Until last month, we could have predicted how this pandemic is going to cradle up our life ultimately. Now globally, leaders will all agree that the implication of that effect will stay that will last for at least a decade.
The numbers are increasing rapidly, and so are the rules for people gathering in public places. Businesses like restaurants, bars, shopping malls are on the verge of shutting down as people maintain social distance.
To say that we are living in unprecedented times feels like an understatement.
One very particular trend that marketers have seen in recent times is how isolation and uncertainty have had a significant impact on the shopping behaviour of people around the globe. Some terms that we have heard so much recently is bulk shopping, panic shopping, and all this is sourcing from online shopping. People are changing what they are buying, how they are buying, and what they are buying during the COVID-19.
As cities are being more stringent in avoiding crowding in public places, they are imposing lockdowns. Lockdown is thus ruining the business of non-essential commodities, thus leading them to close down. Buying essential items through the online medium has become the new normal. Offline businesses have to adapt to this change and become flexible in putting their efforts. Even after the pandemic is over, people will become habitual of this lifestyle; they will not prefer to go out unnecessarily. Essential commodities or commodities they widely purchase will be purchased online only. Shopping online will become the new normal even after the pandemic is over.
Impact On Global Online Retail Bifurcation
In these modern times, retailers and brands are facing daunting short term challenges. These challenges revolve around health, safety, supply chain, labour force, cash flow, consumer demands, and marketing. Successfully navigating through these challenges will not ensure a profitable future for the business, because when we emerge from this pandemic, which we will for sure, we will appear in a completely different world as compared to before lockdown.
To make your business survive but be profitable post-pandemic, it is essential to understand the trends and base your decision on them.
“Retail platforms have undergone a six percent global traffic increase between January and March 2020. Overall, retail websites generated 14.34 billion visits in March 2020, up from 12.81 billion global visits in January 2020.”
Source: Semrush (Statista 2020)
Consumer Behaviour Has Changed Permanently
The need is to understand that consumer behavior throughout the globe might change permanently. Even before the pandemic hit the world, people’s shopping behavior was shifting to digital. Many product categories are disrupted by digital-like books and entertainment, whereas some products like apparel and consumer electronics are moving towards digital since the pandemic. The most notable transformation is of the grocery industry, before the pandemic in the nascent stage, people worldwide have widely ordered their groceries from eCommerce websites. Understand the impact of COVID on the change in consumer behaviour through this Image.
Source: Stackline (Statista 2020)
Increased Terror Of Germs And Proximity
If you think that the COVID-19 effect will end once the vaccine is made, then you are wrong. First, COVID-19 could re-emerge after some time, and now we are more vulnerable to any such virus. High time that entrepreneurs and consumers accept the new reality. People are going to be more cautious about germs and prefer contact-less delivery for a long time. Buffets, trying clothes, and wherever more people are present will completely be avoided. Retailers have to strategize now on no-touch experience and emphasis heavily on hygiene. Germophobia will be a more heard term in future which will impact the eCommerce industry. Check the statistical representation to understand the impact.
Source: Internet Retailing; RetailX (Statista 2020)
Planning to launch a niche-based eCommerce business
Consumers who have bought gym equipment will not prefer to go to the gym, and Consumers who have purchased a streaming media subscription will continue paying it. People who started enjoying home-cooked meals or started cooking new delicacies at home prefer to do so even after the lockdown is over. A considerable amount of the workforce will shift from working in an office to working at home. Businesses have to understand the impacts and create a need for their business right now to become profitable even after the pandemic. Check how consumers in Italy are widely ordering products online.
Source: GDO News (Statista 2020)
New Economic Reality
The United States and many other countries may recover from the pandemic to face the worst recession. Japan has fallen into recession due to COVID-19. A Morgan Stanley report also projects American gross domestic product to land at an annual rate of 30.1% in April-June, and that unemployment could average 12.8% over the period. Goldman Sachs is projecting a 24% annualized drop in output in the next quarter.
Consumer spending is dramatically curtailed during the pandemic. People have become financially more conservative. Thus leading to consumer’s credits less available, and a large cohort may go into default by their debt. Graphically check how the coronavirus will impact your business.
Source: Bevh (Statista 2020)
The Economic impact of this pandemic will not impact every retailer and brand alike. The brands that enter the lockdown with a weak-balance sheet are loaded with debts or may have risen from their current balance. The economy is so uncertain for businesses that many are retracting their earnings governance and are unable to provide the investors estimate for the performance this year.
The emergence of high retail bifurcation will impact which businesses are profitable. The brands selling high demand Pandemic necessity on Amazon and other eCommerce websites will not be affected by the pandemic. Learn how eCommerce activities have developed in France.
Source: Content Square (Statista 2020)
These Products Are Seeing The Most Sales Growth During The Pandemic
1. Grocery and food – People are understanding that going out to grocery stores to buy package goods can also be a worry as maintaining social distance can be difficult. So people are resorting to websites to purchase these goods. People also prefer packaged goods as they feel they are safer and less contacted by humans as compared to vegetables and fruits.
Read in detail about: Grocery & Packed Food Marketplace Business Model
2. Wine and Alcoholic Beverages – While many cities are still facing the lockdown, the local bars and alcohol shops are not opening. Many people feel the Wine and Alcohol marketplace as an essential commodity that has become a boon for marketplace owners. Wine and Alcoholic marketplace are delivering wine and alcohol at least to the local cities where delivery is not prohibited.
Read in detail about: Wine and liquor marketplace business model
3. Health and Household – The Health, medical, and household industry have seen a considerable demand, specifically during the pandemic. In this sector itself, people are doing panic shopping and preferring to buy items in bulk. We all know about toilet paper incidents that happened all across the globe. Most offline businesses were not able to handle the crowd, especially when the supply was on the lower side. Online eCommerce businesses dealing in health and household items are seeing huge traffic.
4. Lawn and Garden Accessories and Tools – As people are spending more and more time in the household unaware of spending most of their time. People have taken up more and more to their hobbies, which they could not pay attention to during a busy time. Gardening being another such hobby, people need the equipment and tools to work around in the garden. Marketplaces that provide lawn and garden accessories are also seeing a lot of traffic, and the conversion rate is too high.
5. Personal Care – There rate at which people purchase personal care items were already on a high. Now since the lockdown, the only thing that changes is that people now prefer to buy personal care items online. Especially when the country starts reopening the economy, the personal care items will be sold in huge numbers.
6. Entertainment, Recreational Toys, and Games – Since people are in lockdown and do not have any other way to entertain themselves. They are ordering Toys, Games, and other entertainment items online. Going out to buy these unessential items are strictly prohibited in some cities. Delivery is still open as businesses are resorting to contactless delivery options.
7. Gym and Weight Training & Fitness Equipments – Gymaholics are still not able to go to the gym or even a park to walk or jog. Some people are using this time to come back to shape and need the equipment and tools to do so. Launching a Gym and weight training & fitness equipment marketplace can be profitable during and after the pandemic.
8. Digital Products (ebooks/photograph/etc.) – for a long time now, people will avoid receiving physical products, or necessary products they will use but with proper care and sanitization. For the products that can be converted to digital products, people I’ll prefer to buy digital products online.
Top Declining Product Categories
For now, People have become accustomed to the word ‘essential.’ During the pandemic COVID- 19, customers are buying essential products, stepping out of your house for vital work only, necessary travel. Also, Governments of different countries have imposed essential gatherings with a minimum number of people, and many more such rules.
1. Luggage and Travel Gear – For a long time, people will not be able to think about leisure travel. Traveling only to reach their hometown or no traveling at all will be the new trend for a few months, if not years.
2. Jewelry – Though many will argue, jewelry is not an essential product. The sales of jewelry and accessories have declined ever since the pandemic has hit countries in the worst way. People will not go to physical stores to buy jewelry for months to come, but people will still prefer to order jewelry via online websites.
3. Costumes – Though during the holiday season, the costume industry boomed. But this year is all about staying indoor and staying safe. Dresses and other clothes that people rent out will not be used even after the pandemic is over for a long time due to sanitation issues.
4. Gifts – Though we all like to receive gifts since we are confined to our own homes, we will not be able to buy or give gifts. This industry may not be finished due to COVID-19 but can revive once this lockdown period is over. People will not be visiting crowded places to buy gifts, so launching a gift marketplace can be a fruitful idea for aspiring entrepreneurs.
5. Party Decoration and supplies – Since gathering will not be more than a limited number of people. Parties and gatherings will be a thing of the past. So party decorations and supplies will also not be bought and sold in large numbers. There will be customers who want to buy these things online, but offline stores will not see the same number of customers as they did earlier.
For entrepreneurs who were planning to launch their online business, now is the right time. They also need to understand carefully regarding the industry or the product niche they want to start their business. In-depth market research of the current scenario, checking the google trends, and other tools to find out what people are looking for right now will help launch a profitable business.