Will E-Commerce Continue to Dominate the Retail Industry?

Will E-Commerce Continue to Dominate the Retail Industry?

Online sales rose dramatically amid COVID-19. But since brick-and-mortar stores reopened months ago, does that mean the e-commerce will collapse?

Last March, e-commerce had seen massive growth, thanks to the consumers' sudden change of behaviour due to the pandemic. Groceries, home goods, gardening supplies, and other essentials became highly popular products in online stores when usually, people would go to brick-and-mortar shops to buy them.

Home and garden brands rose, particularly amid the online shopping mania. In April, their year-on-year growth peaked at +120%. Unsurprising because a staggering number of people started to raise plants while in lockdown.

Retailers that are primarily brick-and-mortar increased their online presence, too. E-commerce platform Shopback Philippines, which had 370 partner stores in 2019, gained 149 more partners during the pandemic, making their community grow to 510 members.

Moreover, due to malls and other commercial establishment closures, retail stores targeted their investments toward digital marketing. Many begun to enhance their websites, online ordering procedures, and PPC advertising tactics.

But brick-and-mortars have already reopened last June, so what does that mean for e-commerce? Will consumers go back to their everyday habits?

E-CommerceWill Continue to Dominate

While e-commerce sales consequently slowed after lifting the lockdowns, they don't show signs of reversing. Nobody should expect retail to "return to normal"because, at this rate, there's no going back to how it was anytime soon. Even before the pandemic, brick-and-mortars have already been fighting a losing battle with e-commerce giants like Amazon.

Besides, recent data, as shown below, clearly indicate that online sales continue to grow worldwide:

  • American brick-and-mortar retailers saw online orders jump to 24% between May 31 to June 7, a significant growth compared to their performance in the same period last year.
  • Online orders of Pureplay retailers climbed to 5% during the same period, also higher than their sales in 2019.
  • Online grocery sales in the U.S. skyrocketed in March and continue to do so at a fast pace. Walmart, in particular, had online revenue growth of 74% during the first quarter of 2020.
  • More food merchantssigned up with food delivery platforms FoodPanda, GrabFood, andDeliverooin the Philippines, one of the countries to first impose a nationwide lockdown.
  • European retailers have been observing a steady increase in online orders since the beginning of the year, but they've seen a considerable spike in April.

Consumers are Likely to Maintain Their New Behaviours

The latest data from Mckinsey suggest that consumers are likely to keep the new behavioursthey've adopted during the lockdowns. That means they'll continue to shop more online and less at brick-and-mortars. As such, retailers shouldn't sit back and wait for the consumers' old habits to return.

They should also watch out for the products that boomed amid stay-at-home orders. Home and garden brands, which gained a lot of patrons last April, experienced a slight decline by mid-June, as garden centres reopened. However, the decreased sales turned not to result fromthe physical garden centres reemergence, but because of the rainy weather.

Indeed, good weather has always meant more sales for garden products. During warm and sunny climates, more people are eager to raise plants or grow their own produce.

Online food and drink brands are other retailers to watch out for. By late March, these businesses were garnering a year-on-year customer growth rate of 575%. Although grocery stores remained open during the lockdown, the diminished confidence of consumers pushed them to resort to online ordering.

However, we should note that food and drink brands aren't competing with grocery stores. Hence, we can expect a resurgence of grocery shoppers once the virus is finally contained.

Select a few retailers, such as trendy fashion and electronic brands, may also see the "normal" return soon. Products that tend to have high demand, like Nike shoes or iPhones, will always have buyers that will visit a brick-and-mortar store for them. Thus, when Apple releases a new product after the pandemic, it is likely that customers will camp outside their stores again. Such may be the case for Nike, too, when they announce huge discounts.

The New Normal for Brick-and-Mortar Stores

When governments started imposing health protocols, brick-and-mortars followed them quickly, requiring their staff and customers to wear masks, disinfect their hands and shoes before entering, and practice social distancing. But these shouldn't be the only ones they must do to stay in business.

They must also enhance their customers' online shopping experience. Their websites should be mobile-friendly and offer integrated services like "buy online pick up in-store." And as for their in-store services, they should upgrade them even more, and give people a reason to visit despite the risks. For instance, Walmart holds events or offer exceptional in-store experiences to attract visitors to stay longer and buy more. But now that consumers are too anxious to stay outside for long, brick-and-mortar retailers should convince their customers that shopping in person would be worth it.

Still, even if the old standard returns after a while, no retailer should abandon their digital marketing efforts by that time. Considering that people have learned to appreciate online shopping more, they won't likely stop doing so anytime soon-all the more reason for a retail business to veer into e-commerce.

Posted by inGenium Ltd

inGenium Ltd

iNGENIUM Ltd. is an software development company from EU which delivers a full range of custom .NET, web and mobile solutions for different business to meet partner's demand.

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