The Shift to e-Commerce: Consumer Behavior in the Time of COVID-19

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By: Wise Marketer Staff |

Posted on July 21, 2020

The COVID-19 pandemic is unlike anything the world has ever seen in the past decades. Countries, institutions, and business leaders are facing tough choices during these trying times with unprecedented levels of uncertainty. And with everyone’s eyes fixed on CDC data, the world anticipates drastic changes to the way we used to live and consume items that we want and need.

Across the globe, the pandemic has led to major shifts in business conditions for both B2B and B2C companies. The global efforts to contain the COVID-19 outbreak has also changed the daily habits of consumers, consumption patterns, and ways of thinking, resulting in a demand for online services across various categories, including entertainment and essential items delivered using innovative non-contact methods.

Whether by necessity or desire, consumers are moving their purchases online. And some of these consumers, who never engaged in online shopping prior to the outbreak, may not go back to shopping like they used to. As a result, many ecommerce businesses are experiencing sizable growth and businesses are increasingly shifting to a direct-to-consumer business model.

COVID-19 Impact on e-Commerce and Consumer Behavior

Even before the coronavirus pandemic, e-Commerce sales represented a huge chunk of overall retail sales growth in the US. For instance, 56% of overall retail growth last year was accounted for by a whopping $600 billion in online sales. Projections state that e-commerce sales may go as high as $6.5 trillion by 2023.

However, there’s no denying that the pandemic has accelerated the growth of e-Commerce. The COVID-19 crisis will result in permanent change to our shopping behavior and ways of conducting business in the US and in the whole world. While some businesses are experiencing a short-term peak in demand that may be temporary, other businesses will be moving online for good.

It’s mainly due to these five factors that are influencing shifts in e-Commerce and consumer behavior:

1. Convenience #1 reason for online shopping: Consumers are getting used to convenience that online shopping offers and the habits they’ve picked up during the pandemic are quickly becoming persistent. Convenience has even overtaken price as the number one reason for consumers shopping online. Essential product categories, such as fresh food, cleaning supplies, and other household essentials are particularly susceptible to the convenience wave.

2. Continued social distancing due to the risk of a pandemic blowback: Around the world, there is an underlying concern about a pandemic blowback. Thus, social distancing will encourage the continuation of online shopping, reinforcing shifts in consumer behavior in the longer term.

3. Intensified competition online: E-commerce businesses that are experiencing a surge in sales will do everything they can to retain and connect with their newly acquired customers, be it through loyalty programs, promotions, subscription models, and expansion of the product range. As consumers are becoming more tech-savvy and using referral sites or price engines to find the best deals online, the competition will just further intensify.

4. New distribution and logistics capacity: Companies who offer shipment and delivery services are experiencing an overwhelming demand for contactless and last-mile package delivery, which has pushed them to build up new capacity and scale their operations.

5. Elderly consumers go online: As the elderly population is in self-isolation or self-imposed quarantine, their online shopping habits are expected to continue and even accelerate the existing behavioral trend. According to recent statistics on the effect of COVID-19 on online purchases in the US, 5% of consumers aged 65 years old and above shopped online for the first time due to self-quarantine and physical distancing. A third of consumers aged 65 and older also plan on buying more goods from online marketplaces due to the pandemic.

Consumers Prepare To Stay Indoors

With the majority of the workforce now officially working from home, and a great number of students shifting to e-learning, many consumers are investing in tech and hardware upgrades. Tech-related retail sites experienced a 20% increase in traffic in the weeks following the pandemic and also recorded a higher number of purchases, with a 30% increase in transactions.

Sites specializing in books and toys are also experiencing more visits and transactions, often double the total increase since the beginning of the pandemic. As parents around the world contemplate on weeks and even months of homeschooling and indoor play, they’re preparing to equip their homes to make the transition as seamless as possible.

Sports retailers are also seeing a 30% increase in their number of transactions. As physical distancing and self-isolation limit people’s ability to take part in group sports or go to the gym, consumers are making sure they can keep up with their fitness regime at home by purchasing the right equipment. This is especially true in the US, as over 60 million Americans are members of a gym club.

The Rise of Digital and Contactless Payment Methods

The coronavirus outbreak is not only changing the way consumers shop but also how they’re paying for their purchases. Digital and contactless payments experienced an unprecedented boost ever since the start of the pandemic, seen by consumers as a safer and cleaner way to pay for goods. Consumers are also trying out new payment methods while they’re purchasing from online stores, and favor methods that have the strongest protection from scams and frauds.

Overall, total payment volumes are experiencing a huge decrease in 2020 due to losses in segments such as in-store and travel, but they’re expected to resume growth in 2021 and benefit from the shift to online shopping and cashless payments.

Towards an Uncertain Future

As consumers grapple with the uncertainty during these trying times, their purchasing behavior becomes more erratic.

Companies that courageously invest and pivot their businesses to accommodate the behavioral changes can capture market shares and emerge as market leaders post-pandemic. It can be something as simple yet innovative such as an SEO strategy to get their e-Commerce sites at the front of their audience. For others, appealing to changing values and rebuilding their customer experience could result in a profitable revival. For some, there is no other choice but to wait until the pandemic blows over.

Regardless, every industry, especially the e-Commerce sector, faces one universal truth: life after the pandemic will be different significantly. The true winners are those who act on the current opportunity, familiarize themselves with technology options, and test solutions until they create an online shopping experience that matches their customers' needs and expectations.