COVID-19 is having a dramatic impact on e-commerce – accelerating uptake, shifting buyer types, changing attitudes to spending and distorting previous consumer journey dynamics.
Marketing in the COVID-19 crisis
This article is part of a special WARC Snapshot focused on enabling brand marketers to re-strategise amid the unprecedented disruption caused by the novel coronavirus outbreak.
The immediacy of growth brought on by global lockdown in e-commerce is well reported. Morgan Stanley analyst Brian Nowak recently estimated a 58% increase in e-commerce sales during the month of April. Initially this was in essential items, such as groceries, but more recently home items and larger one-off purchases have moved online too. What really matters to our clients is whether this e-commerce acceleration will result in a long-term shift. Equally important is how each industry will be affected differently.
You only need to look at the Chinese e-commerce industry boom following SARS in 2003 to get an understanding of the potential for long-term growth. Alibaba launched the Taobao marketplace one week into the SARS 2003 outbreak to become bigger than eBay. JD.com launched a year later and are now the largest direct retailer in China with 310 million active customers.
The early signs in Europe that countrywide lockdowns will impact the online maturity of all industries long-term can be seen in the broadening of e-commerce audiences. Older generations have been forced to buy products they would normally get in store online, and an accelerated rate of adoption in rural regions has also occurred for similar reasons. The affluence of online retail consumers has also dropped, skewed significantly by the grocery sector. In fact, 52% of shoppers say they will purchase more online as a consequence of the pandemic.
We recommend all advertisers track regularly the changes to consumer shopping behaviour as each country across the world responds slightly differently over time. Through doing just this it’s become clear that whilst markets like Germany have seen increases before and after lockdown in claimed increases in e-commerce usage (21%< 36%), the UK has continually seen week-on-week growth. At the start of June, 59% of consumers told Dynata they are increasing shopping online (31%< 59%).
Not all marketplaces are equal
In January 2020, eMarketer reported a forecasted slowdown in growth rates (+19% in 2019 in central Europe) for e-commerce, while the share from online sales increased to 16% overall in January. For industries such as apparel, auto and entertainment, this has increased to near 100% share during lockdown, with a long-term behavioural change expected.
Whilst we believe all e-commerce players will see accelerated long-term growth, in the short-term, not all industries have seen the growth we hear about in the mainstream press.
In 2019, IBSW speculated that the grocery sector, which has long struggled to build online retail momentum, will continue on a slow-growth trajectory. How wrong they were. ACI Worldwide reported categories which saw a decline in transaction volume during March 2020 include ticketing by 60%, travel by 44%, clothing by 30%, and online dating by 8.9%.
Maximising the value of behavioural data
We believe the value of digital behavioural signals and communication strategy is one that is best maximised when applied across all commerce functions in an organisation. Whilst the businesses we work with have organised their e-commerce function into distinct operational teams, it’s become more evident in recent months of the need to develop a more holistic picture of an e-commerce business. Furthermore, brands have the agility to flex resources and effort across each function.
There are many reported examples of this happening, such as Lindt & Sprungli in Canada, which launched a direct to consumer e-commerce business in five days, relying on a highly connected and agile logistics, sales and marketing team. Whilst this article won’t attempt to cover all marketplaces across every commerce function, we will look to identify three universal solutions that can be adapted to meet the needs of all brands and categories in their ambitions to advance their online shopping experience.
1. Behind the shelf
Whether your business has been impacted by new product trends, a changing audience or simply a change in levels of demand, pinpointing where growth will come from is vital in knowing how to adjust your communication plan. The pandemic has opened up the importance of digital availability, as this recent article by OMG’s Gemma Spence explains. Having the infrastructure in place to forecast demand represents a significant opportunity for brands in aligning their availability strategy.
Historically, panel-based data sources were used to identify growth from expanding, existing and adjacent audiences. With a more volatile and uncertain landscape, we believe marketers need more robust and agile methods for forecasting product performance. And with a new audience comes new opportunity.
2. At the shelf
Those retailers looking at their physical shopper experience will be all too aware of the importance of giving consumers confidence that social distancing measures make high streets a safe place to be. Shopper experience online also requires brands to demonstrate consistently strong experience. The success of pure players, including Amazon, has again been highlighted by the pandemic, largely down to their ability to deliver a consistently strong shopper experience ‘at the shelf’.
You might only get one chance to impress your new audience and whilst brands like Currys have launched online virtual shopping, and virtual catwalks have emerged to show off new products, for most brands getting the foundations in place represents the greatest opportunity for improvement. This includes (but is not limited to) monitoring product pages in marketplaces for fraudulent listings to protect brand reputation, maintaining retail content hygiene across all retail.com and DTC platforms, or focusing on product content, titles, image, video at the very least.
Maximising your visibility on the Amazon shelf requires a balance of product relevance, to improve organic visibility, and experience, to improve conversion performance. The success of getting this balance right should be measured through a concise KPI framework, ensuring both the relevance of message and positive product experience.
Whilst keyword performance data might be most suited to understanding product relevance, connecting these metrics to ASIN level performance gives a more complete picture. It is often only possible to achieve this at scale with the right Amazon marketplace technology partner.
3. To the shelf
All brands are looking to get more for less, never more so than when emerging from a global crisis into a likely recession. With the majority of e-commerce advertisers utilising biddable media, optimising towards business outcomes such as ROI, the current volatility in pricing and competition creates for a challenging investment environment.
We recommend a three-staged approach to better e-commerce investment planning:
- Channel planning. Utilise already-established reporting and optimisation solutions to create a full picture of e-commerce investment in order to provide direction on the optimum portfolio.
- Performance planning. Append performance, benchmarks, trade deals and business ambitions to unlock an insight-driven investment strategy and recommended channel and portfolio mix.
- Audience planning. Apply identical audience segmentation across all online retail distribution channels in order to make more long-term investment decisions to avoid cannibalisation and maximise growth segments.
- Whilst there long-term acceleration of online shopping, working closely with digital behavioural signals allows brands to understand more deeply how their business and consumer has changed.
- Developing the agility to apply marketing-led insights across all aspects of the e-commerce function is fundamental to changing for the new normal.
- A new approach to forecasting where demand will come from provides a competitive advantage.
- Balance efforts in shopper experience through creative adaptation with relevance via emerging technology.
- Focusing on a staged approach to more holistic investment planning will deliver immediate efficiencies and long-term growth.
- COVID-19 is having a dramatic impact on e-commerce – accelerating uptake, shifting buyer types, changing attitudes to spending and distorting previous consumer journey dynamics.
- Brands across all categories and marketplaces are responding accordingly and at pace.
- A holistic approach to online retail is required
- Behind the shelf: Ready for new consumers with new product demands
- At the shelf: Enhancing the experience for your new shopper
- To the shelf: Using new market dynamics to create more from less
Understand the extent to which your communication plan is accounting for rapid changes in e-commerce by reviewing tactics against each of the four parameters.