Photo: @criene via Twenty20
Will Americans keep looking for new e-tail sites as stores reopen?
The nationwide shelter-at-home orders of the past few months have motivated customers to not just try out new brands, but online retailers with which they have never done business before.
More than half of Americans (55 percent) have made a purchase at a new online store during the pandemic, according to Small Business Trends, citing a survey conducted by Ware2Go. The survey further found that 87 percent of customers report shopping online and 64 percent say they are replacing their weekly shopping trips with online orders.
Customers being moved to try new products and services has been a recurring theme throughout the course of the novel coronavirus pandemic. First came the initial, massive wave of adoption of online grocery shopping in mid-March, which allowed customers to shop for essentials while minimizing human contact. At the same time, stock-outs due to pandemic-related panic buying and, in some cases, food shortages, forced many customers to trial new products to replace their favorites. With a third party doing their grocery shopping for them, shoppers sometimes inadvertently received products they had not anticipated buying.
Customers were also buying things they wouldn’t have otherwise outside of grocery stores. Best Buy and other technology retailers, for instance, saw spikes in the purchase of home office technology as the majority of the U.S. workforce transitioned to working from home.
Teaching at home, another COVID-19 driven trend, also drove purchases of both traditional teaching supplies and teaching-related technology, as a Ware2Go infographic illustrates. With no clear consensus on a decision to reopen schools in the fall, these purchases will presumably continue.
As the Ware2Go study’s point out, many consumers switched to new retailers for reasons one might never have anticipated. Early in the pandemic, Amazon was swamped with orders for food and cleaning supplies, leading the e-tail titan, notorious for its unparalleled fulfillment capabilities, to experience large backlogs and even suspend delivery of items deemed non-essential, leading customers to order elsewhere.
Discussion Questions
DISCUSSION QUESTIONS: What might determine whether shoppers will continue shopping the new websites after the pandemic that they’ve started using? What can online retailers do to remain “sticky” if and when things return to relative normalcy?
Poll
BrainTrust
Two words: Guaranteed delivery.
E-commerce was mostly playing catch-up to Amazon’s Subscribe & Save service. To drive stickiness, retailers and brands need to offer recurring subscriptions that stock the pantry, home office, cosmetics drawer and more. This will ease the anxiety that consumers have about the potential lack of inventory for in-store trips while at the same time ensuring a CPG can directly connect with the consumer (and better forecast demand).
It’s debatable as to whether a retailer even needs to offer a discount for recurring subscription programs. If they can just guarantee delivery of common goods, they earn the right to store my credit card.
I agree, David. I think there is a significant innovation waiting to happen in the pantry/refrigerator area. Convergence of grocery delivery, subscription and real-time consumption data can happen. I long thought an IoT enabled refrigerator has basics in place for innovating in this area. Why not subsidize $2,000 IoT enabled fridge in exchange for guaranteed purchases for 2 years — or something along those lines?
That 55 percent of the shoppers are trying new stores is obviously significant. That is great news. But that also means a significant drift to competition. Another study shows 40 percent of these new customers will churn soon or be one-time customers.
That means the online stores have their task cut out for them. Many stores are seeing significant uptick, but need investment in understanding consumer behavior, analytics and improving customer experience to make this uptick sustainable.
I see nothing in this study confirming “64 percent say they are replacing their weekly shopping trips with online orders” and even if it did, a study by an online shipping company is suspicious. If that were true, we would have seen it in every grocery retailer’s press release.
Boredom at home during the lockdown and being unable to get inspiration from visits to physical stores and retail spaces has pushed people to be more experimental online. That’s great news for the long tail of smaller retailers and DTC brands that have suddenly been discovered. Will this continue? Yes, to a certain extent it will. In many cases, loyal relationships have been formed and consumers will stick with their new choices. Experimentation may fade somewhat as physical shops reopen, but now that consumers have learned there is a whole world of interesting propositions out there I suspect they will continue to seek out new retailers and experiences.
People in both rural and urban areas have shown intense eagerness to “get outta the house” as phased reopenings continue. This will only intensify as more stores reopen. So online shopping may ease, however the new habits of online shopping will not go away. I believe the net effect of all retail (online and offline) will be a strong increase by Q4.
Those that engage, retain. Websites that offer value to people beyond the transaction have the best chance to retain their newfound traffic. Offering content, connections and community is the way to capitalize on one of the rare opportunities this pandemic has presented to retail.
Change begets change. As shopping habits were upended with lockdowns and out-of-stocks, shoppers were forced to look for alternatives to old habits. That’s led them to places they wouldn’t have gone otherwise. Whether they stick with new habits or revert to old ones will mostly be determined by the level of satisfaction they feel. Keep shoppers happy and they will stay; screw up and they will leave. It’s still retail and many of the old rules still apply.
The same concepts that large omni-brands have been trying to push are equally pursued by smaller, DTC brands: personalized experience, targeted messaging, and assortments that resonate with that specific consumer. So if an e-tailer is able to do these things successfully, it will help reduce the churn from their newfound customers back to their traditional shopping destinations. New websites being shopped will likely see a similar trend to other services which have spiked during the pandemic such as food delivery and curbside pickup. They likely won’t retain their current levels, but they certainly won’t regress towards the norm. Consumers are creatures of habit, but once they attempt a new service with positive results, they are likely to continue utilizing.
While there will undoubtedly be some stickiness with online retailing that shoppers tried during the pandemic, the magnitude remains to be seen. In some cases, shoppers might have signed up for a year of service (like with online grocery providers) which will help with that stickiness, but in the end it comes down to satisfying customers. And online grocery retailers and service providers had their challenges too – lack of pickup/delivery slots, out-of-stocks without adequate substitutions and so on. So there will be some winners and some losers as we move forward.
That’s a good point. Those that had subscription programs have better chance of stickiness. For the rest, there is high risk of “one and done” customers.
Mixed on this one. The experiences for many have been late deliveries, significant out-of-stocks and a challenge to get anyone in customer service to support online orders. Poor, forced experiences don’t translate into loyalty. That said, there were some truly exceptional retailers that were able to deliver online products quickly and on-time. Usually, these were the larger known brands like Lowe’s or Walmart. At the end of the day, whatever new conveniences were found would have to be supported with high quality fulfillment to change consumer behavior – and in many cases this just wasn’t the case.
For retailers to build stickiness, the same level of reliability of service, availability of product, and consistency of experience needs to continue – after all, the competition is just a click away.
This is about delivering the customer service consumers needed during the pandemic while stores were closed and those that performed best won new loyal customers as a result. Taking my own household as an anecdotal example – we made purchases from at least five new e-tailers between late March and May, mostly because our usual go-to providers (looking at you Amazon, for example) couldn’t deliver or, more importantly, showed out-of-stock items we wanted. Three of those e-tailers were food-related and we have already made additional purchases from them all. These e-tailers not only had what we wanted in stock, but they were able to deliver to us in a reasonable amount of time. That means we are likely to continue buying from them given the convenience of the overall service so long as they continue to perform. If they falter, are late with a delivery, or go out-of-stock, most likely it will give us reasons to return to our previous choices both online and offline. Just as it is difficult to predict in our own home, it is difficult to predict how consumers will react to these changes long-term. We are in uncharted waters!
I don’t know about “in the same way,” but certainly online will grow. Whenever “normal” returns, it’s going to have a bigger presence than “before”, and the longer that takes, the bigger that share is going to be, both because of the general trend, and the difficulty of recovering the in-store component of retail.
(In other words: the longer recovery takes, the greater will be the acceleration of online.)
If the survey is accurate that shoppers seek out new products and positive delivery experiences, the highly visible e-commerce destinations are once again best positioned. Amazon, eBay, Google Shopping, and other marketplaces will be the top-of-mind, most convenient channels for online retailers (where they risk commoditization as “sellers”) to continue to be discovered.
Buyer needs will return to normal levels. Certain categories inevitably will drop as home containment-driven demand wanes. This includes home cooking, fitness, office supplies, and weapons (yes, weapons and accessories have spiked as a reflection of tumultuous times). Ironically, same day delivery needs may also relax as consumers have the option to return to physical stores.