There’s no doubt that the crisis caused by the global Coronavirus (COVID-19) pandemic has created an incredibly difficult business climate. Businesses are being presented with many new challenges as international borders close, bricks-and-mortar businesses shut their doors, and people are told to isolate at home. Many companies face temporary or even permanent closures, with staff facing months of financial uncertainty and worry.
Consumer behaviour has been forced to immediately change, and change on a massive scale. Those in isolation or under lockdown can’t perform their usual routines, especially since many local shops have been forced to close their doors for safety reasons. Concerns about the availability of goods have encouraged panic buying of items in bulk. Financial uncertainty and the prospect of a severe and long-term recession make for a stark backdrop which has led to an impact on consumer outlook, perceptions and behaviours.
For the businesses that remain active at this time, questions are inevitably being asked about how best to cope with the prevailing trading conditions, and how best their strategies should adapt. This is a difficult question to answer since the Coronavirus pandemic is so new that the circumstances are changing fluidly and on a daily basis. Defining a strategy now is difficult as there is limited evidence or precedent to base assumptions on.
Initial indications about what might happen to businesses and the economy could be gauged by looking at the data from the countries which first suffered from the effects of COVID-19. While there’s no guarantee that others will follow the same trajectory, analysis of these countries can reveal useful patterns and insights.
(source: The Biggest Business Impacts of the Coronavirus Pandemic)
During this period, the same site’s generic traffic also dropped-off, indicating a general downturn in demand for fashion items (Lord Simon Wolfson, Next’s chief executive, stated recently that “People do not buy a new outfit to stay at home”).
Other ecommerce sites show different trends. The following UK brand within the Home and Hardware sector saw a large increase in brand search:
Even their generic non-brand traffic has increased since mid-March:
So different sites, and sectors, will experience different effects from the changes in consumer behaviour. What is clear though is that user behaviour is definitely changing online, and sometimes quite dramatically.
Are ecommerce sites set up to cope with these changes?
COVID-19 is already impacting buyer behaviour
Online, the world is changing just as fast as offline. In early March 2020 The Drum reported on research that shows that, while annual advertising growth rates in China are predicted to fall from 7% growth in 2020 to 3.9%, ecommerce advertising spend is predicted to grow by 17.7% and social media spending to rise by 22.2%. This seems to reflect the changes in consumer behaviour as they switch from buying offline to buying online. They also show that as people are spending more time at home, brands have responded by shifting spend from offline media to online, with 14% reporting this course of action. In the same piece of research, they go on to state that “e-commerce as a platform has already seen exponential growth, especially in FMCG which saw spending through e-commerce channels in China grow almost seven times as fast as the sector overall in 2019; a trend that the coronavirus outbreak is likely to accelerate.” The same picture is painted in research published by Business Insider Intelligence and eMarketer analysts in March 2020, which suggests that ecommerce is likely to grow as consumers avoid physical stores. Their data suggests that 74.6% of US internet users said they'd be likely to avoid shopping centres and malls if the coronavirus outbreak in the country worsens, and over half would avoid shops in general. A new study from Ipsos MORI from mid-March 2020 reveals that 50% of Chinese and 31% of Italian consumers say they’re now using ecommerce ‘more frequently’. In contrast, only 18% of UK respondents said that they were using online stores more frequently, with close to half reporting there was ‘no change’ in their ecommerce habits. However, now that the UK is in lockdown these statistics are likely to change dramatically, probably trending towards the figures seen in other countries with more advanced COVID-19 issues. While the types of goods people need might change due to their circumstances, the need to purchase these somewhere will remain, and we will likely see a general switch to online shopping.
Ecommerce challenges
In theory, online stores of all sizes stand to benefit from the switch of consumer behaviour to online shopping since they are already well-positioned to serve the increasing demand for goods and services. However, there are challenges. Ecommerce is not a magic bullet in itself, and MorningStar cites issues with adoption (especially amongst lower-income consumers) as a dampening effect against any uplift in sales. There are also issues with the supply-chain and product delivery, with companies already starting to be clever about resolving them through innovation. Perhaps an even more limiting factor for businesses will be the level of readiness of their ecommerce offering. If their online platform is not capable of offering a competitive user experience, the chances are it will fail to entice, impress or retain customers. Ensuring that your ecommerce site or app is optimised and ready will be critical in the success of your online offering, and how competitive you can be in an increasingly competitive landscape. Fortune states that:- “companies with robust e-commerce offerings … will fare the best in the current turmoil”
- “analysts agree that retailers still playing catch up on e-commerce will be the biggest losers”
- “retailers with good sites will lose the least”
Changes to ecommerce traffic
We have already seen big changes in search behaviour in the Fashion sector. It’s not uncommon for fashion brands to have a significant proportion of their traffic coming through branded search. In the example below we can see one UK-based fashion retailer’s branded search traffic drop by approximately 40% after strict new measures were introduced in mid-March to combat the COVID-19 virus (we’ve actually seen some other fashion brands drop by as much as 70% in the same period):

