The Ecommerce Quarterly is a series of presentations by Econsultancy, which curates the latest trends, developments, and statistics in ecommerce.
It is a guide to what is happening right now in ecommerce and what you need to be aware of. This edition of Ecommerce Quarterly is heavily influenced by the impact of Covid-19.
The following topics and more are addressed in this edition of Econsultancy’s Ecommerce Quarterly:
- The acceleration of ecommerce growth
- The impact of Covid-19 on consumer behaviour
- Considerations for ecommerce operations including working environments, ethical supply chains, contactless delivery and flexible returns
- Brands testing augmented reality (AR) to respond to the inability to try on physical items
- Developments in last-mile delivery, including the robotic cars being used to deliver groceries in the UK.
Summary of what to expect in this edition of Ecommerce Quarterly:
Impact of Covid-19
The impact of the coronavirus pandemic has been immediate and far-reaching.
- Ecommerce acceleration: Ecommerce growth has accelerated. In the UK, for example, it took 10 years for ecommerce as a proportion of all retail to grow from 10% to 20%. During the pandemic that proportion has grown from 20% to 30% in about approximately eight weeks.
- Consumer spending: As safety became a priority purchases shifted from in-person to digital channels overnight. Many consumers will have engrained purchasing habits that are unlikely to shift back to what they were pre-Covid-19, at least in the short term. UK consumer research indicates that 25% of the population will make permanent changes to the way they shop, with spend redirecting into online channels. Consumers surveyed by AfterPay indicated that many who are now completing their shopping online are doing so to avoid people (48%) and for convenience (46%). This indicates that for many, the pandemic may impact consumer behaviour in the long term, even as shops reopen.
- Market transformation: During the Covid-19 lockdown, ecommerce went from being an additional sales channel to the primary sales channel. Those businesses that were not set up to sell online stopped earning revenue immediately. One such retailer was Primark, which reported lost revenue of £650m per month as physical stores were shuttered, with sales in the quarter to June 2020 down 75%. For retailers, this has far-reaching implications for their physical presence. Retailers will need to examine the cost of physical retail and consider whether this is overserved in some areas. According to senior marketers interviewed for Econsultancy’s Future of Marketing 2020 report, ecommerce is unlikely to go back to the level that it was prior to March 2020.
Technology to the rescue
Covid-19 has led to new and novel applications of technology by brands to support the customer experience.
- Visual commerce: It seems as though some analysts have been evangelising augmented reality (AR) for years. The inability to shop in stores may be the use case that this technology needed. Brands such as ASOS and Sephora are utilising AR tools to support shoppers with the experiential part of the shopping experience that they are otherwise missing from the online environment.
- Video conferencing: Some retail brands selling high ticket items that require longer consideration are supporting customers via video call to provide customers with guidance and product support.
- Livestreaming: The livestream market in China is predicted to double (to 613 million users) with a value of 961bn yuan (£108bn) in 2020. Growth in China stems from the popularity of influencers. For example, Chinese influencer Viya sold 15,000 bottles of Kim Kardashian’s KKW fragrance in under a minute during a livestream in November 2019.
- Working out from home (WOFH): Alongside working, working out from home has become a trend. Covid-19 forced boutique gyms to turn to livestreaming classes via Zoom and social media. In June, fitness fashion brand Lululemon announced that it would acquire Mirror, a home fitness startup that sells hi-tech wall-mounted mirrors for streaming workouts. Meanwhile, hi-tech at-home fitness company Peloton’s share price has more than doubled since January. Like retail, gym businesses need to capitalise on taking an omnichannel approach to cater to those consumers that do not want to return to physical gyms.
Brands have responded to sold-out supermarkets by launching D2C offerings. Examples include Heinz to Home and Snacks.com. In addition, recipe box businesses have experienced increased demand with one business claiming that it had a 452% increase in customers between March and May.
Increased shopping online has shone a spotlight on ecommerce operations both for brands and consumers.
Brands need to consider ecommerce fulfilment, contactless delivery and flexible returns. Consumers meanwhile are becoming increasingly aware of the importance of ethical supply chains and sustainability. For example, despite strong performance throughout the pandemic and its acquisitions of Warehouse and Oasis, in July, Boohoo had to commission an independent review of its supply chain as a result of claims that UK factor workers were paid £3.50 per hour while being offered no personal protective equipment during the pandemic lockdown.
Econsultancy would like to thank the following people for their contributions to this report:
- David Williams, Omnichannel, Ecommerce and Digital Leader, DHW Digital
- Colin Lewis, CMO, OpenJaw, DMX Dublin
- Vinny O’Brien, Ecommerce Director, Crua Outdoors
- Aidan Duffy, Ecommerce Consultant
- Liam Lennon, Director, Juicers.co.uk
- Lynette Saunders, Senior Analyst, Econsultancy