Five ways COVID-19 has impacted e-commerce

COVID-19 has affected e-commerce marketing in all sorts of ways, and especially the fast moving consumer goods (FMCG) sector. Some essential goods are in such high demand that they don’t need any form of advertising to flourish. However, the pandemic has hit non-essential goods dramatically, presenting unique challenges for marketers looking to engage with new consumers and behaving in new ways. It’s essential marketers are nimble, agile and adaptable during this time so they’re also ready to transition for a rapidly-changing future.

Online groceries are seeing incredible demand

Before COVID-19, the predicted online spending on groceries in the UK accounted for around 9% of total grocery sales in 2020. It’s now estimated this number will jump to over 13% in 2020, with hypermarkets and supermarkets witnessing understandable but nonetheless considerable drops in their store footfall . This disparity creates a unique challenge for brands and their marketers as they adapt to a tricky situational benefit. On the one hand, they’re seeing increases in online sales and demand, but at the same time facing  significant loss in terms of consumers browsing, choosing and purchasing in store.

Consumer demographics are evolving in real-time 

Prior to the outbreak, 40% of UK consumers were buying FMCG  products online. The majority of online sales still sits with those in the 25-44 age group, with almost half of people in this consumer segment having bought FMCG products digitally. But online grocery shopping rose a massive 24% in March among people aged 55+. This change – as well as huge shifts in online behaviours as consumers adapt to supply chain challenges encountered by many supermarkets –  mean that brands targeting this audience must evolve their marketing strategies, and keep re-evaluating their tactics daily towards this heavily in demand and oversaturated audience.

Consumers are gravitating towards non-perishables

In the UK, the demand for non-perishable items in March went up by a huge 36% compared to the beginning of the year. This demand has considerably levelled off during the month of April as people are beginning to accept the new normal, but it’s still up by 29% compared to the pre-COVID-19 levels of demand and up 43% compared to the same period last year. The huge disparity between the demand for essential and non-essential products was the first obstacle that marketers needed to manage during this crisis.

Retaining customer engagement for non-essential items during a pandemic  is a tricky challenge – where new engagement tactics along with elements such as social responsibility become paramount. For example, the Museum of Ice Cream, an ice cream museum and e-commerce store, has adjusted to the current climate by donating much of their product to frontline healthcare workers. This ensures they are still relevant, but highlights the value of their brand and ethos to their existing and potential new customers.

Cosmetics and sporting goods face reduced interest 

Interest in sporting goods has dropped by nearly 70% during the last 45 days in the UK. In addition, the online purchase interest and intent in the health and beauty segment also went down by nearly 30% as more consumers have become focused on essential purchases. In order to make up for the lack of interest, some cosmetics and apparel brands have begun shifting their production to make hand sanitisers and face masks respectively, or have begun supporting those currently fighting the pandemic on the frontlines by sharing profits with local charities or healthcare services.

It’s time to take stock on advertising tactics and consumer spending 

Understanding stock availability at any given location in real-time is also crucial for marketers to make sure they deliver a positive customer experience – especially in times where movement is restricted and the availability of basic staples and delivery can be erratic. Brands must make sure they are advertising products that are available to customers so they continue to provide an enjoyable and seamless experience. Where possible, brands need to make product availability clear or suggest a relevant paired product which they can serve dynamically to maintain relevance and interest for consumers. Marketers also have the luxury of purchase behaviour and spend levels, which can indicate whether certain groups or demographics are increasing basket value or frequency, so they can push additional product.

More than two thirds of advertisers predict COVID-19 will result in reduced advertising spend across all channels, even looking  into 2021.

This is a unique and challenging time for the e-commerce platforms for non-essential goods. But the most successful brands and marketers can look forward to being reunited with an understanding and loyal customer base that might have been fleetingly diminished due to the crisis. And those most flexible and adaptive to the instability could emerge with new audiences that share the same values.

Mike Gray, Head of Client Strategy MIQ