Pandemic Impact on eCommerce: Everything You Need to Know

February 4, 2022
By
Jomel Alos

The COVID-19 pandemic forced a shift in consumer behavior which brought about an acceleration in the global digital economy. As such, opportunities for tremendous development in eCommerce during the pandemic have exploded.

In this article, we'll go over all you need to know about the effect of the pandemic on eCommerce.

State & Growth of eCommerce During Pandemic

According to a report, 67% of consumers say that the COVID-19 pandemic has changed the way they purchase. While this has had a detrimental influence on traditional business models at large, eCommerce in pandemic as a whole is evolving beyond this. Read them below:

Sales & Revenue

The pandemic may have resulted in mixed fortunes for some companies, but data also indicates how eCommerce sales have boomed in the wake of it. The figure below shows a clear rising trend in total global retail sales from 2019 to 2020, illustrating the effect of pandemic on eCommerce driven by the lockdowns.

As more people become accustomed to making purchases online, International Trade Administration (ITA) anticipates a steady 8% gain in all global retail eCommerce sector sales through 2024, with the sector accounting for nearly 22% of overall global retail sales by that year.

Meanwhile, according to the most current statistics, retail eCommerce sales in 2021 amounted to an estimated 4.9 trillion US dollars worldwide. This value is expected to increase by 50% over the following four years, reaching around 7.4 trillion dollars by 2025.

Global Retail Ecommerce Sales Worldwide graph
Global Retail Ecommerce Sales Worldwide from 2014 to 2024 (in billion USD)

Consumer Behavior & Motivations

Consumer attitude, behavior, and purchasing changed alongside the pandemic itself in early 2020. In fact, 48% of consumers say their shopping habits have been permanently changed by the pandemic.

48% of consumers say their shopping habits have been permanently changed by the pandemic

Due to the uncertainty brought about by the pandemic, what consumers buy shifted to value and essentials. As seen in the chart below, there’s a 19% rise in global eCommerce revenue between the pre-and-post COVID-19 era in 2020, with Food & Personal Care seeing the greatest growth at 26%.

Worldwide eCommerce Revenue Forecast 2020 graph
Worldwide eCommerce Revenue Forecast 2020 in Billion USD

Another major trend to keep an eye on is how swiftly brand loyalty has dwindled. According to a McKinsey & Company survey, 40% of customers claimed they changed brands during the pandemic. Besides value, the most common factors influencing customers' shopping choices are accessibility and convenience.

consumer behavior changes pandemic graph
Evolving priorities: COVID-19 rapidly reshapes consumer behavior

Digitalization

93% of customers are now eager to experiment with new payment systems that encompass anything from QR codes to biometrics to digital payments. As a result, businesses are stepping up their game plan by embracing new technologies that allow them to better engage with customers. 

In fact, given the increasing demand, 20 to 30% of business in grocery eCommerce has shifted online. This has led to a 9 to 12% online grocery penetration, a threefold increase over pre-pandemic figures.

The chart below reveals the customers around the globe turning to digital commerce for their daily necessities and entertainment.

customers purchasing category pandemic
Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis

These are just a few examples on how eCommerce has accelerated due to the pandemic. Reports by IBM and Adobe estimate these changes to be roughly 5 years ahead of time. 

Cross-Border eCommerce

Based on Logistyx report, 57% of online shoppers have made cross-border purchases during the pandemic. Meanwhile, 43% agree or strongly agree that doing more online shopping in general during the pandemic has made them more receptive to purchasing from foreign eCommerce sites, with clothing and footwear being the most likely purchases.

57% of online shoppers have made cross-border purchases during the pandemic

The chart below shows the significant effect of the pandemic on eCommerce global revenues, contributing 19% to 2020 sales growth and 22% to 2021 sales growth.

Global eCommerce Revenue Forecast  graph
Global eCommerce Revenue Forecast in Billion USD 2021

Supply Chain and Logistics

Multiple national lockdowns triggered by the pandemic have hampered global supply lines. In fact, it’s causing supply chain interruptions in 94% of Fortune 1000 companies. Additionally, 72% of companies have seen unfavorable or highly negative consequences on their operations.

positive negative impact pandemic supply chain graph
Positive and negative impact of COVID-19 in supply chains of different industries

eCommerce Sectors & Categories Affected by the Pandemic

One of the effects of a global pandemic on eCommerce is customer behavior and motivations. It changes and influences how people shop and acquire necessities and non-necessities.

Now that travel is restricted, lockdowns are in place, and in-person interaction is prohibited, what precisely are consumers buying, and which services are thriving or struggling under the pandemic's impact?

Categories

In between the second and fourth quarters of 2020, the food and beverage sales increased more than any other category as a result of the imposed lockdowns. Apparel and accessories top the list in 2021, with a nearly 19% growth over the previous year, while food and beverage was the second fastest-growing category, at roughly 18%.

Year-on-year change in retail e-commerce sales
Year-on-year change in retail e-commerce sales in the United States as of February 2021, by product category

Products

Consumers’ buying habits have changed as they adjust to new living arrangements, resulting in a rise in demand for a variety of product categories. In March 2020, the demand for disposable gloves grew by 670% over the previous year. Second place goes to a bread machine, which had a 652% rise in sales, a popular choice among consumers who started baking.

Due to travel restrictions and cancellations in the midst of the pandemic, baggage and luggage, as well as men's swimwear and cameras, have suffered a significant drop in sales.

fastest growing ecommerce product categories pandemic graph
The Pandemic Economy: What are Shoppers Buying Online During COVID-19?

B2B

The massive lockdowns and minimal in-person contact posed major hurdles for B2B eCommerce during the pandemic. The repercussions vary widely per sector. According to reports, two-thirds of B2Bs in the travel and hospitality industry cited significant disruption to their operations.

According to eMarketer, personal services (60%), education (52%), wholesale (46%), and manufacturing (46%) were among the most impacted B2B sectors. Meanwhile, tech and telecom (21%), financial services (28%), and energy and utilities (29%) were able to experience minimal impact.

Factors Driving the eCommerce Growth

The pandemic has radically changed how people shop, and it isn't simply because of lockdowns or social distancing. Here are 5 significant factors for the effective expansion of eCommerce during the pandemic: 

Factors Driving the eCommerce Growth

Lower Loyalty

In response to the crisis, people became more receptive to trying out new brands and shopping locations, with value, convenience, and availability being the most important factors in their purchasing decisions. By mid-2021, more than 80% of customers had purchased a brand other than their customary. Customers have also been more inclined to support local businesses and SMEs.

80% of customers had purchased a brand other than their customary

Scarcity of Products in Physical Stores

Remember when the government initially started enforcing lockdowns? People were in a frenzy buying food and other necessities in grocery stores, which even created a toilet paper shortage in the United States. In fact, 60% of consumers claimed experiencing out-of-stocks.

Because of this, people had no other choice but to turn to eCommerce to purchase essential commodities. Thus, customer purchasing behaviors have shifted dramatically with more product options online.

Contactless Payment

With safety being the number one priority, people during pandemic prefer to have minimal to no contact while purchasing things. While technology will not completely replace in-person transactions, surveys show that the global use of proximity mobile payments in 2020 grew by 22.2% year over year. Plus, it provided great convenience as customers could place orders at any time and even from the comfort of their own homes.

Improved Social Media Shopping Experience

More brands are experimenting with new approaches to promote their products and engage and captivate their customers, including video marketing and on-platform shopping. Social commerce allows customers to learn about new products and discover different options of designs and brands in just a few clicks.

Safe Fulfillment

As the popularity of online shopping grew, so did the use of third-party delivery services in food, grocery, and retail purchases. Getting the best products without having to wait in line was a huge perk to new-age consumers.

Post Pandemic eCommerce Trends

Post Pandemic eCommerce Trends

The growth of eCommerce after the pandemic appears irreversible in the coming years. Here are the top eCommerce trends that experts are seeing to continue in 2022 and beyond:

Post-Pandemic Transition from “Need Buying” to Indulgence Spending

In a post-pandemic world, consumer spending is expected to rev up. According to a McKinsey & Company report, if and when the flu pandemic ends, 51% of US consumers want to participate in some "revenge spending." In June 2021, customers are starting to spend more as the proportion of customers delaying large purchases fell to 37%, down from 47% the prior year.

Ethical Shopping and Ethical Brands

Based on Google’s recent report, interest in ethical purchasing and ethical products has increased by an average of 450% in 2020. At the same time, more than 37% of buyers are now aware of the environmental effect of their online purchasing habits.

Accenture also reported that 45% of customers are adopting more sustainable buying decisions, which will surely remain one of the eCommerce trends in 2022.

Brand Loyalty Disruption

As the digital economy grows and consumer behavior and attitudes shift, brands can no longer rely on the traditional loyalty program. A recent survey found that 75% of customers adopted new shopping habits during the pandemic, and 57% were eager to try out new and independent businesses for the first time.

Supporting Local

People no longer simply buy from well-known companies; in today's market, anybody has the opportunity to sell online. In fact, 56% of consumers shop at neighborhood businesses or buy locally sourced items, and 75% of consumers claim they want to shop more locally in the coming year.

56% of consumers shop at neighborhood businesses or buy locally sourced items

Direct to Consumer Increase

D2C trade allows businesses to sell directly to consumers. As such, resellers and intermediaries are eliminated, resulting in cheaper pricing for consumers and more profits for businesses. No doubt this trend will continue till the year 2022.

Adopting Cryptocurrencies

Decentralized finance is already influencing a wide range of companies, including large banks and payment networks like PayPal and Visa. In fact, the top three in the industry had more than tripled their traffic counts in 2021.

Getting familiar with blockchain and cryptocurrencies is a plus in eCommerce. It provides better utility, including faster and more cost-effective business operations, as well as increased data security. 

New Avenues to Shop

Consumers now spend an average of 13 hours, 35 minutes a day engaging with social media. This suggests that social media has a greater influence on consumer purchasing decisions than ever before. Therefore, more brands are finding creative ways to promote their products effectively, such as using a live streaming eCommerce platform.

Predictions for Post Pandemic eCommerce

Predictions for Post Pandemic eCommerce

eCommerce Grocery Shopping Will Stay

Online grocery shopping has seen tremendous growth in recent years since the pandemic and is projected to be one of the pandemic's long-term eCommerce advantages. It’s fast and convenient, especially with close delivery and pick-up options. 

Online grocery shopping is expected to increase to 9% in the future. If this holds true, the supermarket business will have kept 70% to 80% of the digital gains seen during the pandemic's height.

Amazon will Continue to Grow but Shopify Thru DTCs will Compete

Marketplaces such as Amazon make it simple for vendors to market their items and reach a huge number of existing customers. While it continues to dominate the DTC industry, other merchant service providers, such as Shopify, are stepping up their game by providing a legit web presence.

Meal and Food eCommerce Will Increase Due to Work From Home Shift

Online shopping goes hand in hand with new habits and changing consumer behavior, particularly when it comes to food selections. There is also a strong drive for a more sustainable and healthier lifestyle in a large majority (70%) of people. 

As customers shelter at home and avoid going out, delivery will become as crucial as takeout. Customers will undoubtedly continue to use close delivery since it is convenient, especially as their schedules, commutes, and carpools with children get more hectic.

Shipping and Delivery Experience Will Set Frontrunners

Customers became so accustomed to having fast, same-day, and occasionally overnight delivery options that it became an expectation for eCommerce businesses. Smooth, low-cost shipping and convenient delivery options are some of the deciding factors for customers to make a purchase.

Omnichannel Experience

In a post-pandemic world, the future of business isn't a battle between online shopping and brick-and-mortar retailers. According to McKinsey analysts, “offering a compelling omnichannel experience…is a requirement for survival.”

This way, you make your brand available where customers want to shop. According to eMarketer, retail eCommerce sales will continue to expand by double digits globally through 2023.

Looking Ahead the Post Pandemic eCommerce

The COVID-19 pandemic has created new challenges for many traditional and online businesses alike. But, if there’s one major takeaway any brand or business can get from this experience is to be like water. Marketplaces are always changing, especially in a more digital age. Consider the potential of digitization and do not be hesitant to keep your firm open to market developments. 

We hope these latest insights into consumer behavior and sentiment surrounding the pandemic and the economy helped you in taking the next steps for your business.
For more information on how you can promote and manage your products with ease while also scaling up your brand online, get in touch with us at sales@fluxpanda.com. Flux Panda has all the features you need to grow your e-commerce revenue.

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