E-commerce websites have seen a spike in visitors since the outbreak of Covid-19 made people homebound. As an E-commerce owner or manager you must have heard that the industry is about to grow significantly. However, you must also know that this is a blanket statement which rules out that it is extremely important that e-commerce owners and managers take the necessary precautions to prepare for the upcoming economic situation.
While most people might argue that this topic can not be discussed simply because the situation doesn’t have a true precedent, let me explain why this is both right and wrong. First of all, the e-commerce industry has been there and indeed growing significantly even before the coronavirus outbreak. Moreover, we do have some precedent available from the 2002-2003 SARS period when Alibaba and JD.com saw significant increases. However, we can not make generalizations based upon this period simply because the current crisis is larger and has seen more radical shifts than previous times.
Online retailers are faced with three big risks in this time:
The production chain and the goods routes are threatened
What we see from China’s example being the first country to experience the full blow by the pandemic is that all companies, small or large, face the impact of factories being shut down to contain the virus. Companies with large reserves are able to change sources of supply to stay in the market. However, a medium sized company is powerless if their product fails to appear simply because one supplier’s factory doesn’t work anymore.
Moreover, as a company outside of a badly affected area, there’s a huge chance one of your suppliers is based in the coronavirus stricken countries such as China. While there are no reports that any one has been infected through packages coming in from China, we have already seen instances such as the boycott of an Asian snack-bar in the US due to the needless fear. As an e-commerce company that imports products from China or any other badly stricken country such as Italy or Spain, you can expect to lose some customers. This is an absolutely absurd train of thought but it does result in loss of sales.
Challenges in dropshipping
There’s a high risk for dropshipping businesses who do not have a warehouse to fall back at in case of production bottlenecks. If your producer is based in a country which is now in complete lockdown, it's highly likely that your sales come to a standstill. Also you might rely on a much longer logistics chain which may face delays or halts during the outbreak.
Overwhelmed online platforms
Chances are that you see an increase in traffic to your website, which may end up slowing down your website or even crashing. This may result in a denial-of-service attack (DoS), which may mean you lose some of your loyal customers. Make sure your website is running at optimum capacity so it is not overloaded and does not crash. If having a strong website was not priority before due to lack of online sales, it is something you need to start thinking about now.
However, it is not all sad and gloomy of course - there’s a silver lining for most online retailers as long as they take the right precautions in time.
It is very obvious that people are gradually moving to online shopping and this will have a positive impact on the whole E-commerce industry. Here’s a few examples of changes that may take place over the next few months.
eGrocery
eGrocery has already seen a rapid increase in sales during this time. Ele.me, a part of Alibaba Group, saw grocery orders nearly double and JD Daojia stated that sales have nearly quadrupled.
However, clearly the demand for products is unprecedented and has overwhelmed many companies. The UK based ocado.com has seen a spike that they were not able to keep up with, resulting in them shutting down their website to avoid a “denial-of-service attack”.
Food and Delivery
Food delivery networks have increased the most in the past few weeks. There’s a million open restaurants that can not seat their customers in the premises which means takeouts and deliveries are the only viable solution for them.
However, delivery itself is not a very straightforward process. In Italy, carriers are not able to deliver shipments to households in the quarantined cities. Therefore, brands are implementing systems to check if a particular delivery is possible or not. They have also increased the customer service staff to help people get quick updates on their shipments.
Apparel and Cosmetics
Chinese cosmetics company Lin Qingxuan had to close 40% of its stores amid the coronavirus outbreak. They moved all their beauty advisors from their stores to become online influencers, which helped them achieve 200% growth compared to the previous year. Similarly, there are good examples in the apparel industry that show that the right strategies will help increase online sales. Later in this article, I have listed out some strategies that retailers can use to keep their customers. Demand for clothing and accessories could fall as less people go out or socialize offline, however, the right precautions can help retailers get through this time.
Other Industries
A lot more industries have creatively made a shift to e-commerce. For example, we have seen recently an increase in full virtual tours using Augmented Reality (AR) by luxury product retailers, as well as, museums.
Healthcare and insurance are also industries that have been able to leverage the online buying increase. For instance, Ant Financial (formerly known as Alipay) added free coronavirus-related coverage to its products. This has encouraged consumers to buy insurance online and increased the loyalty of existing clients. The outcome is 30% more health insurance products sold.
Similarly, startups like Viveo Health have seen an increase in popularity by providing online consultation services with doctors and also online tools to help patients maintain their drug supply through e-prescriptions.
Strategic Direction for the future
A lot of companies have already moved from the crisis response to post-recovery planning. Digitalisation is a priority for most businesses, including manufacturers. As the digital side of retail businesses grow, some precautionary measures and long-term strategies are a must.
Evolve your marketing strategy
Make sure you make transparency and proactive communication a part of your marketing strategy. In these times it is important to make sure that you are honest about your problems and make customers aware of delays in delivery or other bottlenecks before time. A key goal for marketing should be keeping the loyal customer onboard. Don’t let lack of servicing make you lose your clientele.
It might also be a good time to reconsider the channels you use for online engagement. Does it suit you to switch to tik-tok now and target the e-girl and e-boy? What else can you change among your communication channels?
Search for alternative providers
Contact your most important suppliers immediately and get a good understanding of their location and how things stand there. It might be suitable to consider local providers to shorten the supply routes making the supply chain more smooth.
Ration your sales
It is important to know that the situation might even escalate further. This means that there might be a wider supply and demand gap. Instead of leaving your customers disappointed with no service or product, you could cut back on your advertising measures. It is better to sell fewer items than to lose customers because you cannot service their order.
Scale up in the right direction
It is extremely important to scale up in the right direction right now. To avoid supply chain bottlenecks you need to be extremely careful with your manufacturers and suppliers. However, don’t let bad tech hold you back. In this time when e-commerce is seeing a rapid demand, don’t lose your customers to a slow website, bad UX or a website that lacks security, all the things that could have been easily avoided.
At Thorgate we have recently been in talks with companies who understand that it is high time to optimise their UX or focus on making their online platforms more user friendly for their own staff. A lot of companies are coming to the realisation that digitalisation is more important than ever before and as industry experts with ample experience, we’re able to help potential clients by showing them the right direction.
At Thorgate, we built a complex e-commerce platform for a Lithuanian electronics retailer, Novastar, using the latest design and software development practices. We chose the Django Oscar framework, which is specifically built for elaborate e-commerce platforms and makes few assumptions about projects, allowing virtually any part of the framework to be extended and customised. In this way, complex business rules can be captured in an elegant and cohesive way.
We also designed and developed an online grocery shopping service for the largest Estonian grocery retailer, eCoop. To achieve complete stability under heavy traffic and at scale, we used Python, and Django as the main backend engine including Celery for handling asynchronous tasks and Redis for optimising data structure. To ensure a simple and straightforward shopping experience, we created a custom shopping list feature. There are several shopping lists available, composed by well-known nutritionists. Customers can also create their own personal shopping lists to use later.
Being an experienced market player, we understand what tech stack to use for an E-commerce website, what is the optimum UX that converts and most importantly we understand the business itself and can consult on what strategies to take in this time. If you are looking for a product partner to scale your E-commerce platform, contact Thorgate.
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