The COVID-19 crisis is changing consumer behavior across eCommerce platforms tremendously. Due to this change, a few businesses will thrive; some will become stagnant while the rest will collapse. The drastic rise and fall of specific product categories in the e-commerce market are alarming.
To stay afloat, you need a powerful marketing strategy in line with current consumer psychology. This turn of events is a brilliant opportunity to foster consumer loyalty and satisfaction. Therefore, it is time you micro analyze these trends. By using methods of data analytics, you can turn this into a favorable situation for yourself and your customers.
“Many generational attitudes have been tied to singular events that leave their imprint. It remains to be seen if this is one of them, but it’s not hard to imagine that it will be.”Simeon Siegel
Managing Director, BMO Capital Markets
To design a power-packed marketing strategy, you need to know what is driving your customers. You can lean on generational attitude or even an area-wise attitude of people to formulate personalized marketing strategies.
Furthermore, analytics has highlighted a few high performing e-commerce categories. If your business is one among them, then you must be under high pressure to perform. Problems of supply chain and inventory management have to be handled well before they manifest.
Coronavirus has promoted panic buying among consumers
Since WHO recognized Coronavirus as a global pandemic, there is building pressure on brick-and-mortar as well as e-commerce stores. Consumers, therefore, began stocking up items like masks, cleaning supplies, toilet papers, and canned foods. The demand rose to overwhelming levels.
Most of us responded in similar ways to feel that we are in control. Paul Marsden, a renowned consumer behavior analyst, explained this quite simply. She said panic buying could be playing with our three fundamental psychological needs.” These needs are autonomy, relatedness, and competence.” Hence, Panic buying seemed the most therapeutic thing to do in such times of crisis for us.
Amidst the pandemic, apart from the “retail therapy,” two other actors came into play. Firstly, the crowd mentality and secondly, the pooling of contradictory information which increased our stress levels.
Also read: COVID-19 And Predatory Pricing Online
Is online purchasing safe during the Coronavirus pandemic?
This question illustrates a significant safety concern for all of us amidst the Coronavirus outbreak. With the knowledge of the life cycle of the virus on surfaces, panic grew further. Even though many shipping companies claimed low-risk levels due to harsh shipping conditions, it was not worth the risk.
In its statement, the CDC claimed the same about e-commerce businesses. But they were talking about shipments that spend about a week in the shipping process before the consumer gets it. Plus, they talk about the lack of any contaminating agent on the way.
Moreover, the WHO addressed the safety of these packages. They reserved that: “The likelihood of an infected person contaminating commercial goods is low, and the risk of catching the virus that causes COVID-19 from a package that has moved, traveled, and exposed to different conditions and temperature is also low.”
A generational analysis of purchasing pattern
Coronavirus has affected consumer behavior differently across generations. There is a significant difference in Gen Z and Millenials v/s Gen X and boomers.
1. Gen Z and Millenials
The youngest generation of the pyramid changed their shopping behavior drastically. 96% of this group is concerned about the effects of this pandemic. A few examples of their drastic behavioral changes are cuts in spendings and stocking necessary items.
2. Gen X and boomers
The pandemic has affected the older generations considerably less. Their buying habits didn’t sway much. For an illustration, only 24% of boomers and 34% of Gen X changed their shopping behavior. This value is much less when compared to about half of the millennials.
Men v/s Women: gender-wise change in consumer behavior
The survey shows that there is a gender-wise aspect of this change too. More women than men are concerned about the impact of the Coronavirus crisis. On the contrary, 33% of men are making more amends to their shopping behavior than the 25% of women.
Similarly, 36% of men are changing their expenditure on experience as compared to 28% of women. These experiences range from travel to restaurants. Also, more men are shopping through e-commerce sites, thus reducing in-store interactions.
Changes across sectors: Cart abandonment and AOV
Two major factors to asses the sector-wise impact of the Coronavirus outbreak are cart abandonment and AOV.
1. Cart abandonment
Primary determiners are the length, prices, customer research, and complexity of checkout formalities. At times, seasonal buying trends also come into play, for example, black Friday sales. Lower abandonment rates signify high product demand.
At present, the abandonment rate in the e-commerce grocery sector is 8%. This value is higher than usual. Probable causes are a shortage of products or unusual levels of traffic on websites.
Average order value shows how much consumers are willing to spend in a specific area. Grocery, pharmaceutical, and general retail categories show higher than anticipated growth. Whereas, the travel industry is going downhill due to the lockdown as compared to the 2019 value.
The fastest growing and sloping e-commerce categories
The online retail sale is about to cross the $6 trillion mark by 2023. But since the Coronavirus pandemic has set in, this figure has wavered. The reason being, huge demand for certain e-commerce category. Moreover, a few other types experienced a sharp decline in demand. Stackline, a retail intelligence firm, analyzed the sales across the U.S. to identify thee categories.
The fastest-growing categories
To begin with, consumers are exercising control over their buying habits. They are mostly buying shelf-stable items. Foremost in this list are disposable gloves with a change of 670% in customer purchase. Following suit is a list of easy-to-prepare food items like soups, rice, and even packaged food.
The fastest declining categories
Due to the current circumstances, consumers canceled vacations. Therefore, they abandoned items stored in shopping carts they would have otherwise bought. The luggage and suitcases are suffering the most. Not only the camera companies but also apparel brands have suffered a setback.
Due to this change in trend, even Amazon, the largest retailer, felt the impact. Amazon is going to delay the delivery of non-essential goods as per the official statement.
How is consumer buying preference changing across e-commerce websites?
Amidst the Coronavirus lockdowns, overall consumer behavior is evolving. To understand how consumer preferences are evolving, Yotpo conducted a poll for 2000 consumers. For this purpose, consumers selected belonged to the age range of 14-73.
Out of 2000 who participated in the survey, 34% live in the U.S., 33% in Canada, and the rest 34% in the U.K. The study highlights a significant change in consumer behavior.
1. What they do with the time they spend online
About 35.65% of consumers keep on checking marketing messages. While a relatively less 32.05% focus on browsing things online, only 25.35% are making purchases. If similar trends continue, about 43.02% of consumers will resort to online shopping ultimately.
2. How is money usage changing
More than half (56.75%) of the consumers are trying to save money. Whereas, about a fifth (23.65%) are trying to spend more. Only about a third(31.7%) are turning towards online stores to make purchases.
3. Survival essentials like health products are consumers’ leading choice
Consumers are buying more safety products like hand sanitizers(40.15%). The demand for wellness products like vitamins, CBD, and superfoods (21.60%) are also on the rise.
4. Changing preferences for household items
Household items constitute the majority of the portion of consumer carts. For instance, these products are cleaning supplies, medical care goods, non-perishable food, and toilet paper. In fact, retailers have developed a priority among these essential goods too.
Non-perishable food(46.95%) to tackle pandemic food requirements tops the list. Personal sanitizers (40.15%) are running close. About 34.95% are preferring cleaning supplies.
5. Concerns for availability
Now, consumers even purchase from non-famous brands for their requirements. Consumers are not ready to wait for their preferred brands. Only about less than fifth (17.05%) are signing up for re-stocking updates.
How is Coronavirus affecting traffic across e-commerce websites
The change in traffic is most prominent in the fashion sector. Brands in the fashion sector garner traffic mostly through branded searches. In the following example, a UK-based fashion retailer experienced a 40% drop in traffic. This drop took place even after they took new measures to tackle the Coronavirus pandemic.
The same brand registered a decrease in traffic for its website too. This trend indicates a sector-wide decline in demand for fashion apparel.
As an illustration, let us take another study of a UK-based Home and Hardware brand. This brand experienced a significant increase in their branded search.
Even the non-branded searches lead visitors to their site quite frequently.
How is Coronavirus changing revenue across various sectors
The Coronavirus pandemic has disrupted the brick-and-mortar shopping. Therefore, people are turning towards e-commerce for purchasing products. There is a considerable shift in revenue in various sectors.
1. Grocery e-commerce
Online grocery stores marked a peak in the second week of March. Consumers turned to online stores for their demands. Rakuten Intelligence illustrated this spike through its year-over-year analysis.
2. Other e-commerce categories
There isn’t any drastic change in consumer behavior across different e-commerce categories. Overall, data doesn’t give enough insight. So, Common Thread Collective has broken down the data to help us learn.
3. Subscription services
Among various e-commerce categories, subscription and convenience services have skyrocketed. Both their revenue and conversion have increased significantly. WITHIN, a performance branding company, has collected year-over-year data to illustrate the changing consumer behavior due to Coronavirus.
How are the product categories shifting due to Coronavirus?
People are making choices as per both their local and global circumstances. Market research company Nielsen has divided the consumer behavior into six categories based on behavior during the Coronavirus pandemic.
- Proactive concern for health
- Reactive health management
- Pantry management
- Quarantine preparation
- Restricted lifestyle
- Normal lifestyle
As people jump between these categories, their behavior changes on the microscopic level. This shift, in fact, has a crucial impact on the e-commerce categories.
1. Health and safety products
These products are getting exhausted as soon as new stocks arrive. Product sale in this category has gone up by 300%.
2. Shelf-stable good
People planning for long term quarantine are sticking to shelf-stable food products. Specifically, sales of milk and milk products have increased by 300%. Dried beans and fruit snacks are following suit.
3. Digital entertainment
Now that people are homebound, they are rapidly turning towards digital streaming services. Brands like Netflix, Amazon, and Hulu witnessed an atypical revenue increase in the first quarter of 2020. Even a few other streaming services have rushed their schedules on-demand. Therefore, broadcasting shows on consumer demand.
4. Luxury goods
This particular category is moving downhill. Vogue business suffered a loss of about $10 billion in 2020 due to the Coronavirus pandemic. This change is due to lockdowns of Asian markets, the biggest for this category. Thus, proving the importance of Asian consumers.
5. Fashion and Apparel
Since the retail businesses are closing down, there is a massive drop in revenue. Owing to people’s lack of consumer interest, brands are closing down their physical as well as experience stores. A few brands even closed down the online stores to protect their supply-chain workers. Shipbob’s data shows a 20% decrease in month-over-month sales.
After developing an all-round understanding of the present change, there are many things you can do. Firstly, you have to change what you offer to your customers. Secondly, you have to invest more in data analytics, SEO, and CRO. Due to this, you will develop adaptability to the ongoing competitiveness.
Furthermore, another crucial move is to personalize your interaction with customers. These Personalized marketing efforts will boost sales manifolds. Lastly, think ahead. If you can anticipate the market trend of the near future, you can focus on long-term brand-building.
A lot is changing, and that too rapidly due to the Coronavirus pandemics. Data analytics is a proven way to make sense of this changing buyer trend across various e-commerce categories. At Datahut, we gather data from multiple sources and analyze it. Next up, we tell you how to use it for your best interest.
When it comes to any data-related assistance, we believe that we can be of help. Be it consumer behavior analytics or web scraping; we have a range of services waiting for you.