Sunday, August 23, 2020

COVID Is Driving a Step-Change in E-Commerce - And That Also Means B2B


For the past several weeks, a chorus of business analysts and marketing pundits have been proclaiming that the COVID-19 pandemic is driving a substantial step-change in online shopping and buying. E-commerce sales have been growing rapidly for several years, but it's difficult to argue with the proposition that 2020 will turn out to be a major inflection point for online commerce.

If we want "hard" evidence regarding the pandemic-driven growth of e-commerce, we need look no further than the most recent quarterly earnings reports of five large U.S. retailers. All these enterprises reported astounding increases in e-commerce sales, compared to the same fiscal quarter of 2019:

  • Lowes  - sales increased 135%
  • Home Depot - Sales "leveraging" Home Depot's digital platforms increased 100%
  • Target -  Digital sales increased 195%
  • Walmart - U.S. e-commerce sales grew 97%
  • Amazon - Online product sales increased 40%. (Note:  This does not include revenues from AWS, Amazon's cloud platform.)
It's important to note that these results are all comparisons with the same fiscal quarter of last year, and we also need to recognize that, with the obvious exception of Amazon, these retailers began their push into e-commerce fairly recently. Still, these e-commerce growth rates are compelling evidence of how much shopping behaviors have changed since the pandemic began.

Will the New Behaviors "Stick" After COVID-19?
The elephant-in-the-room issue for marketers is whether or to what extent the "new" online shopping and buying behaviors will "stick" after the COVID-19 pandemic ends. Some research is suggesting that the shopping behaviors triggered by the pandemic will be long lasting.
For example, in late July and early August, McKinsey & Company surveyed just over 2,000 U.S. consumers to assess how the pandemic had affected attitudes and behaviors across a wide range of economic issues and activities. Seventy-six percent of the survey respondents said they had used a new shopping method since the COVID-19 outbreak started, and 75% said they plan to continue using the new shopping methods after COVID-19 has subsided.
The McKinsey survey also asked participants about their online purchases in 20 product categories and found that respondents expected to increase their online purchases in all 20 categories.
While the results of the McKinsey survey are compelling, it's always a little dangerous to rely too much on survey results that purport to describe what respondents will do in the future. A survey can accurately capture what we intend to do at some point in the future, but whether those intended behaviors actually materialize is another story.
My view is that COVID-19 has produced a step-change in online shopping and buying, much of which will persist after the pandemic ends. If COVID-19 was a short-term event, new shopping behaviors might well be temporary. But we have already been living with COVID-19 for six months, and it seems likely that the trajectory of the pandemic will not change significantly for the next few months at least. Therefore, new shopping behaviors will have plenty of time to become habitual.

How Will the New Shopping Behaviors Affect B2B?
Most of the recent research regarding the shift to online shopping and buying has been focused on consumers. But there are indications that the COVID-19 pandemic is also driving significant growth of B2B e-commerce.
In April, Wunderman Thompson Commerce surveyed 200 B2B professionals in the United States. Survey respondents represented a range of job functions and seniority levels, including purchase managers, procurement managers, and C-level executives. This research found that B2B online purchasing had increased by 22% (on average) since last year. The survey respondents reported that they are now making 48% of their B2B purchases online, up from 38% before the COVID-19 outbreak began.

The Bottom Line
As marketers, we tend to underestimate the importance of convenience in buying decisions and behaviors. The COVID-19 pandemic has forced both consumers and business buyers to use online channels for purchases they previously made in other ways. From these experiences, many buyers have learned that it is easier and faster to shop for and buy many types of products online.
As humans, we tend to gravitate toward behaviors and practices that enable us to accomplish what we need to accomplish in the easiest and most convenient ways possible. When the pandemic subsides, some buyers will undoubtedly revert to in-person shopping and buying for some of their purchases, but a higher level of online shopping and buying will likely be a permanent fixture of the "next normal."

Image courtesy of Animated Heaven via Flickr (Public Domain).

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