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How COVID-19 Affected Ecommerce and How Businesses Can Survive

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September 23, 2021

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The COVID-19 pandemic has caused shifts across many industries, and e-commerce is one of them. Social distancing and stay-home mandates have pushed people to utilize online services. People bought groceries, food, entertainment, and more through websites, apps, and social media. Because of this, the e-commerce industry faced some growth albeit accompanied by challenges.

E-commerce businesses grew at the height of community lockdowns. However, like every other industry during the pandemic, it underwent various shifts. As businesses power through the economic effects of the pandemic, they must incorporate some changes to survive the shift.

Effects of COVID-19 on Ecommerce Businesses

1. Ecommerce Sale Growth

In 2020 alone, the e-commerce industry grew by 32.4%. The industry experienced a $105 billion growth, as people turned to online shopping amid lockdowns. Consumers turned to mobile apps for the delivery of medicines, groceries, food, and other miscellaneous items. As lockdowns extended, more options for products and safety became available in online stores.

By the first quarter of 2021, e-commerce sales growth increased by 39%. This is three times faster than the last two quarters of the previous year. The continued e-commerce growth could be attributed to the spike of cases in January. People are still wary of the coronavirus, as more cases and variants emerge. As a result, people purchase online to minimize the chances of exposing themselves to the coronavirus.

2. From Brick-and-Mortar to E-commerce Retail

The shift towards online shopping has significantly affected brick-and-mortar retail. In 2020, Business Insider found that 12,000 stores were set to close, excluding small businesses. This shift affects even the biggest players in the game.

As the pandemic continues to push physical stores to close, more and more people prefer online shopping. 73.5% of consumers were shopping online more often at the height of the pandemic than they did before the pandemic. The same survey also found that 88% of consumers will continue to prefer online shopping after a cure or a vaccine is discovered.

Hence, the rise of online shopping does not end with the pandemic. If consumers continue with this behavior, the demand for brick-and-mortar stores could remain at risk.

3. Changes in Product Categories

Consumers’ needs and priorities have also been affected by the pandemic. As a result, the demand for various products has also undergone some changes. The following are product categories that have experienced significant changes during the pandemic:

• Health and safety. The sales of health and safety supplies have increased by more than 300% during the pandemic. Because of demand and supply, prices underwent spikes. Stocks were also depleted at the start of the pandemic.
• Shelf-stable goods. Food items that have a long shelf life have garnered more than 300% in sales growth. Consumers stock up on these goods in preparation for quarantine.
• Food and beverage. Groceries have received significant growth in sales. However, this category experiences different consumer behaviors, causing sales to fluctuate every month. Additionally, consumers tend to prefer a buy-online-pick-up-in-store mode of shopping. Some also hire personal shoppers or have their groceries delivered to their homes.
• Digital streaming. Because people have been staying at home more during the pandemic, they need something to entertain themselves. 80% of American consumers are subscribed to at least one service during the pandemic. This is a 7% increase from their pre-pandemic survey.

4. Lay-offs and Increased Unemployment Rates

Unemployment rates skyrocketed at the start of the pandemic. The unemployment rate in the Philippines doubled, increasing from 5.1% in 2019 to 10.3% in 2020.

The same trend in unemployment rates happened with the rest of the world. Businesses laid off employees to cope with the financial consequences of the COVID-19 pandemic. Employees were worried about how they can pay rent, put food on the table, and raise their families.

This scenario poses negative consequences to business processes. For example, customer service could be less effective since there will be fewer representatives to answer inquiries. It could also mean delayed shipping time because fewer employees will be working on packing and shipping out parcels.

Additionally, the remaining employees could take the brunt of the lack of manpower, resulting in burnout and fatigue.

5. Financial Consequences

Forced closures, change in consumer behaviors, and the world suddenly coming to a halt had their devastating effects on the economy. Others even claim that the economic effects of the COVID-19 pandemic are worse than The Great Depression.

Aside from the large-scale effects on the economy, there are direct effects on every e-commerce retailer out there. The biggest contributing factor is that a lot more people are experiencing financial issues. To manage their finances, a consumer may need to cut down on expenses, especially shopping for leisure. As a result, retailers will have fewer customers than they did before the pandemic.

Recovery is in place, as the vaccine rollout continues to accelerate around the world. However, the effects of the COVID-19 pandemic may be long-term. These e-commerce business challenges may have permanently reshaped the industry, and the only way for businesses to survive is to adapt.

How to Survive the Shift

Online Presence

Nowadays, there are multiple ways of increasing the online presence of your business. The development of internet culture has provided businesses with innovative ways to capture more consumers. The following are a few ways to increase online presence:

• Be active on social media. Social media is a powerful and accessible tool for businesses. Not only is it free to create a business page, but it also has a global reach. It can showcase products and services through sharing of pictures and other relevant posts. Through social media, businesses can easily connect with their customers—whether it’s customer service or feedback.
• Build a website. E-commerce businesses need a website for many reasons, and one of them is credibility. When a customer searches your business online, the best way to appear on their searches is through a website. This way, you can showcase your products, story, branding, and everything else that a customer needs to know. This provides reassurance of the legitimacy of the business.
• Use different marketing strategies. Sometimes, it’s easy to fall into a rabbit hole when you’re browsing the internet. Businesses take advantage of this by placing their links in blog articles, videos, and other forms of content. This strategy has multiple purposes such as luring potential customers to a business website or scoring high in search engines.

Omnichannel Commerce

Omnichannel commerce creates a more streamlined approach to the shopping experience. No matter where the customer is browsing or checking out their carts, omnichannel commerce makes sure that the experience is seamless.

To further understand omnichannel commerce, it’s important to know what multichannel commerce is. Multichannel commerce uses different media such as a website, social media, an app, or a brick-and-mortar store. Businesses maximize these platforms to sell products and services.

Omnichannel commerce, on the other hand, uses multiple media and synchronizes them. For example, if a customer using the website adds an item to their cart, this addition will reflect on the app as well.

Online shopping becomes a better experience for customers through omnichannel commerce. This strategy improves the customer experience. It allows the customer to see the same items, maintain their shopping cart, and check-out across different devices without losing any data.

Essentially, multichannel commerce is the foundation of omnichannel commerce. The latter simply can’t exist without the former.

Improving Customer Service

Good customer service is crucial in business. It helps in increasing revenue, maintaining a good reputation, and improving customer retention. All these hit the mark for what every business needs to become and stay successful.

When a business continues to seek improvement with customer service, statistics have found that it leads to an 84% increase in revenue. This results in better profit for the business, especially as they try to sustain their growth.

Word-of-mouth marketing is another free and powerful tool. Good customer service brings 69% of consumers to recommend your business. Imagine when a customer recommends your business to a friend. Then, that friend recommends to another friend. And so on. This creates a ripple of recommendations that bring in more customers.

Aside from attracting more customers, it’s important to retain them. Customer retention saves your business a lot of money compared to capturing new customers.

One way to do this is to have an edge against competitors, and that edge could be amazing customer service. 89% of customers report that they would support a competitor after a negative customer service experience. So, allow your customers to have the best assistance from you, and they’ll keep coming back.

The Key Takeaways

Ecommerce businesses have faced changes throughout the COVID-19 pandemic. Online sales soared at the start of the pandemic, especially when lockdowns were in place. Employment also took a hit, as businesses needed to cut down on costs. The demand for a brick-and-mortar store and of certain product categories have also experienced changes. Overall, all these changes have corresponding financial consequences.

The future of e-commerce could be molded by these shifts. At the moment, businesses need to cope with these changes to survive. Online stores, multichannel and omnichannel strategies, and good customer service are essential to adapt to the shift.