If the current pandemic has sent businesses one message, it’s this: You have to be ready for anything. And that includes the sharp increase in online buying. According to SAP’s Commerce 2020 research, eCommerce orders jumped 40 percent just after the World Health Organization declared COVID-19 a global pandemic on March 11. Two weeks later, online orders hit a plateau of almost 64 percent higher than those placed in February.
And while eCommerce orders have increased, uncertainty remains around how buying behaviors will change once stay-at-home restrictions are lifted, or if and when a second wave comes along. Both health concerns and the convenience of shopping from home indicate that eCommerce has become an essential part of every business.
But that’s only part of the story. Keeping your eye on supply chain disruptions and making sure customers have memorable buying experiences will ensure your business can adapt to fit ever-changing customer needs. “When we saw these early indicators of demand increasing, we reached out to customers to see how we could help them handle this spike in demand,” said Moritz Zimmerman, CTO and Head of CX Commerce for SAP. “By building additional capacity and a more resilient eCommerce platform, they’re now able to adapt more quickly and keep their businesses moving forward.”
We wanted to know more about how the pandemic had affected our customers, and what they should consider on the road to recovery and beyond. Here’s what we found.
Retail Buying Patterns Are Changing
In the weeks following the announcement of the pandemic, online sales for both grocery and big box retailers skyrocketed by 148 percent. At the same time, demand shifted for essential items and groceries — including some categories retailers likely had not anticipated. For instance, in just one year, demand for bread machines increased by 652 percent, cough and cold medicine by 535 percent, and weight training equipment by 307 percent.
At the same time, due to restrictions on travel plans and social gatherings, demand for luggage, cameras and party supplies decreased substantially. As storefronts began to close due to lockdowns, retailers also faced the possibility of consumers losing trust in their brands.
To help minimize these disruptions, and gain a competitive edge, retailers will need to have clear inventory visibility. This will help them quickly adapt to changing consumer demands by shifting inventory to different channels, for example. Retailers will also need to make it easier for customers to purchase by providing simple online interfaces, contactless commerce options (including digital payments), the option to buy online and pick up in stores, and ship-to-home services.
Consumer Products Face Strained Supply Chains
In the week following the pandemic announcement, panic buying pushed up gross merchandising volume (total sales) for consumer goods by 15 percent. However, both average order value and total online sales have decreased since reaching their peak in March.
With ongoing supply disruptions for high-demand items, lower demand for luxury goods, and the risk associated with border lockdowns, consumer goods companies are looking for ways to stabilize their supply and delivery chains so they can keep their numbers up.
One way they can achieve this is by adopting a direct-to-consumer model — whether selling directly to consumers, or shifting product from wholesalers and retailers to smaller corner stores. Sourcing locally and ensuring products are located where they’re in demand can also improve the customer experience by ensuring products are delivered in a timely manner.
“Going direct-to-consumer, along with having the ability to quickly launch an online channel can help struggling companies recover revenue and diversify their customer base,” said Zimmerman. “It can also help you shape the customer experience and build deeper relationships, ultimately increasing brand loyalty.”
Industrial Manufacturers Will Need a New Approach
According to our research, average total sales for industrial manufacturers dropped 29 percent between pre-pandemic and post-pandemic periods. With non-essential factories closed, and consumer demand shifting, manufacturers will need to rethink how they handle products, sales and customers.
While industrial manufacturers may already have eCommerce initiatives, they may need to consider new offerings, as well as rethink their customer base. This could mean offering data-as-a-service based on data from customer equipment, or providing digital products like portals and apps to help equipment operators better understand their own data. Success for these manufacturers will also depend on economic recovery abroad, and the ability to introduce new contractual models.
Transform Your Business, Build Resilience
From supply chain disruptions and store closings to lockdowns and labor shortages, businesses in every industry have felt the impact of the current crisis. Yet we still have to ensure we provide our customers with the goods and services they need to keep their businesses and lives thriving. With a strong eCommerce foundation, you can more easily adapt to customer needs, continuously innovate, and provide outstanding customer experiences that will help you build the resilience you need to come out ahead.
Learn more about how you can build a more resilient eCommerce business. Read Commerce 2020: SAP CX Insights.
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