COVID-19 has had an unprecedented effect on how we shop for goods. So much so, that it’s hard to decide which is more incredible: the sheer influx of ecommerce activity or the speed at which this influx has happened. In terms of growth, April and May 2020 outpaced even the 2019 holiday online shopping season and saw ecommerce spending exceed expectations by $52 billion. Year-over-year, the 82.5 billion spent during this period was good for a 77% increase. In terms of speed, it’s projected that the first few months of this pandemic have accelerated ecommerce growth by 4 to 6 years. As a result of all of this, it’s expected that the share of global retail sales generated via ecommerce will reach one-third by 2024.
Of course, these figures and projections are due in part to the extraordinary circumstances we find ourselves in. And yet, COVID-19 aside, ecommerce has been growing at a steady clip for years now, both in Canada and worldwide. This has created an interesting dynamic where brands and businesses — already trying to succeed in this burgeoning marketplace — have had to innovate and adapt to emerging trends with tremendous agility.
So with ecommerce changing and taking on new shapes before our very eyes, it’s important to understand some of the most popular trends accelerated by COVID-19.
1. BOPIS (Buy Online Pickup In-Store)
Known to many of us as the “curbside pickup”, BOPIS is a fairly straightforward concept: users can purchase items through an ecommerce platform and opt to pick up in-store or curbside to avoid shipping times and fees. And while BOPIS was fairly common before COVID-19, it has absolutely exploded during the initial months of the pandemic. In the USA alone, BOPIS-related purchases grew by 195% YoY in May. And though it has flattened off since then, it’s a trend that has cemented its staying power and has become a go-to method for many consumers.
Aside from highlighting the importance of having seamless omnichannel logistics, BOPIS relies on solid inventory management practices. It’s essential for merchants to implement the right systems to deliver the most up-to-date inventory available to the consumer. All components of the fulfillment system need to be working in-sync to create real-time, accessible info on order statuses, locations handling and customer engagement. In this context, working with a flexible, dedicated, tech-enabled fulfillment and logistics partner can make all the difference.
2. Digitally Native Vertical Brands (DNVBs): Cut out the Third-Party Retailer
In a climate of significantly curtailed brick-and-mortar retail activity, DNVBs are proving themselves to be the next big thing. These web-only, direct-to-consumer brands have shown their tremendous growth potential over the last few years, even before COVID-19 sent consumers flocking to web stores in unprecedented numbers. In 2017, The top-75 DNVB retailers generated $8 billion in revenue, which was good for 44% growth compared to the year before. In fact, they are growing nearly 3x as fast as the average ecommerce retailer.
In opposition to gigantic third-party ecommerce retailers like Amazon, DNVBs create a highly branded, user-friendly, consumer ecommerce experience from the warehouse to the final fulfillment. This allows for more direct, personalized, and valuable experiences before and after purchase.
If done correctly, this direct-to-consumer model creates healthier margins for the brand, healthier consumer relationships, and more brand loyalty. Of course, the DVNB model relies on rock-solid logistics and fulfillment infrastructure. Instead of working with a third party, it’s essential to work with a dedicated ecommerce fulfillment and logistics partner who prioritizes your brand’s growth, support and seamless business integration.
3. Ecommerce Grocery Shopping
At the end of 2019, Macleans published an article forecasting a surge in e-grocery shopping in 2020 and beyond. It painted a picture of giant food warehouses that relied on sophisticated AI to compile grocery orders at breakneck speed, which would then ship out to consumers. And though the industry is developing impressive procedures and tech, ecommerce grocery sales represented about $2 billion of a $120 billion dollar food retail market at the time — still nascent and immature by any metric.
What’s happening now is something that few forecasted. Driven by lockdowns and reduced store hours, shopping for groceries online has surged. In the USA, online grocery shopping grew by 22% in 2019. That number is expected to surge to 40% in 2020. In Canada, ecommerce revenue in the food and restaurant sector has jumped 160% since the start of lockdowns. The growth has been so sudden that many retailers are struggling to keep pace with orders: wait times have increased, inventory levels are precarious and orders are quite often not fulfilled accurately.
Of course, given the climate, these growing pains are somewhat understandable. It will be interesting to track the effects of COVID-19 on this industry as they strive to meet the efficiency and potential scope captured in the Macleans article.
4. Subscription Programs and Boxes
In precarious economic conditions, brand loyalty is absolutely essential for ecommerce retailers. Aside from impeccable products, customer service and seamless ecommerce experiences, brands have increasingly turned to subscription programs to encourage regular and repeat purchases. Of course, this trend is best seen in the food industry, with companies like Good Food, Blue Apron, Hello Fresh and others providing meal subscription boxes. Generally speaking, there are three types of subscription box services5:
- Replenishment: These types of subscription boxes offer a ready supply of products.
- Curation: These boxes offer customized and personalized items based on what the consumer prefers.
- Access: These offer exclusive selections or discounts on products a consumer normally buys.
All told, this industry is booming. It’s projected that by 2023, 75% of all companies that sell directly to consumers will offer some type of subscription-based service. And with many customers spending increasing amounts of time at home and looking for more convenience, COVID-19 has had an impact as well: more than 22% of companies have seen subscriber acquisition rates grow during the pandemic.6 With many new converts beginning to come around to this convenient model that prizes brand loyalty above all else, it will be interesting to see if this trend continues when the current situation stabilizes.
5. The Importance of Consumer Experience
In many ways, COVID-19 has exposed the logistical lapses that prevent companies from succeeding in the ecommerce space. From slow websites, patchy inventory and a lack of online presence to high shipping costs, long fulfillment times and unresponsive customer service, it’s forced many retailers to adapt quickly and shore up their ecommerce practices in order to keep up with demand and growth. All of this, at the end of the day, is to ensure the best customer experience possible. Improved online shopping experiences have been a major contributor to ecommerce’s meteoric growth over the past few years and continuing to optimize and improve on these experiences will be even more important going forward. More than just sending consumers flocking to web stores, COVID-19 has served to highlight how crucial it is to have seamless ecommerce shopping, logistics and fulfillment practices in place.