The coronavirus lockdown and closure of physical stores is driving online demand.
With the overnight change in shopper behavior how can brands adapt online strategies to ensure e-commerce business continuity?
In Europe and the US, we are well into the coronavirus crisis, with predictions of peak infection still to come in many countries. As it is, e-commerce sites, alongside physical retail stores, have become a vital lifeline, helping people in social isolation to deal with ever more stringent restrictions.
Logic dictates that as more stores close their doors, e-commerce will need to pick up the slack, keeping supply chains open to provide consumers with daily essentials. Across Europe and the US, we are seeing massive growth in demand for e-commerce and online shopping, primarily for household items and food, but also in other categories such as home exercise kit, and business equipment centered on enabling home working.
Grocery e-Commerce Growth
In Italy, where online sales had lagged many other markets until recently with just 4% penetration, e-commerce sales of consumer products grew by 81% in the last week of February, according to Nielsen. Carrefour Italy said it’s online subscriptions doubled to 110,000 in the week from March 9th, and sales via its partnership with logistic specialist Glovo increased 10 fold. A similar pattern is emerging in Spain, where pre-coronavirus e-commerce penetration was also low at about 5%, and in France where according to Nielsen online home delivery, as well as click & collect orders rose by 32% and 29% respectively in the first week of March. In the US Adobe says overall e-commerce is up 26%.
Category Mixed Bag
The picture is not the same across categories. Groceries, personal care, and medical supplies are booming. So too are niche categories like fitness products up 55% in the US, and computers up 40%, but others such as fashion have declined drastically causing some retailers to pull back from e-commerce altogether. In the US for example, Victoria's Secret, marshalls.com and Brandy Melville closed their online operations, according to Retail Dive. Impulse categories such as confectionery are also taking a hit.
In a survey conducted by Digital Commerce 47% of retailers said they expected to see some downside in revenue in the coming weeks, with only 14% saying they would not suffer. The survey also reflected the mixed prospects for e-commerce in different categories, with 30% of respondents projecting e-commerce gains, while 36% said they expected their online business to shrink.
Dealing with Demand
Some retailers and suppliers are better placed to cope with the growth in demand, while others are buckling under the pressure. On March 18th UK grocery delivery specialist Ocado briefly closed its website and stopped taking on new subscribers. Tesco has restricted online orders to 80 items, and specific products to a maximum of three per customer. Across Europe delivery and click & collect slots are booked up for weeks, with Tesco using radio ads to ask consumers who can shop in-store to do so, in order to keep scarce delivery capacity for those confined to their homes.
Even Amazon is not immune. It announced it is hiring up to 100,000 additional workers to increase capacity at its warehouses. At the same time the e-commerce giant has effectively closed its fulfillment centers to Marketplace sellers – temporally suspending intake of goods in order to prioritize household staples, medical supplies and other high-demand products.
Adapting your eCommerce Perfect Store Strategy for the Surge
With the unexpected explosion in e-commerce demand brands are struggling. In our experience, effective e‑commerce relies on prioritization and focus, which is central to the e‑Commerce Perfect Store Framework supported by data and insights. However, one of the challenges for brands today is how best to use the available data to focus their efforts at this time of unprecedented change. Ongoing e‑commerce success demands a multifaceted approach, but in these extraordinary times for many categories it's about focusing on the Five Beautiful Basics to maximize your online store representation, presence and performance to cope with the surge:
Distribution & Availability
First and foremost comes distribution. Brands need to pull out all the stops to ensure all relevant products are listed in key online retailers, and that they are consistently monitored to avoid items going out of stock. Switching fulfillment from physical retail to e-commerce is already proving a challenge for some suppliers and retailers. Even the mighty Amazon has experienced high levels of out of stocks for household staples, and has had to extend delivery times as a result of the rise in demand.
Availability monitoring always plays an important role in supporting e-commerce best practice, whether that's alerting your team to out of stocks on any online platform or losing the Buy Box on Amazon. A consumer can’t buy your product if it is not available when she logs in to her favorite e-commerce site. However, now more than ever it is essential to have a good understanding of the ongoing health of online retailers’ inventory for your products, and to be able to immediately identify items that are out of stock. In some cases it will make sense for brands to reassess which products to track for online availability as online consumer demand shifts to new categories, in order to be in a position to make informed decisions and prioritize supply.
Price & Brand Integrity
Online demand for all manner of consumer goods, from food to household cleaning products, may be through the roof – but brands and retailers need to guard against unreasonable price hikes at this time. Some organizations have taken advantage of the situation to increase their profits. However, suppliers and retailers that are seen to profiteer for short-term gain today, will likely suffer long term reputational damage. In some cases they could also face prosecution. In the US, authorities are investigating excessive price increases on hand sanitizer, disinfectant wipes and masks as well as everyday grocery items including chicken, rice and milk, according to the New York Times.
The proliferation of smartphones has eroded the boundaries between channels from a consumer perspective. Shoppers can easily access online and offline prices wherever they are. Your competitors will also have a complete view. The challenge for product manufacturers is to identify the key indicators that lead to price changes, and to monitor changes on a daily basis.
Search & Consumer Convenience
With many consumers turning to e-commerce for daily shopping for the first time it’s up to brands and online retailers alike to make it as easy as possible for them to find the products they want. Search results are a measure of your products' or brands' online retail shelf placement. However, with increased pressure on e-commerce infrastructure, including online queuing in some stores, consumers only have time to focus on top search results. If your products are not scoring well in terms of 'Share of Search' and 'Search Rank', they are not going to be noticed, or brought by harassed shoppers.
To avoid losing out it’s important to reassess and refocus your Search performance optimization efforts. A starting point might be to review the blog ‘How to Win the Battle for Online Store Search & Digital Shelf Placement’ which includes 10 e-commerce channel and online store search performance tips for consumer product manufacturers. The battle for consumer eyeballs might also require increased investment in online trade advertising and iMedia.
Increasing Content Capability
The overnight migration from offline to online retail has produced a sudden need for more and better product content. Content is central to success in the online channel, and categories which were once seen as less important in an online context are now faced with a need to dramatically improve rich e-commerce content capabilities. Online, content is your product. It is central to item discovery (driving online store search results), shopper reassurance & conversion (in place of physical product), and brand awareness.
Creating, managing and distributing content that converts for e-commerce isn't straightforward and with increased demand for content, you are likely to need help. The content your new and existing consumers depend on in online stores is different from most other product marketing and brand content. We've covered the dos and don'ts of how to create good e-commerce content in this blog before.
It might also be time to consider introducing technology such as a Product Information Management (PIM) system to create, manage, host, approve, change and distribute e-channel content efficiently. Such a system should also help to automate and streamline the 100s of individual tasks involved, as well as the coherent exchange of communications, data and assets between brand teams, agencies and e-commerce sites.
Rating & Reviews
In a time of panic buying and re-stocking not many consumers are going to spend time reading online product reviews for daily essentials. In high value categories however, shoppers’ opinions as expressed through Ratings & Reviews will continue to matter. As such they are still one of the fundamentals to be monitored and managed even in a time of change, but we would definitely consider them as priority number five - unless your scores are so low they would give consumers pause for thought.
The sudden surge in demand, coupled with unfathomable uncertainty presents challenges for every brand. As Procter & Gamble’s chief financial officer, Jon Moeller told delegates at a recent Consumer Analyst Group of New York event. “The operating challenges change with the hour, and of course the path of the virus is unknown, making it very difficult to provide precise estimates of impact.”
At eStoreMedia, we want to play our part, helping you navigate the current situation. We have transitioned our already distributed workforce to home working so we can continue to provide brands with daily e-commerce analytics and automation service updates. We have also augmented the capabilities of our Client Success, Content Agency and eCommerce Consultancy teams to help with your changing needs and specific challenges. You can contact them via your Client Partner or email firstname.lastname@example.org.