The spread of the coronavirus disease has brought about a public health emergency of pandemic proportions, and with it, a looming economic crisis.
With the growing number of reported cases and mounting concern over possible contamination, the virus has brought almost all commerce to a halt. Footfalls have dropped, save for essential purchases like household supplies and disinfectants, or in many cases, medical treatment.
Interestingly, the impact of this outbreak on ecommerce platforms has not been the same across the board. As brick-and-mortar stores have been shut down in the meantime, one would expect to see a natural increase in online shopping. However, for most product categories, this has not been the case.
Here, we take a detailed look at how the coronavirus has impacted online traffic, consumer purchase patterns, and ecommerce revenues across the world.
With self distancing policies in place in most countries, consumers are forced to communicate exclusively online, using their smartphones and other devices. This has been further amplified with some governments locking down specific areas and communities within their cities, sometimes even entire countries, like in the case of New Zealand, South Africa, and Colombia.
Because of this, ecommerce websites are seeing an increase in traffic. Worldwide online activity has gone up by 3.7%, while the time per session and the number of online transactions have increased by 8.3% and 0.4%, respectively. Overall conversion rates also show a year-on-year increase of 3.3%.
Online Purchasing Patterns
One of the ways people are responding to this period of uncertainty can be seen in a significant change in online consumers’ buying behaviours and purchasing patterns, both offline and online. Due to these changes, brands now face a major challenge to stock up on their essential products and meet customer demand. Here are some insights on how consumer purchasing patterns have changed:
History has shown that people tend to do whatever they can to take any semblance of control they can get in the event of a crisis, and this pandemic is no exception. The uncertainty brought upon by the current situation has led people to stock up on essentials such as medical supplies, masks, hand-sanitizers, and toilet paper in a fit of desperation.
Another factor that has led to panic buying is crowd mentality. Seeing other people emptying up shelves and watching things go out of stock validates their decision to stock up on unnecessary items furthermore.
Cart Abandonment Rates
Seasonal buying trends have been observed to affect abandonment rates in the past. For instance, abandonment rates drop during events like Black Friday as shoppers try to take maximum advantage of limited-time promotions.
Lower cart abandonment rates suggest an increased demand for certain products or services, and that is apparent in some sectors at the moment. Salecycle reports that since last year, insurance abandonment rates have been down by 11%, and 2% for mobile providers.
In some sectors, the demand is higher than usual; however, abandonment rates are also unexpectedly on the rise. One major example is grocery. An analysis of data captured by Google Analytics shows that the demand for groceries has grown higher than usual, but abandonment rates are on the rise as well, up almost 8% in 2019.
One explanation for this unusual behaviour may be that customers are having trouble finding items because what they’re looking for may be out of stock. Another reason could be that websites’ performances are suffering from unusually high levels of traffic, therefore more shoppers are backing out from their purchases.
Average Order Values
Data on Average Order Values (AOV) shows that consumers are spending more than average in several areas. Grocery, pharmaceutical, and general retail order values are higher than they used to be before the pandemic. Other non-essential sectors such as travel, sports, luxury goods, and others are down, unsurprisingly, while average insurance order values fared higher in 2019.
Impact on Sales and Revenues
Due to the drop in brick-and-mortar shopping, some ecommerce categories have seen significant upticks. However, this is not what we’re seeing everywhere. The sales of both omnichannel retailers and pure-play ecommerce stores have been affected in surprising ways. Here are some insights on how sales have varied across different sectors due to the coronavirus outbreak:
The coronavirus has forever changed the way people purchase groceries. There has been a significant increase in both home shipping and BOPIS (Buy Online Pickup In Store) methods for grocery shopping. The overall Gross Merchandise Value (GMV) of grocery has gone up by 110% to 115% across the Asian region. The overall sales of shelf-stable items and canned goods have also increased by 69%.
Health and Hygiene
Health, hygiene, and safety products are being purchased at a faster rate than they are manufactured, causing most of them to go out of stock on most stores both online and offline. Sales of hygiene items, meds, and other health products have risen by more than 300% in the US.
Clothing and Fashion
Online traffic on clothing and apparel sites is down by 27% across the globe. This is because most online consumers are spending more on groceries, meds, and other essentials right now.
Since most countries across the globe are under lockdown, most people can no longer go out for entertainment. This has caused a significant increase in sales and revenues of digital streaming and subscription services such as Amazon, Netflix, Hulu, Disney+, and so on.
The luxury goods industry is expected to suffer a loss that could go as big as $10 billion since this industry relies heavily on the purchasing power of its biggest market, Asia. Unfortunately, the Asian market has been the most affected with the pandemic and has been dealing with it since January.
The world is currently in a state of flux, and we have no idea what the post-coronavirus economy is going to look like. Customers are trying their best to adapt to these strange times by changing their buying behaviours and purchase patterns. How will this impact your ecommerce business?
Let’s have a chat about how you can actively respond to these evolving market trends, continue to provide services, and sustain your business.