Coronavirus: The Implications for B2C Commerce
By Brian Walker
The Covid-19 novel coronavirus outbreak has gone from a regional Chinese public health crisis to a global emergency very quickly.
This is clearly a very dynamic situation, and while we all hope for a quick stabilization and decrease in both the rate of infection and mortality, we do not really know the length, spread, or impact of this virus.
For business leaders, this presents a whole host of important questions ranging from employee health to addressing supply chain disruption, to consumer trust, to business continuity.
Hopefully, those challenges are short-term, but for retailers and brands, what are the implications for eCommerce in the short-term and longer-term?
Immediate Actions for B2C Businesses - Retailers and Brands
If you sell relevant products to treat and prevent novel coronavirus, focus on what is most important to your customers right now:
Ensure your product information is accurate. Unfortunately, there are lots of misinformation and inaccurate claims out there. Customers need to know the facts about products, down to very specific details like the percentage of alcohol in a sanitizer or the molecule size that may pass through a mask or filter.
Build relevant, fact-based and accurate content to advise customers. Customers want to know both how effective they may be and how to use them to prevent infection. People are depending on you and these products for their health, and those they care for. Rich content and relevant links to medical and scientific authorities may be an important help, and that is true even if you do not sell and market-relevant products.
Ensure these products are discoverable. Not a surprise, but at Bloomreach we have seen a spike in sales across client sites in recent weeks, including masks +849%, hand sanitizers +420%, disinfectants +184%, and canned food +191%. Make sure your search is tuned and able to get people to the right products, and that you suppress products that are not appropriate.
Ensure out of stock items are clearly marked and can not be ordered. This seems obvious, but not all systems are as well integrated as they should be. Having these products still appear in search and category listings with “sold-out” - and when you expect the back-order or resupply to become available - may be a better service to your customers than simply removing them, as it will save customers time and aggravation. And while it may seem anathema to common business practices, you can also consider the good will of helping customers find these products even if it is from a competitor
Lastly, ensure fair market pricing is followed and delivery promise-dates are accurate. This is a particular issue with marketplaces such as Amazon and others where you may not be in control of the pricing. Not only is this moral obligation, but also may put you on the wrong side of authorities.
If you do not sell relevant products to prevent and treat coronavirus, right now is a tricky time. Consumers’ minds are elsewhere and you need to market with sensitivity and empathy, while also maintaining a business.
And of course, consumers are going to also enjoy a distraction or two, while filling lots of downtime as they change their routines and spend a lot more time working and relaxing at home.
Marketers and merchants can look to:
Connect with consumers around their home, family, neighbors, and close friends. We will all be looking to fill time, and this kind of crisis has a way of connecting us to those in our immediate circles. Think about merchandising strategies that fulfill that need, maybe even a touch of nostalgia. We may all be able to use that right now.
Emphasize eCommerce. It goes without saying that digital channels will now be paramount. Customers will be increasingly shopping from home, most likely from the couch or kitchen table (during their eighteenth conference call of the day as they work remote).
Attention spans will be short, and people will be looking to both quickly find and buy essentials, while also filling time browsing and dreaming and gaining inspiration they may well impassively act on as they spend more time at home. Google and Amazon will be a natural starting point for these consumers as they start their digital journeys.
Make sure you get your share and secure precious margin dollars by ensuring your digital experience is up to standard, your content well targeted, marketing and experience aligned and personalized, and search effective and relevant. eCommerce and digital marketing performance will be critical to not just your online numbers, but the company's overall results and earnings.
Your CEO, your board, and your investors are most certainly paying attention to eCommerce now.
Reassure customers of the source and materials of your products. The science here is still inconclusive, but consumers are naturally more concerned now over country-of-origin and the source of the products they are bringing into their homes or businesses.
Marketplace sellers selling off-price and insta-brands from off-shore may be looked at - rightly or wrongly - differently by consumers now. Many retailers and brands are not consistent with this information on their digital channels. And it may be time to address that.
Try to address concerns over how products will be delivered or picked up. Trusted carriers and pickup options where ‘social-distancing’ and disinfection is respected will be important to many. Consider how you might implement these and reassure your customers through clear communication. I realize this is a challenge.
Long-term Implications for B2C eCommerce
For businesses everywhere, it is time to gameplan to address the long-term implications of the novel coronavirus, and that is most certainly true for retailers and brands where digital commerce channels will be critical moving forward. Consider that:
Changes in customer behavior will become even further entrenched. The average modern human is already a digital junkie, and online research and shopping - and of course omnichannel behaviors - are already a routine part of our lives.
But shopping in physical stores still makes up a majority of our spending, even today. That will certainly change short-term as ‘Social distancing’ recommendations become common and even routine local shopping trips and errands cause people to pause and consider if they really want to take the risk.
This is certainly already true in areas already impacted by Covid-19, such as in the Seattle area - which is both where I live and where the virus has had its most pronounced, tragic impact thus far in the United States.
eCommerce is going to fill the gap - both shopping via mobile and desktop - for everything from pantry staples to the impulse buys we buy out of boredom or our daydreams. Home delivery may become a lifeline, just as it became in China, and become the new norm for the average consumer in urban and suburban communities.
For businesses without an effective digital commerce channel or a way to digitally engage their customers, this problem is now becoming a crisis. And implementing same-day courier based delivery and in-store pickup may become critical, depending on your category and store footprint.
Amazon and other large aggregators take an even bigger piece of the pie. Habits are hard to break, and when it comes to shopping online, Amazon takes a very large share of the pie. Look for Amazon to take a greater share of eCommerce and total retail sales, even as their marketplace suffers from the same supply chain challenges other businesses face.
Their Chinese sellers and other offshore insta-brands will likely be impacted by the virus short-term, but their core retailing business will increasingly become a go-to destination for what consumers would otherwise purchase offline.
This will be based on the strength of their prime program - now with an estimated 105 million members in the U.S., which is a staggering 82% of households - as well as their fulfillment prowess, an assortment backed by their buying power, and relative value for the consumer. And of-course Amazon’s sites and apps may not be sexy, but they sure work.
They tick all the boxes for the ‘digital commerce experience table stakes’ and back-end operations. Brands and retailers can’t afford to allow Amazon any more ground. Even if Amazon is a great channel for your business today, and you see a near-term benefit from more sales through that channel, this is very dangerous for the long-term as they commoditize, disintermediate, and co-opt your brand position and product differentiation.
It is time to ensure you have the ability to protect (and ideally grow) your market-share via eCommerce and not allow demand to aggregate any further to Amazon, Walmart, or Alibaba, Rakuten, etc. depending on your market.
Distressed retailers face the perfect storm. Bear with me as I generalize; retailers are in trouble. Sure, there are some outliers doing well who serve niche markets or have a business model aimed at low margin and fast turn.
But most retailers today overbuilt their physical footprint over the last two decades and are now trapped with too many leases for stores whose performance was already lagging before the novel coronavirus hit. But now foot-fal* in all their stores is about to hit rock-bottom, and that means sales.
That sound you hear is inventory turns grinding to a halt in every retail format except grocery. The majority of these retailers do not yet have effective or highly performant digital commerce channels, let alone effective omnichannel capabilities like buy-online-pick-up-in-store (BOPIS), and even if they do it today can not make up the gap.
And to add to this perfect storm, the virus is impacting supply-chains either through supplier interruption or the chaos of trans-oceanic logistics happening right now. This may all, unfortunately, tip these retailers toward bankruptcy or closure, even before you factor in the general erosion in consumer confidence and spending as stock markets and retirement savings take a major hit and the economy tips toward recession or stagnation.
If the impacts of the virus linger on the consumer's shopping habits and sentiments, expect the real retail apocalypse to commence with a further round of bankruptcies aimed at shedding those leases and accelerating the pivot toward a more balanced omnichannel strategy. (And no, I do not think retail is dead, just significantly changed.)
More experimentation in innovative digital experiences. eCommerce and rapid, reliable fulfillment is sure damn convenient. And while we may enjoy the ‘gifts to ourselves’ when packages arrive, is it really as fun as the serendipitous, spontaneous shopping experience when we find that cool special thing?
I really don’t think so, and I do not even enjoy shopping that much (there is a reason why I jumped at the chance to work in eCommerce as soon as it was a thing). And certainly, there are some key demographics with major spending power who still see shopping as entertainment and love the feeling it gives them to be waited on by a great salesperson.
And yes, there are some things you want to feel, try on, and kick the tires of before you buy. But that may very well be an experience we have less and less of for a while. Expect an increasing amount of rich content, augmented reality (AR), and virtual reality (VR) experiments as marketers try to fill that void.
Expect more novelty digital innovations and creative ‘channels’, like social buying and shopping streams. Many of these experiments may prove to be useless, but who knows, maybe there is an Interwebs in there somewhere.
We all hope that the measures being taken across the globe today slows the rate of infection and thus mortality. We all hope medical research will find a way to heal all those already impacted with available treatments.
And we all hope a vaccine for Covid-19 novel coronavirus is discovered and scaled quickly and made available to all who need it across the globe. That said, this ‘black swan’ could bring real shifts in how customers rely on and use digital commerce.
We would be wise to prepare now for the impacts on businesses to both survive and hopefully thrive as a result.
[COVID-19 Content Hub]: Metrics, Insights and Analysis on eCommerce Trends
[Analyst Study with Forrester]: The State of Commerce Experience