Covid-19 has thrown the e-commerce industry in a world of confusion. The past 3 months have proved to be trying for the world economy, with no one spared. While industries like travel and hospitality have taken a brutal hit, e-commerce, on the other hand, has been faced with challenging opportunities. There have been some emerging trends in the e-commerce industry amid this lockdown.
1. Increased Consumer Penetration
Lockdown restrictions in countries have forced customers to shop online even when they otherwise did not prefer to do so. India has a share of just 5% of global online retail sales as compared to 28% in China and 14% in the USA. Online retailers and e-commerce platforms are experiencing drastic increase in sales as consumer avoid going to markets and shopping malls and instead take to digital platforms for all their shopping needs. While companies are struggling with an economic slowdown and disrupted business operations, e-commerce giants like Amazon, Alibaba, Ebay, and Flipkart are experiencing high volumes of transactions.
2. Rise in Cashless Payments
Contactless payments have risen during the lockdown as people opt for contactless deliveries. Consumers move away from Cash-on-Delivery (COD) towards Pre-Paid orders. Seen by consumers as a cleaner and safe way to pay, contactless payments has seen unprecedented growth during the lockdown. Alternatively, some e-commerce platforms take to only accepting pre-paid orders to prevent frauds in such turbulent times.
3. Tier-ll and Tier-lll Show High Demand
Almost 70% of e-commerce demand is generated from Tier-l cities like Delhi, Mumbai, Kolkata, Bangalore, Pune, Chennai and Hyderabad. Due to non-availability of products during the lockdown, e-commerce has seen a sharp rise in demand from Tier-ll and Tier-lll cities as well. Also, with many metropolitan cities falling under the red-zone, major demand for e-commerce companies is driven from these cities.
4. For The Love of Retail Therapy
The lockdown has affected us all in many different ways. We all have our ways of keeping sane, if we can call it, and one of them has been shopping. Retail Therapy gives many a much-needed mental happiness during the prolonged lockdown. When everyone is locked in homes, people will rush to buy products they would see using during this time. Some of the top selling categories online are Electronics, Cosmetics and Home & Living/Accessories.
5. Diversifying Categories
E-commerce giants like Alibaba, Amazon and Flipkart have their hands dipped in almost all categories of products. Smaller and unicorn companies have taken this lockdown as an opportunity to diversify their product range and venture into newer categories. A majority of companies, Zomato and Swiggy, have taken to delivering groceries and daily essentials. At a time when consumers are stocking up on essential items, many e-commerce players have used this time to enter newer markets to test waters.
Some more observations..
E-commerce companies cannot override the importance of boutique stores in an economy. The functional utility that boutique stores bring to a neighbourhood is something even the biggest e-commerce companies cannot offer. It will be safe to assume that irrespective of any amount of rise in e-commerce, boutique shops aren’t going anywhere. However, what we will see in future is consolidation and a symbiotic association of sorts between the two.
There is a large portion of population that is restricting their spending during this lockdown. This behaviour largely owes to the uncertainty that the status quo brings. With normalcy setting in gradually in economies, people will begin to venture out and start spending again. This pent-up demand of 4 months will lead to a sudden surge in sales and revenue for e-commerce companies. It will be further stimulated by the lack of willingness among consumers to visit physical markets or shopping malls.
Where the consumer attitude and behaviour shifts next is hard to predict in this dynamic environment. However, one can be certain that the economy will slowly pick up and consumers will begin spending like before again.