The pandemic has been a weapon of mass disruption for physical retailers worldwide, and in order to survive, many businesses must channel greater resources online, says David Keene of eDesk
In the eight months since the World Health Organization declared a global pandemic, society has had to change its behaviour, and fast. From the adoption of masks to social distancing, these have been challenging times for individuals and businesses alike. The high street especially has been hit hard by calls for people to stay home, combined with non-essential shops being closed intermittently across Europe.
Instead of heading out to the shops, consumers have unlocked their phones and fired up their laptops to purchase goods. Online shopping has been the norm for a considerable time – just look at the omnipotence of trillion-dollar tech titan Amazon, which has made founder and CEO Jeff Bezos the wealthiest man on the planet – but e-commerce has accelerated at breakneck speed over the course of the pandemic. eMarketer believes that e-commerce will account for 27.5% of total UK retail sales in 2020, up from 21.8% in 2019, rising to almost a third by 2024. More dramatically still, e-commerce sales in France are set to rise 17.1% in 2020 compared to 2019 and Germany is set for a 16.2% spike.
Turning to Amazon, its 2020 Prime Day spanned 48 hours in October. However, the online shopping behemoth noticeably enlisted influencers for a small business campaign ahead of the main event, incentivising shoppers to spend £10 on eligible small businesses up until 12th October in exchange for £10 credit to spend during the Prime Days as part of a commitment to invest $18bn in support of SMBs. Similarly, American Express also adapted its Shop Small campaign this year ™u in response to Covid-19 and rewarded customers that shopped at local, eligible small businesses with credit of up to £50. With such significant marketing campaigns to support SMEs from corporates, it is evident that the internet is not just a place for the big boys to prosper, but also the independents. If the internet is now the market, each website is a stall.
The dual Prime Day resulted in third-party sellers, most of which are SMEs, generating $3.5bn in sales across 19 countries including the UK, Spain, Netherlands, Italy, Germany, France, Austria, and outside Europe in the US and Australia too. Overall, 2020 sales increased by 60%.
This is not a passing trend. This is an evolution – one that isn’t going to return to the way things were, even when the high streets do regain consciousness. Eight months is a long time for changed habits to become routine.
Recognising your Achilles Heel
While there have been obvious health and safety benefits of staying home, doing so will have also brought about major realisation about the convenience of shopping via the internet.
There will always be a place for physical stores, but those businesses that have capitalised on the past two-thirds of the year, or indeed failed to, will have recognised there is, and must be, another way to operate. Primark is one such retailer that has felt the wrath of the pandemic, with owner ABF revealing that the low-priced fashion retailer has lost around £2bn in sales as a result of Covid-19. This may well have been a wake-up call for Primark to see that even with its strong and loyal customer base, its lack of online presence is an Achilles Heel.
You need only look to Black Friday – the frenzied day of shopping we used to know is no more. Can you imagine shoppers jostling around in the aisles for a discounted TV these days? Although online always played a key role in driving sales during the annual shopping day, shoppers in the UK especially have had no choice but to turn to the internet for their wares as it’s fallen during the nation’s second lockdown. Staying COVID-secure is a key responsibility for all retailers no matter the country, however, so a traditional in-person Black Friday was never realistic this year.
Delivery firm DPD, which is owned by France’s La Poste, the second largest postal group in Europe, has claimed this e-commerce explosion will be permanent, having invested £200m to scale operations and meet the “new normal” demand from online retailers. Funds will support next-day delivery capacity, with £100m on transport, £60m on 15 new depots and the rest on technology, all of which will lead to the creation of 6,000 jobs. Elsewhere, Royal Mail has reported its parcel revenue accounts for 60% of overall turnover making it larger than letters for the first time.
Contrasting growth such as DPD’s, it’s been detailed that the future of Topshop owner Arcadia hangs in the balance, pointing to the pandemic as having a “material impact on trading” which leaves uncertainty around 13,000 jobs, with the business falling into administration.
With all of these signs in the market, the evidence is clear: we’ve reached the point of no return for e-commerce, so retailers internationally should be ready to put online shopping strategies straight into their baskets and checkout without hesitation. It’s essential that no stone is left unturned in this climate, because if shoppers can’t visit high street stores as they usually would then online retailers need to ensure they’re covering all bases. This means delivering a service across channels and marketplaces or else they’ll run the risk of losing out to another online seller that is meeting the evolving needs of the increasingly e-commerce-savvy shopper.