellers to obtain products in demand, and adapting their assortment strategies within a few days.
We are entering a new era. This is the right time to define what it means for your business to be in a better position during response, recovery, and beyond.