You’ve probably already heard that eCommerce will grow significantly due to the COVID-19 Coronavirus. You’ll probably also agree that this is a rather general statement and one that needs some clarification.
I’ve read countless articles about things that have happened within the eCommerce domain in China, Italy, and the U.S. over recent weeks and want to share all the most relevant case studies in one place. I’ll also add a little context that will help eCommerce managers better prepare for or react to the current global situation.
Feel free to comment and send me your thoughts in the comments or reach out to me at www.linkedin.com/in/tkarwatka/.
It’s happened before
Before we begin talking about Coronavirus in more detail, it’s worth acknowledging that eCommerce has been here before. Alibaba and JD.com, both grew significantly through the SARS crisis in 2002 and 2003.
Changing behaviors
In order to avoid going to stores where there is a higher risk of infection and a potential lack of inventory on the shelves, clients are moving to online retail with longer delivery windows.
“People are gradually moving from offline shopping to online and the habit won’t disappear when the epidemic is over. “
“This will have a very positive impact on the whole eCommerce industry.”
Zhong Zhenshan, Vice-president of emerging technology research, IDC.
eGrocery
eGrocery has seen a rapid expansion during the outbreak. In China, on-demand local services company Meituan Dianping reported that sales of raw food products such as vegetables, meat, and seafood have tripled. Ele.me, a part of Alibaba Group, also saw grocery orders nearly double and JD Daojia stated that sales have nearly quadrupled.
We are already seeing the first signs of the same trend in the U.S. Pradeep Elankumaran, CEO of online grocer Farmstead, told Retail Dive that delivery volume had risen by more than 30% above normal levels in just the last week.
Food
Master Kong—an instant noodle and beverage producer—has moved its focus away from traditional offline retail channels to omnichannel, e-commerce, and smaller stores. By tracking retail re-opening plans, it was also able to adapt its supply chain. As a result, the supply chain had recovered by more than 50% just a few weeks after the outbreak and Master Kong was able to supply 60% of the stores that reopened during this period—three times as many as some competitors.
Other companies in the food industry are diversifying activities or redirecting budgets in response to the crisis. The Chinese branch of a global confectionary manufacturer used the crisis as a catalyst for accelerating its existing digital transformation. They canceled offline marketing activities for Valentine’s Day and reinvested all resources into digital marketing.
Some restaurants offer semi-finished dishes for their customers who would like to stay home and cook themselves.
Delivery
Food delivery networks have grown in China during the crisis. There are millions of restaurants open for business but they are not able to let customers through the doors—meaning that delivery is the only option for generating revenue.
Delivery is not always a straightforward process during the crisis. The current nationwide shutdown in Italy has forced brands to react and find viable solutions. Carriers are not able to deliver shipments to households within quarantined cities, so companies are implementing systems that check if a particular delivery is possible or not. They’ve also increased staff at their support centers to help clients get quick information at a difficult time.
Flexible labor
In China, hotels, restaurants and cinemas chains—which are experiencing a massive drop in footfall or forced closure—have shared their employees with Hema (a digital-first grocery supermarket owned by Alibaba) which was in urgent need of labor for delivery services. Other omnichannel players including Ele, Meituan, and JD’s 7Fresh have followed this example by borrowing labor from restaurants.
Cosmetics
Chinese cosmetics company Lin Qingxuan was forced to close 40% of its stores during the outbreak. By moving all beauty advisors from those stores to become online influencers, they achieved 200% growth compared to the previous year.
Fashion and apparel
Cosmo Lady, which is the largest underwear and lingerie company in China, has shifted its focus to selling on WeChat. They’ve engaged all employees by creating a sales ranking for every single employee, even including the CEO!
You can find some interesting ideas for fashion retailers in this article: The 5 strategies retailers should adopt to combat Coronavirus
Luxury
Les Petits Joueurs, an Italian producer of luxury bags and shoes, is launching a full virtual showroom with Augmented Reality (AR) options to try on every product. In just the last few days, they have observed more on-line as a result of this innovation.
Insurance
Ant Financial (formerly known as Alipay) added free coronavirus-related coverage to its products. This has encouraged consumers to buy insurance online and increased the loyalty of existing clients. The outcome is 30% more health insurance products sold.
Healthcare
JD Health has launched free online consultation services with doctors and also launched an online tool to help patients with chronic diseases maintain their drug supply.
Alibaba started a B2B sourcing platform that matches sellers with hospitals and local government. They also declared they will deliver any goods from the platform to hospitals in need, no matter where.
Strategic direction for the coming years
Many Chinese companies have already moved from crisis response to post-recovery planning. Full-scale digitization is at the forefront of many such plans, including for manufacturers in all industries.
IHL Group President Greg Buzek expects the current crisis to lead to increased investment into omnichannel technologies: “It is our view that the trends to optimize click-and-collect and delivery will double their previous investment as a result of people avoiding crowds for the next 90 days”.
From all these examples, we can predict that the digital side of the retail business will grow at a faster pace than previous projections. Although it is a hard time for the world, it is proof that eCommerce is robust and is able to answer the big questions. This is the positive thing for the long-term goals of the digital transformation of our society.
eCommerce answers the call
In our Divante mission statement, we say: “we believe that better eCommerce technology can help shape and improve the world of the future.” It’s the kind of statement that others read and think it is hyperbole or just a bold marketing claim. But we have always thought it was true.
I also spoke at our Winter Summit about wanting to have a positive influence on the world. While these are trying times for the world, I’m proud to see that eCommerce is currently solving a number of problems in real-time and is potentially saving the lives of people around the globe. It’s proof that the belief we stated in our company mission is not misplaced. eCommerce is robust and is able to answer the big questions, and that should give everyone in the industry a great deal of motivation to find answers to the current problems and then plan for the future.
Sources
- What coronavirus could mean for the global economy hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy?cid=HBR_Coronavirus_Business_Leaders_03122020
- How Chinese companies have responded to Coronavirus hbr.org/2020/03/how-chinese-companies-have-responded-to-coronavirus?cid=HBR_Coronavirus_Business_Leaders_03122020
- The coronavirus budget may be the way to reset retail internetretailing.net/views/editorial-the-corona-virus-budget-may-be-the-way-to-reset-retail
- CHARTS that MATTER March 11, 2020
- COVID-19 concerns may boost eCommerce as consumers avoid stores www.emarketer.com/content/coronavirus-covid19-boost-ecommerce-stores-amazon-retail
- Coronavirus cuts smartphone sales 55% in China. But eCommerce and delivery businesses are booming, www.forbes.com/sites/johnkoetsier/2020/03/09/china-smartphone-sales-drop-55-thanks-to-coronavirus-but-e-commerce-and-delivery-businesses-are-booming/#681c7d404bb9
- Will the coronavirus crisis, like SARS, give birth to the next big thing in China tech?
www.scmp.com/tech/big-tech/article/3073961/will-coronavirus-crisis-sars-give-birth-next-big-thing-china-tech - Some Chinese tech companies see a surge in customers amid coronavirus outbreak
www.scmp.com/tech/apps-social/article/3049520/some-chinese-tech-companies-see-surge-customers-amid-coronavirus - With sales slowing, China’s eCommerce giants pivot to coronavirus assistance
www.adweek.com/digital/with-sales-slowing-chinas-ecommerce-giants-pivot-to-coronavirus-assistance/ - The impact of the coronavirus on retail
www.retaildive.com/news/the-impact-of-the-coronavirus-on-retail/573522/ - How forward-thinking eCommerce marketers are handling the coronavirus outbreak
www.klaviyo.com/blog/coronavirus-impact-on-ecommerce - Coronavirus fears may drive U.S. eCommerce sales beyond 2020 projections
www.forbes.com/sites/shelleykohan/2020/03/06/a-change-in-consumer-behavior-from-coronavirus-fears-may-drive-us-e-commerce-sales-beyond-projections-of-12-of-total-retail-sales-in-2020/#5a4658e47f54 - Here’s how designers are fighting the impact of the coronavirus inside Italy’s lockdown zone
footwearnews.com/2020/focus/designers/italy-lockdown-shoe-designers-fightring-covid-19-business-disruptions-1202944781/ - Other voices: What coronavirus means for e-commerce www.mmh.com/article/other_voices_what_coronavirus_means_for_e_commerce
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