With stores closed and self-isolating shoppers staying away, ecommerce is a necessity for most of us during the current crisis. And there’s little relief in sight. Influential Imperial College London (ICL) research suggests the public is facing an 18-month period of staggered quarantine.
The ICL data, which is being relied upon heavily by both US and UK governments, says the public can expect a year and a half of being placed in and out of quarantine multiple times to avoid dangerous Covid-19 infection spikes that could swamp health services.
This is a potentially disastrous scenario for retail in general, but the team from ROI Hunter suggest it may not be all bad news for the ecommerce sector.
“Very fruitful time for digital marketeers”
Their first observation is that during the crisis, digital ad spend is actually getting bigger as the epidemic intensifies and consumers stay home. Havas predicts that digital ad spend is due to grow by 6% in 2020. This is because other channels are simply less relevant. Outdoor for example has gone from a predicted 10% growth to minus 10%, cinema add spend, understandably, has also dropped through the floor. ROI Hunter’s take on the situation? “It could be a very fruitful time for us as digital marketeers.”
Their overarching message is: times are going to be tough, but from a digital marketing point of view there is an audience there for sure and some great opportunities. Online retailers need to take a step back and keep calm and carry on. They need to redouble their efforts to find out where their customer is on the buying journey, personalise and deliver relevant advertising where it is appropriate.
Shoppers will expect heavy discounting
The financial crisis of 2008 saw the birth of the discount economy, with up to 70% discounts on big-ticket purchases. Abercrombie and Fitch, for example, refused to discount and saw revenues drop 28% at its stores. This was trend was especially clear among luxury brands with sales at high-end department stores down 25% post 2008 financial crash.
In 2008 shoppers turned to ecommerce to find the best discounts. That’s because online it is so much easier to shop around, find discounts and compare prices. This is one of ecommerce’s strengths in the current crisis, but the sector has the potential to go further. Ecommerce and its wealth of data can help retailers find smarter ways to sell so they don’t have to rely on a downward spiral of discounting.
Credit crunch mark two?
Online retailers need to realise their customers face the prospect of reduced access to credit, and with many online shoppers relying on credit cards, this will be a big issue. Following the credit crunch in 2008, 62% of credit card companies scaled back the amount of credit they offered their customers. Some scaled it back by over 50%. This had a big impact on consumer spending in 2008 and it could again in 2020.
Lessons for the ecommerce sector
Despite the 2008 credit crunch (or perhaps because of it) commerce started to eat into the market share held by the conventional retail market. Significant numbers of consumers searching for the best discounts and deals switched to ecommerce, and that change in shopper behaviour was permanent.
In 2020 amidst an expected 18-month period of staggered global quarantine, ROI Hunter suggests online retailers have a similar opportunity to change shopper behaviour and grab another big slice of the market share.
The big take-home lesson from ROI Hunter is that it will be a tough 18 months but those retailers who can leverage ecommerce and weather the storm profitably will face great opportunities in the brave new world of retail post pandemic.