Much has been said about the disruption caused by the COVID-19 pandemic and its effect on human lives and the economy. Undoubtedly, the unprecedented event has wreaked havoc on global markets, but if history is any proof, we will see bold companies that invest ambitiously and timely in their online businesses succeed in the long term. Two of China’s largest e-commerce brands were born of the effect that the 2003 SARS virus had on business and shopping behaviors. The current pandemic, too, presents opportunities as we have seen rapidly changing customer behavior toward online shopping, a trend that promises to stick post-pandemic.
While several brick-and-mortar retail shops are facing closure, many retail and consumer packaged goods brands have faced revenue losses. However, strategic investments toward digital and e-commerce platforms can bolster the revenue stream. The pandemic is also posing several challenges resulting from supply chain disruption and delays in delivery, which may affect the brand’s reputation as well as customer loyalty. A strong PR and design-thinking-led strategy toward customer centricity will help retail and consumer companies build brand equity in the long run. Change is the only constant in the retail and consumer world; hence, these strategies must be fine-tuned continuously in order to remain relevant.
How can e-commerce businesses overcome the impact of COVID-19?
- Build realistic goals and create an agile system that can monitor the situation on the ground and assess opportunities as well as potential risks
- Demonstrate consumer-centricity by empathizing with your consumers
- Prepare and train a team with a problem-solving mindset to respond to customer queries
- Be aware and compliant with the rules, regulations, and laws applicable to businesses globally and locally
- Prepare for supply chain disruptions by optimizing and even ramping up inventory to avoid opportunity losses
- Create a strong network in your supply chain by maintaining relations with stakeholders such as suppliers and logistics partners
- Mitigate supply chain disruption risks by expanding the supply base to avoid reliance on one supplier
Why adopt e-commerce?
A KPMG survey of e-commerce customers on why customers preferred e-commerce to ‘brick and mortar’ stores revealed that, for 58% of the responders, the ability to shop 24/7 was a decisive factor in favor of e-commerce. The next most important parameter happens to be the ability of shoppers to compare prices in e-commerce platforms with 54% responders finding this to be a critical factor. Other important parameters include lower prices of products on e-commerce platforms, convenience provided, free shipping offers, products not available in local markets, and more.
If we divide all the responses into clusters, we find that convenience remains the most important factor followed by price-related parameters, push from offline and, finally, ease of selection. Free shipping and distinguished products that are only available through an e-commerce channel are the other major reasons why customers prefer to shop online.
Advantages of e-commerce:
- Wider reach and easier access (24/7 across any geography)
- Goods can be sold at lower prices, by achieving economies of scale and reducing overheads
- Easier to perform targeted marketing
- Easier to personalize for individual customers
- Collection and analysis of data (applying customer and business analytics) is much easier, making interpretation and business intelligence more efficient and accurate
- Flexibility in implementing business strategy and adapting to new market trends and demands
- Customer convenience and providing the ability to overcome geographical limitations.
- Better ROI
- Better management of customer reviews, recommendations, price comparisons, product comparisons, and provisioning of all the information to the customers
When social distancing norms are relaxed, e-commerce sales may stabilize at a lower growth rate than what they are today. However, the online and e-commerce space will still play a major role in the success of Retail and CPG brands as consumers shift toward digital channels. Retail and CPG brands that can adapt their supply chains quickly, without compromising on quality and consumer centricity for the omni-channel world, will convert one-time purchasers to loyal customers and brand ambassadors, thereby giving the business an edge over their competition.