To say that 2020 was an unprecedented year would be a massive understatement.
The impact of the COVID -19 pandemic has been felt by retailers and consumers in all corners of the world.
As an e-commerce business owner, you’ve probably wondered how the pandemic has affected your business and how it may affect your business in the future. What have been the biggest impacts of the coronavirus on ecommerce? How can you adapt your business to account for the impact of COVID -19 on consumers?
If you’re pondering these questions, you’ve come to the right place.
In this article, we’ll go over the ten biggest COVID -19 impacts on e-commerce so you can better understand the new economy we live in, changing consumer habits, and how to shape your marketing strategy to future-proof your business.
1. COVID-19 Effects on Holiday Shopping
As COVID-19 continues to keep people indoors, experts say one expected consequence is the increased screen time and online shopping during the holiday season.
In fact, according to analysts’ forecast, the coronavirus impact on ecommerce will be particularly hard during the period stretching from Black Friday to the end of the year. In fact, US online spending is expected to increase by as much as 33 percent this year to $189 billion (Reuters, 2020).
Prior to the pandemic, analysts had expected such growth to take place over two years instead of just one.
Experts are also estimating an increase in the ecommerce share of the overall holiday retail sales in the US to 25 percent. In other words, $1 out of every $4 spent this holiday season will come from online purchases. This is a five percentage point increase from previous years, during which the ecommerce share was at around 20 percent.
2. COVID-19 Ecommerce Trends: Spending Habits
Even though revenue from ecommerce sales is set to increase, consumers are set to be more cautious about how they spend and what they spend their money on.
The tightening of pursestrings should come as no surprise, considering the financial and economic impact COVID-19 has had on businesses and consumers all over the world.
According to a study by performance marketing agency Merkle, nearly eight out of ten (79 percent) consumers will be more conservative and opting to spend smartly, choosing products that offer better and more value as well as budget-friendly options (Merkle, 2020).
That said, if you’re running an ecommerce business, you may want to consider switching up your marketing strategy. Placing more emphasis on the product’s value in your ads and contextualizing their benefits where possible within this new norm that we live in may be a good way to attract more customers and drive sales.
3. Coronavirus Impact on Ecommerce Categories
Now that we understand COVID-19’s impact on online shopping, let’s look at what sort of products consumers have been purchasing and the fastest-growing ecommerce categories.
The latest data on COVID-19 effects show that the three categories that have seen the most growth in online traffic are: home and garden, food and groceries, and sports and outdoors (Statista, 2020).
By and far, home and garden experienced the biggest increase in sales. In June 2020, the number of global website visits to ecommerce stores selling these products hit 1.84 billion—a whopping 61.4 percent jump from January (covering a period of just five months). It’s also a year-over-year net increase of 640 million visits.
The number of visits to food and grocery websites reached 1.02 billion, marking a 37.8 percent increase in five months. As a matter of fact, the amount of traffic to online food and grocery stores in the second quarter of 2020 nearly levels the fourth quarter of 2019, when consumers are seasonally expected to eat and consume more.
The sports and outdoors category also saw a notable—albeit less significant—increase, rising from 240 million website visits in January 2020 to 340 million in June 2020.
4. Record Alibaba’s Singles’ Day Sales
Perhaps a clear indication of the COVID-19 effects on ecommerce is Alibaba’s annual Single’s Day sales figures.
Held in November each year, 2020’s event, which was held over 11 days and ending on November 11, saw sales hit a record-breaking $74 billion (Forbes, 2020). This was a 26 percent jump from last year’s figures.
According to Alibaba, US brands brought home the most revenue. Canada and New Zealand and several European countries like the UK, France, Germany, and Italy also rank among the top-selling countries.
At its peak, there were as many as 583,000 orders being placed every single second.
But consumers haven’t been the only ones to flock online. As brick-and-mortar stores worldwide were forced to shut as part of measures to curb the spread of the virus, many went digital and set up online shops instead. Reports say 2,600 new brands took part in this year’s Singles Day sales for the first time.
5. Social Distancing Drives up Digital Consumption
With social distancing regulations in place and consumers largely staying indoors, many have turned online to stay social.
One of the biggest COVID-19 effects has been on the consumption of digital media. Reports show that consumers are spending 12 percent more time with digital media this year compared to previous years (Merkle, 2020).
Specifically, the average daily time spent with digital media in 2020 is forecast at seven hours and 31 minutes—48 minutes more than the six hours and 43 minutes in 2019.
The increase will be particularly significant for media consumed via mobile, social media, and video.
If you run an online business, this is one thing to keep in mind while planning your current and short-term marketing strategy. One great tactic would be to prioritize the online channels your buyers are more likely to frequent to ensure your brand is seen and heard.
6. COVID-19 Effects: Digital Shopping Shift Accelerated
The pivot from in-store shopping to online shopping has been one that’s been in the works for years. It’s been registering a steady annual increase in recent years, but in 2020, COVID-19 came and expedited the process.
As we’ve seen in the previous stats on COVID-19 effects, the coronavirus impact on ecommerce has been a positive one. But to what extent?
According to the latest reports, COVID-19 has sped up the shift to online shopping by as many as five years (TechCrunch, 2020).
As a result, department stores have been experiencing drastic falls in sales revenue, declining by 25 percent in the first quarter of the year and further rising to a damaging 75 percent in the second quarter.
Overall sales from department stores are expected to dip 60 percent over the course of the year, while ecommerce is forecast to rise 20 percent.
7. COVID-19 Ecommerce Boom
To further substantiate the previous point, ecommerce sales revenue has increased year over year.
Total ecommerce sales in the US came in at $211.5 billion in the second quarter of 2020, accounting for 16.1 percent of the total retail sales in the US (US Department of Commerce, 2020).
With an increase of 31.8 percent from Q1, this is the biggest quarterly rise in years. In comparison, Q1 2020 saw an increase of just 2.4 percent. After that, Q2 2020’s figures also mark an impressive 44.5 percent year-over-year increase.
This means that in the first half of 2020 alone, the total amount of US ecommerce sales hit $371.9 billion. Should the ecommerce boom keep up, revenue from online shopping by US consumers will be on track to exceed $700 billion this year.
8. COVID-19 Effects on Payment Preferences
One of the biggest COVID-19 effects has been on consumers’ preferred payment methods.
More and more companies have started to offer delivery services and curbside pickups to reduce in-store contact. Even then, three out of four (76 percent) of consumers still prefer to make advanced payments online than when receiving their purchases (Retail Dive, 2020).
Convenience and quick checkout processes rank among the top reasons people shop online. This means that as a business, failure to offer online payment methods to consumers could very well deter buyers from purchasing from you.
This is especially so during the coronavirus economy that we live in, where more and more consumers are opting for contactless payments.
Currently, the most popular online payment methods include mobile wallets, credit and debit cards, and bank transfers.
9. US Consumer Sentiment During the Coronavirus Crisis
Though certain US states are starting to ease COVID-19 restrictions, it’s still not quite “back to normal” for the majority of Americans. Many are looking forward to eating in restaurants and meeting friends and family again.
A recent report shows that 80 percent of them say they’re not feeling as comfortable engaging with “out-of-home” activities as they did before the pandemic (McKinsey, 2020). However, more and more have started to resume pre-COVID-19 activities.
Aside from the more conservative spending this holiday season by consumers, we can expect celebrations to be considerably more muted than previous years as consumer sentiment remains relatively low.
Most of them will likely choose to avoid traveling home and celebrate in smaller groups or even virtually.
10. COVID-19 Ecommerce Trends: Marketing Spend
The coronavirus has affected both buyers and sellers alike. As consumers cut back on shopping, businesses are also winding down their marketing spend.
Already, more than one-third of advertisers say they have canceled a planned advertising campaign. Even though we’re now months into the pandemic, its effects on ad spend show no signs of letting up.
Nearly seven out of ten (68 percent) advertisers expect the coronavirus to continue impacting their expenditure on ads even as we head into 2021 (Influencer Marketing Hub, 2020).
How big an impact this will have varies according to the type of media. The biggest change will be to display advertising, which experts say has seen a 47 percent drop. This is followed by paid social media with 45 percent and linear TV with 42 percent.
We hope this breakdown of the coronavirus’s impact on ecommerce has been helpful to you.
Even though there’s no telling just how long these COVID-19 effects will last, it’s clear that they will have lasting changes on ecommerce.
As a business, your best bet would be to study these COVID-19 ecommerce trends and statistics and use them to craft your sales and marketing strategies going forward.
Summary: Covid-19 Ecommerce Statistics
Here’s a summary of the Covid-19 Ecommerce statistics you need to know in 2021:
- US online spending this holiday season is forecast to increase 33 percent to $189 billion. (Reuters, 2020)
- Nearly eight in ten consumers plan to be more conservative with their money during the pandemic. (Merkle, 2020)
- Home and garden, food and groceries, and sports and outdoors have been the three fastest-growing ecommerce categories in terms of sales during the pandemic. (Statista, 2020)
- Alibaba’s Singles’ Day sales in 2020 hit a record-breaking $74 billion in 2020. (Forbes, 2020)
- Digital media consumption grew by 12 percent this year as a result of social distancing. (Merkle, 2020)
- COVID-19 has sped up the shift to digital shopping by five years. (TechCrunch).
- US ecommerce sales increased by 44.5 percent year-over-year as a result of COVID-19. (US Department of Commerce)
- Three out of four consumers prefer to pay in advance than when receiving their purchases at the door. (Retail Dive, 2020)
- 80 percent of US consumers still do not feel as comfortable engaging with out-of-home activities as they did before the pandemic. (McKinsey, 2020)
- Nearly seven out of ten advertisers expect COVID-19 to continue impacting their ad spend going into 2021. (Influencer Marketing Hub, 2020).