Why E-commerce is Growing in the Face of COVID-19

Last year, American consumers spent over $600 billion online, the highest amount on record in both total dollars and percentage of retail sales (16%). Economists had every reason to expect that trend to continue, but they had no idea that a global pandemic in the first few months of 2020 would amplify that growth substantially. Will that carry through once brick and mortar retailers reopen? 

“Even when the financial markets settle and consumer confidence returns in full force, the e-commerce trend will continue to surge,” predicts Tracy Warren, Manager of Delivery & PMO at Katalyst Technologies. “Companies should be evaluating their existing systems to determine if they need to upgrade or enhance.” 

It’s almost comical looking at Shopify’s predictions for e-commerce in 2020, as posted in January, which emphasized that analysts cautioned slow industry growth. Meanwhile, by February, as a result of dwindling supplies available in China, online retailers saw an 8.8% conversion rate—widely considered the hardest metric to increase—numbers that compare to Cyber Monday spikes. 

Cause and Effect 

Though shelter-in-place restrictions are the most obvious catalyst for the sales boost, there’s more to it than that. 

• People had no choice but to shop online. With retailers closed, people shopping for anything outside of groceries turned to the Internet for their shopping needs. Ecommerce in Covid 19, that they’ve experienced the convenience of online shopping like never before, it seems likely that many will continue taking advantage of it. 
• People became more comfortable buying specialty items online. Although these categories may have been available prior to the pandemic, even savvy online shoppers seemed reluctant to order prescriptions, cosmetics, and other products over the Internet. But they became more adventurous while quarantined, and saw that perhaps you can teach an old dog new tricks.
  “I myself just got my eyeglasses made by a popular online seller,” says Warren. “I would have probably never considered it before, but it was amazingly smooth process, well-conceived, and good customer service. I doubt I will do it the old way again.” 
• People want to minimize non-essential shopping in stores. Even as restrictions are lifted, 24% of Americans say they would not be comfortable going to a shopping mall for at least the next six months. And with the amplified popularity of apps such as grocery pickup app Instacart, even essential shopping remains a question mark for many consumers. If it were possible to get a haircut digitally, it would be a boon for salons (as this writer found out the hard way when his girlfriend’s attempt to “take a little off the top” resulted in a need to invest in a baseball cap...ordered online, of course). 

What Happens Next? 

If Ecommerce in Covid 19 has taught supply chain managers anything, it’s that one event can transform the entire industry practically overnight. Likewise, analysts can only guess which consumer trends have been permanently altered and which are merely set on pause during the pandemic. But the experts are Katalyst are available to guide you through every step of the way no matter what. Reach out for a consultation to make sure your e-commerce strategy is poised for success in 2020 and beyond.