ECOMMERCE – BEHIND THE COVINDEX

You’ve probably figured out by now that the C19 crisis and its lockdowns are accelerating all sorts of changes – in the world of retail & eCommerce, we’re seeing 5 years of adoption in just a few quarters. Buyers are being forced to make online choices whether they want to or not.

Source: ONS, October 2020

Physical retail itself has been a burning platform (albeit only smouldering gently) for about 20 years. Every year eCommerce has become a little bigger and the problem has become a little bit worse for physical retailers, but the growth in any given year was never big enough for people to seriously worry about or choose to act.

We all now pretty much understand that anyone will buy anything online, given the right experience.

Our CovIndex data based on Social & Search actions suggest a generally positive consumer disposition to this new behavioural situation – albeit that many businesses have a significant way to go to adapt to new consumer demands and be able to satisfy them to appropriate levels: across Social platforms we see 42% positive sentiment & 15% negative sentiment (most commonly driven issues relating to delivery slots either not being available, or not adhered to.

Source: Social Analysis, Freemavens Aug 2020

As expected, Amazon as the giant understandably dominates the conversation with >2k positive mentions around their ability to fulfil the promises they make. It is generally regarded as reliable and quick.

We are now seeing evidence of many retail categories that were previously heavily (or exclusively) physically based now migrating relentlessly towards online.

This even includes the automotive category with searches for Cazoo, CarWow, Cinch and Autotrader all increased significantly as these brands are exploring ways of cutting out the need for physical salespeople in dealerships. One of the drivers of this is the dramatic improvement of the reliability of cars over the last 10 years – making a bad choice is harder than ever for buyers.

In the UK, supermarket retail category online penetration has doubled from 5% of sales to 10% this year, and has seen some newsworthy developments picked up by consumers that are helping drive this growth – Aldi has expanded its click and collect option – it doesn’t do delivery, so this is their best bet. Ocado has generated 38% negative and 26% positive ratings, with customers complaining they did not receive their delivery or were not able to book a delivery slot. They are victims of massive demand overload. The Data evidence suggests the tie-up between Ocado and Marks & Spencer is creating initial delivery problems despite the long term potential for this. The bugs will get fixed, we believe.

In the first quarter of 2020 alone, Amazon Prime membership increased 29% on Q4 2019. The dual benefits of much shorter online ordering cycles and home entertainment proved too enticing for many. We have also seen much evidence of buyers over-ordering, clothes in particular, as they try to create the in-store changing room in their bedroom at home.

This now seismic change in consumer behaviour is not going to mean they switch back to pre-C19 habits.

The change is here to stay and has big ramifications for other adjacent industries. For example, many of the world’s biggest consumer brands have always been in a B2B business – selling pallets of product to retailers, not individual packs to end-users.

What does the new customer relationship look like when consumer can, in some cases, buy direct ‘from the factory’?

A solid example of trends being accelerated by C19 is the proliferation of new, small businesses satisfying needs not being met by much larger established makers. With the internet essentially creating an open route to market and rates of interest for borrowing being at record lows, the flood gates have opened for people starting their own eCommerce businesses evidenced by a substantial increase in searches for Shopify. In 2020, searches increased 43%.

Source: Google Search Data

It’s all change, for sure.

 

 

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