How Coronavirus Is Impacting Ecommerce

Sarah Davis Content AuthorLauren Toney Content Specialist AuthorPublished March 12, 2020
Last updated March 31, 2020

 

 

On top of health concerns, brands across the globe are worrying about how coronavirus (COVID-19) will impact ecommerce as a whole. According to consulting and research firm Technomic, 52% of consumers are avoiding crowds and 32% are leaving their house less often because of coronavirus. And the stock market has become increasingly volatile.

Ecommerce, B2B, B2C, and brick-and-mortar brands alike are all bracing for the impact that coronavirus will have on their business. In this article, we’ve collected everything your brand needs to know about coronavirus and ecommerce, as well as what you can do to lessen the blow.

Note: Keep coming back to this post as updates on coronavirus and ecommerce continuously roll in. We’ll be adding updates throughout the pandemic to help keep you in-the-know.

3/31 update

“The Dow is now up 20% from its coronavirus sell-off low reached on Monday.” – CNBC

Conversion optimization during COVID-19

Is consumer behavior in the current crisis an indicator of things to come? Short answer: Yes.

By utilizing specific statistical methods, testing micro-conversions like add-to-cart events or PDP views, and iterating on and expanding winning tests, you can test faster than your competitors and stay ahead of the curve.

Whether your industry is being affected positively or negatively by the crisis, it is more important than ever to be correctly managing your on-site testing program.

Our latest blog article on keeping up your digital marketing in this crisis covers how to win new customers and retain existing ones over the coming weeks and months by utilizing on-site testing to optimize your messaging and site experience. Our website optimization service lead, Brandon Howell, guides you through the best tips and strategies for conversion optimization in this crisis.

Travel industry updates

The travel industry is seeing some of the biggest hits from COVID-19 as fears and restrictions around travel grow. While some of the statistics are shocking, experts believe once the crisis subsides, the travel industry will recover – starting with local tourism.

The bad:

  • Global airlines stand to face a $113 billion hit if the coronavirus continues to spread.
  • Hotel occupancy dropped by over 24% year-over-year for the week of March 8-14, with revenue per available room down more than 32%.
  • Carnival Cruise Line’s stock is down nearly 60%, with Royal Caribbean and Norwegian down over 70% in the past 30 days.

The good:

  • The canals of Venice have become clear for the first time in centuries. Perhaps in the future cruises will decrease and this may be maintained.
  • Pollution around the world has dropped dramatically: According to NASA, nitrogen dioxide levels across eastern and central China have been 10 to 30 percent lower than normal. Since Italy went into lockdown, nitrogen dioxide levels in Milan and other parts of northern Italy have fallen by about 40 percent.
  • While the US is behind both these countries in terms of stay-at-home orders, we are already starting to see the effects of those orders in places such as Los Angeles, Seattle, and Atlanta. The maps on this site compare the pollution levels between March 2019 and March 2020.

Source: European Space Agency

Amazon update

Fulfillment by Amazon (FBA) provides warehousing and shipment services for third-party sellers. FBA, in addition to Amazon’s larger vendor shipment services, will be suspended through April 5th to allow Amazon to prioritize “household staples, medical supplies, and other high-demand products.”

  • Amazon is prioritizing products associated with childcare, health and household, personal care, grocery, scientific supplies, and pet care.
  • The program is predicted to end on April 5th, but as the pandemic progresses, the limitations may continue.
  • Sellers continue to have the option to sell their goods and fulfill the shipments themselves.

Tech update

The demand for faster downloading speed is higher than ever. With a 75% increase in bandwidth demand from March 8 to 15, the rollout of 5G is being expedited.

  • VPN usage is up by 34% and video bandwidth usage is up 12%.
  • Last week web traffic was up 22% and voice usage was up 25%.
  • 5G can also better support the development and running of apps that take and monitor temperatures.

Due to the impact of COVID-19, television and streaming services are also seeing a massive surge in consumption.

3/25 update

Advice from Google

In this time of constant change and uncertainty, it is essential to keep your business information up to date. Whether you’re reducing hours to help your staff or closing down completely, make it clear to your customers. In addition to updating your website, you should also update your Google My Business profile, which many consumers solely rely on when searching via Google or Google Maps.

Whether your hours or business operations are changing or not, you should make some sort of notice on your site so your customers know they are receiving up-to-date and relevant information from your business.

Here are some actions you should consider taking:

  • Update your business hours on your website and on your Google Business Profile.
  • Clarify what extra precautions your business is taking to ensure the health and safety of your employees, customers, and community.
  • Share if you are providing any new or extra services to the community.
  • If you are experiencing delays, be transparent about what kind of expectations your customers should have.
  • Add a new tab or bold header to your home page where consumers can easily find all information related to COVID-19 and your business.

3/23 update

Ecommerce shutdowns

When COVID-19 first started showing its effect on the United States, it primarily affected brick-and-mortar businesses. In the states that have issued shutdowns of nonessential operations, we are now seeing equitable shutdowns of ecommerce operations. The ecommerce sites shutting down for the foreseeable future include fashion brands Reformation, Marysia and The Frankie Shop, and retailers TJ Maxx, Marshalls, Victoria’s Secret, and HomeGoods.

Retailers experiencing a shopping surge

On the other side of these closures stand grocers, big-box stores, and electronic stores that are seeing huge boosts. Walmart has responded to this increased consumer need by raising entry-level wages for workers by $2. Walmart hopes this will help them manage the shopping surge and more properly reward their workers for the hard work they’re doing. Walmart’s rivals, Amazon and Target, have also increased pay and hiring to help manage their own respective surge in orders.

Despite the rise in sales to stores like Best Buy, Target, and Walmart, retail is suffering. Retail associations are pleading with the Trump administration for relief. They specifically are asking policymakers to lend a helping hand to the retail workforce and provide liquidity to retailers throughout the crisis.

Corona pushing industries and regions to ecommerce

The auto industry has been highly dependent on the in-person sales experience up until this crisis. In an attempt to combat the immense drop in car sales that China saw, dealerships are testing out ecommerce capabilities. Select dealerships are making the following changes to adapt to social distancing needs:

  • Introducing one-on-one appointments in-person
  • Leveraging their large showrooms to allow for social distancing
  • Adding new services to their online sites
  • Allowing test-drives at the home or office
  • Offering at-home vehicle delivery

As with many of the changes in shopping the coronavirus is bringing, we may see these offerings stick around even after the crisis is over.

3/20 update

Upcoming virtual events

In times of strife, business must adapt and think to the future to survive. In an effort to help you maneuver in this uncertain period, we are tackling the toughest questions in two live, interactive discussions.

The first webcast, The State of Paid Search in the Coronavirus Climate, wrapped up at 2pm on March 25th, but you can still register to watch the replay! The video will analyze past trends in paid search and offer strategic advice to help your brand navigate this challenging period. It will be focusing on staying agile with your advertising budgets and what strategies you can embrace to overcome short-term market pitfalls.

The second webinar, COVID-19, Ecommerce, and Your Brand, will take place on April 1st at 2pm and is the best place to get all your questions regarding COVID-19 and your business answered LIVE. In addition to answering your questions, we will cover supply chain disruptions, revenue-boosting campaigns, and how to thrive once this crisis subsides.

Register for both events here.

3/19 update

Instances of innovation

Every week reveals more drastic and unprecedented impacts resulting from COVID-19. While not all of these impacts have a silver lining, we have seen many companies react to setbacks with fantastic, innovative solutions. Here are some of the top cases.

One real estate developer, Evergrande Real Estate Group, retrained their offline sales force to use virtual reality and social media to engage customers. This has allowed them to provide a positive boost to the economy in its time of need and also allows customers to continue to make decisions and payments to benefit their future. These strategies may benefit them beyond this crisis allowing them to better serve their customers.

Another example is the grocery industry in general. Grocery delivery services have shown record sales growth as a result of social distancing efforts. Customers who may never have shifted to mobile grocery shopping, including senior citizens, have abandoned strict habits and converted with ease.

Again, this change of habits may never have occurred without the need for isolation, but after the crisis, the habits may remain.

3/12 update

Strain on events

As traveling fears grow and countries like Italy extend travel restrictions, marketing events across the globe are feeling the impact.

Many major in-person events are being postponed, canceled, or virtualized after the Centers for Disease Control and Prevention recommended that all businesses cancel non-essential company travel.

This recommendation is being taken seriously. Facebook canceled F8, its largest event of the year, which was to take place in May. Google transitioned its Cloud Next 2020 conference to be held online, and Adobe did the same with their annual Adobe Summit conference. Additional canceled conferences include Mobile World Congress, South by Southwest, Shoptalk, Shopify Unite, and Google I/O, among many more.

At the beginning of 2020, 41% of marketers said they would be increasing their event budgets this year. On top of that, 53% of marketers consider in-person events and tradeshows the best way to drive engagements and conversions.

From an events perspective, coronavirus has the potential to have a lasting negative impact on budgets, revenue, and sales for the rest of the year.

In fact, according to eMarketer, the total loss from canceled events will surpass $500 million.

That being said, all is not lost. If you have in-person events coming up this year, prepare now for the possibility that they’ll turn into virtual events. Create additional copy to reflect that the event is virtual, alert your attendees immediately of any changes, and make sure you have all of the tools necessary to conduct a virtual event.

Be proactive, not reactive, in how you pivot to a digital event.

Additionally, being forced to cancel events provides an opportunity for marketers to analyze just how effective events are for their business. Do virtual events actually perform better than in-person events? Are in-person events worth the heavy time and money investments they require, or do they outperform virtual events for your specific business?

Be sure to measure everything so that you can accurately analyze the true impact of events on your brand and make informed decisions moving forward.

Influx in online shopping

As more consumers continue avoiding crowded public places, they’ll increasingly turn to online shopping to get their essentials. In fact, JD.com, China’s largest online retailer, has seen sales of common household staples quadruple over the same time period last year.

With the growth of ecommerce, coronavirus shouldn’t disrupt the economy as much as the SARS outbreak did in 2002. However, it will still bring strain to online-based businesses who need to deal with potentially delayed deliveries or out-of-stock items because of increased demand.

On Amazon, it is extremely important to not let any of your products run out of stock in order to avoid being punished by Amazon’s organic search and advertising algorithms. If your product is out of stock for over 30 days, it will be treated as if it has no sales history once it comes back in stock.

In other words, your product’s ranking for its most important key words drops significantly and will thus show up much lower in search results.

Fears over having products go out of stock may be part of what fueled some third-party sellers to price gouge on Amazon when the virus first started taking hold in the U.S.

Some of the biggest culprits included a pack of two 12-ounce Purell hand sanitizer bottles being sold for over $100 and Clorox wipes being sold for 8x their typical cost. The items have since been completely removed and a company spokesperson told ABC News that there is “no place for price gouging on Amazon.”

Purell

Overall, prices on Amazon spiked at least 50% for most surgical masks and hand sanitizers when coronavirus arrived in the U.S.

In addition to price gougers, counterfeiters have also been taking advantage of consumers’ coronavirus fears, selling products that claim to cure the virus or that don’t meet safety standards.

For example, latex-free gloves that claimed to “prevent coronavirus, flu, and pneumonia” as well as plastic face masks that claimed to “isolate saliva-carrying viruses” had to be removed. Over the last week of February alone, Amazon removed over one million items for violating such policies.

If your brand sells items related to hygiene and sickness, you’ve already seen an influx in sales. Compared to this time period last year, U.S. sales of hand sanitizer are up 54%, with thermometer sales up 34% and aerosol disinfectant sales up 19%.

Focus on keeping your products in stock and be up front with customers if there are going to be any delays.

Delivery and supply chain concerns

With the proliferation of online shopping and delivery demand comes inevitable delays. Consumers who are working from home, on sick leave, or trying to avoid contact with others are ordering more products to be delivered to their house. A shopper who tried to purchase items from Amazon on March 5 received a message warning that increased demand was leading to shorter supply and longer delivery times.

This comes at a time when consumers value fast delivery times more than ever before, with Amazon Prime promising free two-hour delivery for some products. Other major suppliers like Walmart and Target are competing for similar options.

Can your brand handle this higher demand?

As we mentioned in a January Amazon update, Amazon recently made some heavy investments in one-day shipping that aren’t paying off quite yet. In Q3 2019, its net income fell by 26% and shipping costs rose by 46%. Stay tuned to our blog for future updates on how the coronavirus pandemic impacts Amazon’s profits throughout the first half of 2020.

Another factor impacting Amazon is that many Amazon merchants rely on Chinese suppliers. Some sellers spent 6% less this year compared to last year on advertising throughout the middle two weeks of February. Ecommerce supply chains will be strained by COVID-19 as well as factory closures in China.

These factory closures will also impact mass merchants like Target and Walmart, who will almost certainly experience supply chain disruption, a drop in casual shopping, and an increase in purchases of essential toiletries, groceries, and health items.

Additionally, some food delivery companies, such as Postmates and DoorDash, are testing or rolling out contactless delivery options. With 32% of consumers reducing their frequency of eating at restaurants because of coronavirus fears, such apps are seeing an influx in traffic.

Your brand may have never considered advertising on this type of app, but now may be the time to do it!

What’s a brand to do?

Determining how to proceed with events and keeping items in stock are only two items on the marketer’s to-do list as the coronavirus outbreak continues.

What other steps does your ecommerce brand need to take to thrive despite the COVID-19 disruption?

While overall ad spend is down, TV ad spend could see an uptick. With more consumers staying home to work and keeping coronavirus coverage up on their television, switching more of your ad budget to video platforms like television and even YouTube could be a good idea.

As we know, transparency is one of the most important characteristics that today’s consumers look for in a brand. When it comes to coronavirus, proactively addressing customer frustrations and fears (e.g. delivery delays, out-of-stock products, the cleanliness of your warehouse), will support your brand’s reputation and encourage customer loyalty.

Tell consumers about the coronavirus protections you’re putting in place. On top of that, consider providing your agents with additional training on handling any inquiries with appropriate sensitivity.

Additionally, make sure that your display advertising game is up to par. App downloads (especially of news apps) may increase as people spend an increasing amount of time at home. In addition to the delivery apps previously mentioned, app downloads in general have surged as a result of coronavirus. In China, app downloads over the first two weeks of February were 40% higher than the average for all of 2019.

As the coronavirus pandemic continues, pin this blog post to keep an eye out for updates on how the virus will impact your brand and ecommerce in general. We’ll keep updating it as more news comes in.

In the meantime, check out some more recent ecommerce news below:

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