Sustainable fashion

COVID-19 and e-commerce: are online sales increasing?

The global crisis we are living due to COVID-19 is having a tremendous impact on our economy, including e-commerce sales. With more than 1.2 million cases and 64,000 deaths at the time of writing, the virus is really changing our lives and the way we buy. Although Bill Gates tried to warn us back in 2015, nobody believed it could happen.

covid 19 ecommerce woman wearing mask using laptop

COVID-19 cases still on the rise

Pretty much all economies around the world are suffering the effects of the virus. From the 251 countries and territories around the world, 206 have reported coronavirus cases. Only two hundred years ago, the global population was 1 billion. Today, we are almost 7.8 billion people on Earth. And almost a third of that population is under some sort of coronavirus lockdown. On 24th March, India’s Prime Minister announced a 21-day lockdown for the entire nation. In just one sentence, he doubled the number of people locked down around the world, from 1.3 billion to 2.6 billion. To put it into perspective, there are more people under lockdown right now than living on this planet only 70 years ago, according to the United States Census Bureau.

covid-19 planet virus

With so many people staying at home permanently, one wonders what the impact on online usage and consumption may be. And more specifically, how COVID-19 is affecting e-commerce and online businesses. A research study carried out by Business Insider and Emarketer found that three-quarters of US internet users said they’d be likely to avoid shopping centres and malls if the coronavirus outbreak in the country worsens. With over 311,000 confirmed coronavirus cases – and growing – the US outbreak is really getting worse day by day. Even the UK has just surpassed 41,000 cases.

Stockpiling due to panic buying

There’s also the factor of panic buying. This affects especially physical groceries retailers, which have experienced a boom in sales after the initial outbreak news. Paul Marsden, a consumer psychologist at the University of the Arts London, said to CNBC that “the short answer can be found in the psychology of retail therapy – where we buy to manage our emotional state.” This is why people started stockpiling toilet paper in the UK after the outbreak of coronavirus. However, panic buying seems to affect more ‘real-world’ stores rather than e-commerce ones.

toilet paper stockpile covid-19

COVID-19 pushes people to use e-commerce more frequently

However, panic buying doesn’t seem to affect e-commerce that much. One study carried out by First Insight on 28th February on a sample of more than 500 people in the US shows that 21% of the participants are shopping online more frequently. When broken down into age groups, they found that the figure goes up to 30% for Millenials. However, they also found that 35% of respondents are cutting back their spending in preparation for the impacts of COVID-19.

Ipsos, one of the global leaders in market research, carried out a more recent piece of research about the coronavirus on mid-March. They asked 10,000 participants in a survey whether they are using e-commerce to purchase products they would normally buy in-store. The countries reporting the biggest change in consumer behaviour were Vietnam, India and China, with 57%, 55% and 50% saying ‘more frequently,’ respectively. The next country with the most notorious change was Italy, with 31% of buyers recognising they are using e-commerce more frequently. In the UK, however, only 18% of people seem to be buying more online, whereas 49% reported no change in their purchasing behaviour. It would be interesting to see the results after the lockdown was announced in the UK on 23rd March. The results would probably show changes more similar to Italy and China.

mona lisa with mask covid-19

More people online doesn’t translate into more sales

Purchases in traditional retail shops are decreasing. But the COVID-19 is also impacting e-commerce. People are slowly moving towards more online shopping compared to brick-and-mortar shopping. However, this doesn’t translate in more sales necessarily. And the trends vary substantially from one industry to another, and also within industries. For example, UK-based fashion retailer’s search traffic has dropped down between 30% and 70%. These are particularly difficult times for the fashion industry, whether online or offline. People are stuck at home – and they don’t need new outfits to be at home all day.

A few e-commerce businesses are benefitting from COVID-19

On the other hand, a few fashion brands with e-commerce presence are managing to do better after the COVID-19 crisis. Nike, for example, reported an increase of 5% in revenue by the close of their quarter at the end of February. What’s more interesting, “Digital sales in Greater China increased more than 30 per cent while brick and mortar retail sales were impacted by temporary store closures related to COVID-19. Opportunities arise from every crisis, and those who are ready to take the challenge are better-positioned to see a great benefit.

Sales are going down in general for most industries like fashion and travel. There is, however, one type of e-commerce platform that seems to be benefitting a lot from the current COVID-19 pandemic. This is the subscription e-commerce platforms. During the first two weeks of March, they doubled revenue and conversion rates. As most countries announced their lockdowns, more people seem to have turned into subscription services. This has clearly a direct connection with a desire to make the lockdown more comfortable. Streaming e-commerce platforms like Netflix are taking a great advantage from the crisis.

E-commerce and COVID-19 with live data

Emarsys and GoodData have started a project called Covid-19 Commerce Insight. The project provides live data on e-commerce sales for the last seven days compared to the same period last year. For the UK, there are very interesting results in the e-commerce sphere after COVID-19:

  • Pure e-commerce revenue has increased by 31%. Distributed by industry:
    • Fashion has increased by 22%.
    • Home and leisure have increased by 50%.
    • Sport and hobbies have increased by 200%.
  • Online revenue for traditional retailers has increased by 3%. Distributed by industry:
    • Fashion has decreased by 40%.
    • Home and leisure have increased by 134%.
    • Sport and hobbies have decreased by 49%.

These results suggest that, in general, pure e-commerce platforms in the UK are striving more than traditional retailers with online platforms. The difference is even more acute when looking at the trends for the last 14 days. Pure e-commerce platforms have increased on a steady line, from 10% on 19th March up to 45% on 1st April, compared to the previous year in the UK. For traditional retailers with an online presence, the change is much more subtle with a fairly flat trend varying from 7% to 14%. As of 1st of April, online orders in the UK for the fashion industry have increased by 6% for pure e-commerce platforms. For traditional retailers with online platforms, however, orders have decreased by 43%.

covid-19 ecommerce sales laptop mask

Conclusion and advice for e-commerce platforms

The upwards trend for e-commerce sales in comparison with last year is good news for e-commerce business struggling with the current COVID-19 crisis. With the shift from brick-and-mortar stores to online shopping, competition for sales over the internet has skyrocketed. As a consequence, optimised e-commerce platforms have a clear advantage over those which are not. Things like website design, speed, user experience, mobile responsiveness and SEO optimisation are now more important than ever. Those who were already doing great on these will probably see an increase in their online sales. And those who weren’t, well, maybe it’s too late for them but it’s still too early to tell. For now, we can just follow the UK government guidelines and stay home – number one priority for everybody now is to end the crisis as soon as possible.

In the meantime, you can continue reading how to make your travel more sustainable after the COVID-19 crisis.

And remember to share this article – sharing is caring, especially during these tough times!

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