It’s fair to say that 2020 will be seen as the year of the COVID-19 pandemic. Just how long its effect lasts are yet to be seen, although some experts opine that implications might last for up to a decade. Several big businesses across the United States have already filed for bankruptcy, and an alarming number of stores are shutting shop.
How have people’s shopping habits changed during COVID-19? For starters, online and bulk buying is gaining even more traction than before. This comes as no real surprise because social distancing norms stay firmly in place. Consider this – eCommerce sales accounted for 11.2% of the total retail sales in the U.S. in the third quarter of 2019. It has moved to 14.3% in the third quarter of 2020. In the second quarter of 2020, it even breached the 16% mark.
While consumers appear to have moved past the panic buying stage, the pandemic has definitely impacted purchasing behavior in different ways. According to a report put together by BigCommerce, while younger generations are already cutting back on expenses and spending less on experiences, the effect is not as pronounced on older generations.
While there has been a growth in online sales, not all sectors have seen similar benefits. According to a survey of online consumers from nine countries carried out by the United Nations Conference on Trade and Development (UNCTAD), when it comes to consumers who make at least one online purchase every two months:
- There has been a 10% increase in the sale of ICT/electronic goods
- The pharmaceutical/health sector has seen a 9% increase in sales
- There has been a 9% increase in the sale of gardening and DIY tools
- There has been an 8% increase in spending on education and online courses
- The home furniture and household goods sector has witnessed a 7% jump
However, there has been a fall in average spending, and sectors that have suffered the most include:
- Travel and tourism (-75%)
- Home furniture and household goods (-53%)
- ICT/electronic goods (-48%)
- Fashion and accessories (43%)
The need for consumers to turn online is great for eCommerce in some sectors. After all, businesses that give consumers the ability to experience products and services from their own homes can reach out to much wider audiences. If you look at the SARS crisis of 2002-2003, you can notice significant expansion and growth of Alibaba and JD.com around the same time. What this means is that businesses need to recognize their consumers’ changing needs, and address them in a quick and effective manner.
How Have Online Consumer Shopping Habits And Behavior Changed?
The COVID-19 pandemic has, without a doubt, changed consumers’ online shopping habits in different ways. From the point of view of a business, here’s what you need to know.
Consumer Loyalty is Redistributed Because of New Shopping Behavior
With COVID-19 restrictions still in place in several parts of the world – the U.S. included – a number of people have become first-time online purchasers of groceries and a range of staple products. Shopping online is becoming the new norm, especially for staples, and a distinct pattern of growth in this sector seems to be emerging.
Instacart, popular grocery delivery and pick-up service provider, saw its app downloads increase by more than 200% from February to mid-March. A study by CivicScience highlights that the percentage of shoppers from its list of respondents who purchased groceries online increased from 11% on March 1 to over 40% on March 22.
A Nielsen market study carried out in the U.S. illustrates how long it takes for consumers to “digest and process new outbreak information”, and then make buying /spending decisions in accordance. By looking at these behaviors and identifying early indications of changing consumer actions, businesses can successfully manage their supply chain networks.
Given that it can take seven times more money to acquire a new customer when opposed to retaining an existing one, businesses need to switch their focus from customer acquisition to customer retention. This becomes particularly important for brick-and-mortar businesses that are trying to find a foothold in the online world.
When a consumer forms a habit, be it a shopping habit or a habit of any other kind, it typically takes around 21 days for the habit to become a norm. Businesses that wish to make the best of changing consumer behavior get this much time to make their impact felt.
Some Sectors Have Experienced Significant Growth
Some sectors that build on people’s need to remain socially distant have seen considerable growth since the beginning of the pandemic, and the trend is not going to change any time soon. While these include essentials, digital entertainment is finding an increasing number of takers as well. An entire gamut of “new essentials” is now there for the taking, and it includes home improvement supplies, sporting goods, toys, and office supplies.
Subscriptions to online platforms such as Netflix and Spotify have seen a noticeable surge; so much so that the European Union got Netflix to slow down its speed by 25% to make sure that broadband networks continue performing properly.
While consumers are lining up to register with online services that aim to make the buying process more convenient, even some industry leaders such as Amazon are finding it hard to keep pace with the slew of orders.
Phone and video conferencing apps have witnessed a rise in use as well – not just by businesses that have employees working from home, but also by online retailers that are trying to make the best of social distancing and home isolation norms.
With people how having to spend most of their time at home – be it working, entertaining, or parenting – the need for several products becomes all the more pronounced.
Computers are Back
An analysis carried out by the New York Times suggests that there has been an increase in the number of people using websites as opposed to apps. While using responsive web designs continues to remain important, businesses need to come to terms with the fact that consumers are spending more time at computers than before.
Given that people are at home for long periods of time, it is natural for them to spend more time at their desktops or laptops when compared to their mobile phones. For many, computers present a simpler and better way to shop, especially when it involves comparisons.
The focus in the few years has been on following a mobile-first approach. However, while there is a need to optimize online content for mobile devices – and this will not change – it is important to keep desktops and laptops in mind too. For instance, a website should be able to handle any increase in traffic, because close to 50% of users don’t wait for more than two seconds for a website to load.
At this stage, businesses should look at making the most of the increase in website traffic by focusing on creating great user experiences. Statistics suggest that around 60% of consumers engage with websites that are attractive and well designed. Unfortunately, over 75% of digital agencies are of the opinion that their clients’ websites can do much better when it comes to user experience.
There’s a Shift in Shopping Priorities
Bazaarvoice’s research highlights how COVID-19 pandemic has affected the priorities of consumers. Their priorities before the pandemic included:
- Quality – 48%
- Price – 47%
- Brand – 24%
With a shift in consumer behaviors because of the pandemic, their existing top priorities include:
- Availability – 49%
- Price – 36%
- Quality – 34%
Availability is a top concern now, because:
- Close to 60% of all respondents have experienced product shortages
- More than 40% said that finding essential and non-essential supplies is tricky
- Only 30% said they got everything they needed with ease
Businesses need to look at this as an opportunity, as it gives them the ability to reach out to wider markets and attract more potential customers. While this requires ensuring that the supply chain remains unaffected, it also requires marketing your products to a wider audience.
What Businesses Need to Do
There has been a steady rise in eCommerce over the last few years, although the pandemic has definitely accelerated the pace. It is safe to say that eCommerce will only continue to grow in the coming times.
In 2019, global eCommerce sales accounted for over 3.5 trillion. According to predictions that have not taken into account the ongoing pandemic, the number is set to cross $6.5 trillion in 2022. As a result, if your business does not have an online presence yet, now is as good a time to get started. This might include getting your branding right, creating a user-friendly responsive website, and making your presence felt on different social media platforms.
Businesses need to understand that there is a much bigger pool of prospective customers in the online world than before the pandemic. They need to engage with existing and potential customers seamlessly while trying to boost sales and increase customer retention.
Small and mid-sized businesses can use this opportunity to make their mark felt and increase their outreach, as larger players continue struggling with overloaded services. The two main aspects that require attention, in this case, including providing a great online shopping experience and effective engagement with the target audience.
The eCommerce Supply Chain Problem
The changes in online consumer shopping habits and behavior because of the pandemic require that businesses pay due attention to supply chains and communications. Manufacturing units have stopped production in several countries, with the closure of many apparel factories shutting shop in China, India, and Bangladesh serving as prime examples.
In the existing scenario, businesses need to come up with suitable short-term responses to tackle the problems they face.
- Ensure employee and customer safety while trying to optimize production as well as distribution capacities.
- Come up with a list of critical components, determine the origin of their supply, and look for alternative sources of procurement.
- Get estimates of available inventory that you might need to bridge any possible supply chain gap in the future.
- Carry out a realistic assessment of customer demands during shortage-buying behavior.
- Determine logistical capabilities while being flexible on modes of transportation.
- Understand where supply-chain problems might have adverse financial impacts, and manage cash flow accordingly.
Businesses that depend on regional supply chains seem to have been more resilient during the COVID-19 pandemic, so it might make sense for businesses to think about localized operations as far as possible.
Businesses that face logistical problems should take extra measures to communicate with their customers about aspects such as availability of stock and any possible delays in shipping. This is simply because you cannot expect any good to come from reaching out to a large online audience and overpromising while being unable to deliver.
New Shopping Behaviors are Here to Stay
Several eCommerce trends that have come to the fore owing to the COVID-19 pandemic will stay in place for as long as we experience elongated periods of social distancing, and they might continue even after life returns to some kind of normal. For instance, consumers who started shopping online for essentials might well continue to do so long into the future.
The growth of eCommerce in the last decade has been phenomenal. Changes in online consumer shopping habits and behavior during COVID-19 have worked as a catalyst to speed it up even more. While one can say with certainty that online retail will overtake traditional retail in not too distant a future, just when it might happen is anybody’s guess.
Businesses – both online and offline – need to take this opportunity to reach out to their target audience in the best possible manner, while trying to build long-standing relationships with them. Remember that following strategic measures at this point in time are bound to pay huge dividends for small and big businesses alike.