The Explosion in Shopping Online During Covid

By Neil Harrison LL.B. (Hons)

We’ve all been there over recent months! Sitting around in some form of lockdown due to Covid restrictions, we have more time on our hands than ever before. So what do we do with that extra time? Well, there is always some DIY to be done around the house or garden, or a hobby to take up or get back into. We are desperate for that tin of paint to decorate the front room, the fencing materials to get the garden sorted, or the new set of strings for the guitar that has been collecting dust on its stand for the last ten years or so, but all the non essential shops are closed. Disaster!

How on earth do we get into all these various activities if we can’t buy the goods we need? Simple, go online and order them from our well used armchairs.

If there is one thing the coronavirus crisis has done, it has divided retail companies into two very distinct groups: those with functioning e-commerce businesses, and those without. Many of the have-nots simply won’t survive much beyond the pandemic and its restrictions.

Job losses and businesses closing because of Covid

There appears to be almost daily reports of businesses closing, down sizing or being acquired by bigger outfits. This has a clear knock on effect of putting many thousands of people out of work.

The less fortunate include companies that didn’t fully embrace online shopping, or that relied too heavily on sales in actual shopping centres.

Add to this the number of businesses who state that they cannot afford to pay the top up of furlough payments, resulting in workers leaving for other forms of gainful employment and it becomes clear that now is not a good time to be in business, or is it?

Online sales

Online sales going through the roof

The pandemic caused companies such as Amazon to hire many more workers and overhaul its supply chains. But far from suffering because of Covid, Amazon has come through this crisis and continues to get stronger than it ever was.

Many other retailers that invested heavily in e-commerce before the pandemic are also thriving. Many supermarkets are good examples with their online shopping delivery services, but there are other success stories from massive commercial enterprises down to the one man businesses.

The IKEA stores up and down the country reported a forty five percent increase in online sales over the twelve months to August. Many small businesses who had the ability to sell goods online also reported increased sales, after all, these businesses found they literally had a captive audience because of the restrictions.

Online or high street: The difference

The high street option

When you go shopping on the high street, there are many elements that come into play. The time it takes is the first consideration, then the journey needs to be taken into account, parking can be a nightmare, let alone expensive depending on the shopping location. Once in the shop you have to contend with other shoppers and staff. Will the staff be knowledgeable and helpful, or will you end up with the saturday boy who doesn’t know a DVD player from a cotton bud? Then there is the tedium of waiting in line at the checkout before struggling back to your car in the pouring rain only to discover that someone has damaged your paintwork with a shopping trolley and your new purchase doesn’t actually fit in the car.

OK, the above nightmarish scenario may seem a little over the top, but the chances of one or more of these things happening on a shopping trip are pretty good.

Another thing to take into account is when the particular item you want is out of stock or not available from your local store, what do you do then? Well, the only thing you can do is order it if possible, or travel to another shop to see if you have better luck there. All this costs you valuable time and money and with the current restrictions, you could even end up falling foul of the law governing non essential travel. Even the tiered system of regulations made travelling a bit of a lottery and you want to avoid a fine on top of everything else.

The online option

The method of online shopping is by far the least stressful. Put the kettle on, settle back in your armchair and browse your favourite e-commerce websites for the best deals available. Place your order and wait for the delivery to your door, sometimes by the very next day.

Should the item you want not be available from the first website, the next one is only a mere click away. So, no travelling, no traffic jams, no added expense and best of all, no risk of contracting Covid or receiving a fine in connection with it.

What big businesses have done well during the Covid pandemic?

  • Amazon: The obvious success story. Not a day goes by without an Amazon delivery van driving up and down the road.
  • Apple: With people spending more time at home, and many working from home, the demand for apps and remote work equipment increased.
  • Domino’s and Papa Johns Pizza: These fast food delivery outlets have seen a marked increase in trade.
  • DocuSign: Because of the pandemic, most document signing has had to happen virtually, making this companies bank balance swell considerably.
  • Etsy: Etsy became a go-to online retailer for face masks, and mask sales accounted for 14% of its overall gross merchandise sales. But even excluding mask sales, Etsy had a gross merchandise sales growth that was up $1 billion year over year — an increase of 93%.
  • Facebook: Facebook had a rise of 12% for their monthly active users from the previous year.
  • DIY stores such as Wicks and B&Q: With more time at home, many decided to take on home improvement projects using the money they had saved for holidays, gym memberships and other activities. Clearly the restrictions put pay to these, so DIY was a good distraction that payed dividends to the DIY chains.
  • Microsoft: As people began working remotely from home, the need for cloud computing increased. At the same time, people were spending more time at home playing video games. Both of these trends proved very profitable for Microsoft.
  • Netflix: A massive increase of subscriptions during the lockdowns brought extra revenue in for Netflix.
  • PayPal: With online shopping comes PayPal. Delivery operators such as Uber Eats rely on online payments to carry out transactions, so their profits increased accordingly.
  • Shopify: The number of new stores created on this platform increased by 71% between the first and second quarters of the year.
  • Spotify: Shares of Spotify were up about 80% and monthly active users rose by 29%.
  • TikTok: During the pandemic, many people turned to the video sharing app TikTok. This app now holds the record for the most any app has been downloaded in a single quarter.
  • T-Mobile: The mobile phone giant also did very well throughout the pandemic.
  • Wayfair: The online furniture retailer enjoyed an 84% jump in sales, making it profitable for the first time since going public in 2014.
  • Zoom: More and more meetings for business and between individuals has seen the profits soar.

Added value for money with e-commerce

A major upside to online shopping is the amount of money that you can save. Clearly, buying from a high street brand online is unlikely to be cheaper, even if it is more convenient. However, those businesses that only offer e-commerce shopping can often sell their wares at a reduced rate as they do not have to pay extortionate rental and rates on their high street premises.

The retail price will have to reflect the extra money these businesses have to pay to occupy their place on the high street, which is bad news for the consumer and eventually the business owner alike.

These business costs can often be the reason why some businesses with a physical high street presence eventually fail and a charity shop will most likely spring up in its place.

Maximising foot fall for your business

Many years ago, before the Internet had arrived, a friend had opened a very specialist fishing tackle shop in the old town, which happened to be a good mile or so from the newly developed town centre. There were a few other shops that catered for a niche market of locals there, but they had been in situ for many generations. The fishing tackle shop was new and as there was no main road past it, nobody knew it was there. Occasionally people would come into the shop on their wat to visit the stately home nearby and ask how long the shop had been open. They would be shocked to find out that the shop had been there for the past five years. It turned out that these people only lived a few roads away, but rarely went that way as it was in the opposite direction to the new town.

Realising the lack of foot fall was severely damaging the ability of the business to make money, the owner enquired how much it would cost to take over a smaller shop that had sat empty in the new town for over two years. He was dismayed to discover that the cost in rent and rates was more than twice his annual business turnover. Although more people would have seen the shop and been able to shop with him, it was just too much of a gamble to take. Regular customers attempted to spread the word and even posted flyers advertising the location of the shop, but sadly it was to no avail and the business closed down soon after.

Had the Internet been around in those days, the business would have had that all important accessibility and visability and could have thrived, regardless of where the physical shop was situated.

Online services also win with Covid

It’s not just the business that markets and sells physical goods that have grown during the Covid pandemic, online services have flourished too.

Online consultancies are delivering training sessions in all manner of subjects, from Health and Safety seminars to keep fit classes.

Although online services are a new way of working and not as enjoyable as face to face interactions, it can still be a viable way of making money.

Zoom, Skype and Teams meetings have replaced the boardroom at the office as more and more of us have been forced to work remotely from our homes, but even some of our leisure activities have moved online too, sometimes with great effect.

A personal trainer who delivered fitness classes and one to one training had been extremely worried at the start of the pandemic as he was concerned that his business would fail because he relied on clients physically being with him. He soon discovered that having virtual workout sessions was even more profitable than the old system. He no longer had to pay for the rental space at the local sports centre three times per week. More clients joined as they felt the inactivity of lockdown was showing around their waist and they could do their workouts from the warmth, safety and comfort of their own homes. This was a win win situation thanks to the wonder of the Internet.

The Internet can replace business travel during Covid

Another way businesses have been able to not just survive, but thrive during Covid is with the online meeting. Zoom, Skype and Teams meetings have rapidly taken over from the regular board mettings held globally in many businesses.

Before Covid it was commonplace for many to travel to other counties or even countries to conduct face to face meetings. This clearly comes with a heavy cost to the business. Flights, subsistence and accomodation are not cheap and all have a negative impact on the business.

Although this is not totally new technology, it has never been embraced that much, with businesses still opting to send representatives around the globe for meetings and conventions.

If your business relies on providing training courses, the Internet is the ideal place to deliver these events. The PowerPoint presentations can run alongside your own presentation and your audience can pay per screen rather than per person. All they require is a smartphone and they can take part in your training session.

Being able to deliver a quality presentation virtually is so much cheaper and far less stressful than having to travel thousands of miles to do the same, maximising your profit margins at the same time.

Diversity is key

The amount of business people who thought they were doomed at the start of the pandemic, that have now turned things in their favour is quite staggering.

Many businesses relied on face to face interaction to operate and it is understandable why they were so concerned initially.

A sports coach for example, who cannot deliver their training in person will be scuppered right? Wrong! So many have thrived with remote training sessions. Personal fitness trainers, fly fishing instructors and even golf professionals have all thought of ways to diversify their talents to help their business thrive.

All they need is a camera on their phone and they can demonstrate their technique to a very wide audience who will be paying per view, rather than just one at a time in person.

There are certain drawbacks to this remote way of learning, much the same as the down side of virtual meetings. People can start to feel too far removed from the much needed human interaction and that can be quite damaging to the mental health of some people more than others.

From Covid 19 and beyond!

The question is, will consumers continue to buy online once the pandemic is over?

There does appear to be some early evidence that consumers are unlikely to revert back to their old ways of shopping. A research paper has suggested that the longer the pandemic lasts, the more likely that consumers will continue with their new shopping habits.

Savvy companies are being quick to adapt to this prediction, as they have seen that a much broader set of the retail businesses are really seeing e-commerce as a top priority, and that has increased in a big way since Covid hit.

Early studies have seen that consumers have dramatically shifted their shopping to online shopping over the past six months. In fact, shoppers are actually embracing e-commerce in large numbers.

Even Google has accelerated its own e-commerce plans in response to the pandemic. The search engine business is now allowing retailers in Europe, the Middle East and Africa to list products on its shopping tab for free, after doing the same earlier this year in the United States of America.

Many small businesses that were slow to get to grips with e-commerce are now desperately trying to catch up, as they recognise they are missing out of a serious amount of business.

Before the Covid pandemic, many retailers had the attitude that e-commerce was a relatively small part of their overall business, maybe only accounting for five to ten percent of their turnover, therefore it wasn’t really worth pushing or investing more heavily in. Now that figure has grown dramatically to thirty, forty percent or even higher, they can now see that a genuine revolution is occuring and they cannot afford to sit back and miss out on a bite of this very large cherry.

Even the massive e-commerce companies can’t afford to be complacent. Their investors will be watching their performance very closely indeed.

A classic example of this is Amazon. The online store that supplies us with virtually anything and everything we could ever need celebrates its annual Prime Day with huge discounts on Tuesdays and Wednesdays. The event is expected to generate $9.9 billion in global sales for Amazon, no small amount and an increase of forty three percent from last years Prime Day event.

It would be foolish to suggest that all will be well and the economy will be fine. The truth is that the economy is still likely to struggle with a recovery from the pandemic and any recession caused by it, but with the wealth of businesses that have found new ways of working through these unprecedented times, we can have hope that the damage will be limited thanks to e-commerce.

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